AKRON (May 27, 2004) — Standard & Poor's Ratings Services lowered its corporate credit rating on Goodyear and removed it from CreditWatch with a stable outlook.
Standard & Poor's changed the rating to “B+” from “BB-.”
“The downgrade reflects our view that the weak, albeit improving, operating performance of the company's North American tire operations, along with Goodyear's heavy schedule of debt maturities, pension funding and other cash obligations during the next few years, will support a financial profile consistent with the now-lower rating,” said analyst Martin King.
Goodyear has total debt of about $6 billion and $5.8 billion of underfunded employee benefit obligations, Standard & Poor's said.
The rating agency expects Goodyear to realize “meaningful” savings in 2004 from cost-saving efforts, but benefits after this year may be more modest. The agency further expects the tire maker to report “subpar” operating performance in North America for the next few years.