HANOVER, Germany (Aug. 3, 2004) — Continental A.G. took a $118.7 million charge against first half earnings to cover restructuring costs at its Mayfield, Ky., plant, but said the cost could rise to $144 million before year-end.
Continental Tire North America Inc. announced in early July it intends to cease tire production at the passenger and light truck tire plant in Mayfield by year-end, blaming the decision on high operating costs at the 44-year-old facility.
The tire production phase-out will affect about 715 hourly and 112 salaried workers. Conti will, however, maintain mixing and warehouse operations there, saving about 130 jobs.
The closing cost is almost identical to that estimated by Nicolas Hirth of Morgan Stanley Equity Research Europe.
Despite the restructuring costs, the operating result of the passenger and light truck tires division—which includes the company's North American business—rose slightly to $144.8 million. Sales rose 8.3 percent to $2.31 billion despite a drop in sales in North America.