HANOVER, Germany (March 31, 2005) – Continental A.G. took a $64 million charge against 2004 earnings to cover “impairment” costs at its Charlotte, N.C., tire plant as a result of “unsatisfactory results” at that facility.
Continental said the charge is related to property, plant and equipment, specifically the depreciation of older, two-piece molds. A spokesman said this indicates the company feels the plant needs investments to upgrade the infrastructure to improve efficiencies, but no specifics are available at this time.
Morgan Stanley Equity Research said in a commentary on Conti's earnings the charge “could imply further cost-cutting and/or capacity reduction actions….”
When contacted, United Steelworkers of America Local 850 in Charlotte was unaware of the charge.
Conti also booked $129 million in charges related to the phase-out of tire production at its Mayfield, Ky., plant at year-end. The firm had no update on negotiations to sell its Bryan, Ohio, earthmover tire plant.