AKRON — Bridgestone Corp., Goodyear and Pirelli & C. S.p.A. have “deconsolidated” their operations in Venezuela due to a deterioration of that country's macro-economic atmosphere, growing restrictions on the conversion of foreign currencies and the reduced availability of U.S. dollars.
All three tire makers reported losses associated with the moves: for Bridgestone, $360 million; Goodyear, $646 million; and Pirelli, $615 million. The deconsolidated units' revenue and earnings will no longer be included in the firms' overall financial results.
Goodyear said “evolving conditions” in Venezuela — including currency exchange control regulations and continued reductions in access to U.S. dollars — have restricted the ability of its Venezuelan subsidiary to pay dividends and royalties and to settle liabilities.
These restrictions, combined with other government regulations such as price and profit margin controls and strict labor laws, “have increasingly limited our ability to make and execute operational decisions at our Venezuelan subsidiary,” Goodyear said. The company added that those factors have “significantly limited our Venezuelan subsidiary's ability to maintain normal production and control over its operations.
“We expect these conditions to continue for the foreseeable future,” Goodyear said, while also noting that C.A. Goodyear de Venezuela's sales last year accounted for one-third of its Latin American revenue and contributed $119 million in segment operating income in 2015.
Pirelli said that its Venezuelan operation would no longer be included in its results, “and therefore will no longer bear the impact of the recurring devaluations which we have seen in recent years, both at the level of results and the net financial position.”
In Venezuela, Bridgestone Firestone Venezolana C.A. operates one tire plant, in Valencia, that opened in 1955 and produces passenger, light and medium truck tires, with nearly 1,300 employees.
Goodyear's plant also is in Valencia, with capacity for passenger and light truck tires and 750 employees.
Pirelli de Venezuela C.A. operates a plant in Guacara, making passenger and light truck tires with 700 employees. Capacity at that 26-year-old plant is listed at 4,000 units a day, although Pirelli said in its earnings report that the plant operated at only about 50-percent capacity throughout 2015.