AKRON — Goodyear said it plans a "phased restart" of production at some of its commercial truck tire plants in the U.S. and Europe, perhaps as early as this month.
The Akron-based tire maker also reported a first-quarter drop in sales of $600 million, resulting in a loss before income taxes of $185 million to $195 million for the first quarter of 2020, and an adjusted loss before income taxes of $175 million to $185 million. That total excludes approximately $10 million of rationalization and accelerated depreciation charges incurred during the quarter, the company said in "preliminary results" for the first quarter of 2020.
Goodyear continues to evaluate production plans around the world, as most of its manufacturing facilities in the Americas and Europe, as well as several of its plants in Asia Pacific, remain closed.
Goodyear said the decision to resume production will be based on market demand signals, inventory and supply levels, as well as its ability to keep its associates safe in light of the COVID-19 pandemic.
Rich Kramer, chairman, CEO and president of Goodyear, told Tire Business last week that, ideally, the tire maker would like to begin to restart plants in early May, but would take its cue from its original-equipment vehicle customers.
Goodyear said its plant in Pulandian, China, is operating with all of its workforce and is expected to ramp up production throughout the second quarter.
Mr. Kramer reiterated that the "health and well-being of our associates" remain the company's top priority.
"We are working diligently to ensure we will be prepared to resume our manufacturing operations safely and efficiently when automotive production and replacement tire demand recovers," Mr. Kramer said. "At the same time, we are proactively taking actions to mitigate the impact of the sharp decline in industry demand on our profitability and financial position."
Goodyear also reported that it successfully refinanced its $2 billion "primary revolving credit facility" in the U.S., extending the maturity date to 2025.
"We are pleased to complete this action, particularly given the current economic climate," Darren R. Wells, executive vice president and chief financial officer, said. "The extension of our debt maturities enhances our financial flexibility and further strengthens our liquidity position, allowing us to better manage the challenges we face.
"This renewal reflects the financial community's confidence in our business and the quality of our assets."
Goodyear said its first quarter 2020 sales were approximately $3 billion, down from $3.6 billion in 2019. Tire unit volume dropped 18% from 2019 to approximately 31 million for the first quarter of 2020.
Significant declines in global original-equipment shipments caused that, the company said, after auto makers stopped production and replacement demand weakened, following quarantine measures instituted across the world.
The company also attributed a loss of approximately $65 million to lower factory utilization and other period costs, directly related to idling its manufacturing facilities.
The company said it has not yet calculated its tax rate for the first quarter and thus is not able to provide its preliminary net loss or loss per share.
Given evolving macroeconomic conditions during the first quarter, the company continues to conduct impairment testing related to the carrying values of certain assets, including goodwill of its Europe, Middle East and Africa business. As a result, the company could record a non-cash impairment charge during the quarter, and its reported loss before income taxes could be higher by up to $185 million.
The company reiterated that it took "swift action" to reduce operating costs and capital expenditures in response to declines in industry volumes, which includes the company's decision to temporarily close its manufacturing facilities in the Americas and Europe, a move it said would "reduce conversion costs, improve inventory levels and preserve cash."
Other measures the company took include a combination of furloughs, temporary salary reductions and salary deferrals of more than 9,000 of its corporate and business unit associates.
The company also reduced discretionary spending, including marketing and advertising, and supsended payment of its quarterly dividend.
Goodyear said it expects 2020 capital expenditures to be no more than $700 million.
As of March 31 Goodyear reported a total liquidity of approximately $3.6 billion, including approximately $970 million of cash and cash equivalents, compared to $3.5 billion in total liquidity, including $860 million of cash at March 31, 2019. Total debt was approximately $6.5 million, essentially unchanged from the previous year.
"I am proud of the courage and resilience of our associates around the world as they continue to service our customers and consumers during this unprecedented time," Mr. Kramer said. "I am confident we will weather this crisis and that, as we continue to focus on our strategic priorities, we are positioning the company to win in our markets when the auto industry and broader economy recovers."