AKRON — The price of a share of Goodyear stock nosedived Friday, plunging 27.6% to $15.78 in trading after the Akron-based tire maker held an earnings conference call with analysts.
According to various reports, the share price gained 7.5% before trading opened, but then fell in the afternoon, hours after the company noted in the conference call that it was "targeting 2022 free cash flow around break even," compared with a 2021 cash flow of $1.06 billion.
Goodyear CEO and President Rich Kramer cited labor shortages, shipping difficulties, continuing semiconductor shortages and increasing raw-materials prices as some of the reasons for inflated pricing going forward.
"Looking ahead, we expect cost pressures to persist over the next several quarters," Kramer said. "As you would expect, we remain focused on executing strategies to capture value and drive efficiencies while prudently managing our costs."
Goodyear's stock opened the day at $22.61 per share, up from $21.74 at the previous day's close. The stock jumped to a high of $22.66, but by the time the day ended, the stock had lost more than a quarter of its value, sinking to its lowest price per share since Feb. 22, 2021, when it opened at $13.52 per share.
Darren Wells, executive vice president and chief financial officer, said raw-materials costs increased more than $300 million in the fourth quarter.
"And we saw a step-up in other inflation as well, with over $80 million in calculated general inflation compared with our recent historical average of closer to $35 million a quarter," Wells said.
Wells also said COVID-19-related absences continue to hamper the company in factories, requiring the company to hire many new workers, particularly in the U.S., "to address higher retirements and overall attrition."
He said that "not only results in higher costs for workers who are training others or being trained rather than building tires, but also reduces the normal pace of cost savings programs in our factories and creates a situation with a metric we normally think of as cost savings is negative, reflecting this impact on productivity."
Data released Thursday showed that the consumer-price index for January, which measures the cost of dozens of everyday consumer goods, rose 7.5%, the fastest increase since 1982.
Kramer said Goodyear "is performing at a high level despite a challenging macroeconomic environment. We're recovering share while improving margins. The Cooper integration is off to a strong start, and we're driving the innovation necessary to ensure we continue leading our industry through the mobility revolution and beyond."
Wells noted that all tire companies are facing the same pricing challenges. Goodyear charts nine competitors, he said, and seven of them announced price increases in the first quarter, and one of the other two that didn't, he said, raised prices at year-end 2021.
"So we are seeing very consistent pricing across all the significant industry players," he said.
