Goodyear Tire said first quarter results were significantly affected by COVID-19 with volume down 18% versus last year. It has temporarily suspended its quarterly dividend and reduced 2020 capital expenditure to further enhance liquidity.
"We are proactively taking actions to mitigate the impact of the sharp decline in industry demand on our profitability and financial position," said chairman Richard Kramer.
Goodyear said it had successfully refinanced its primary revolving credit facility in the US.
First quarter 2020 sales were US$3bn, down from $3.6bn a year ago.
Tyre unit volume was 31m, down 18% from the prior year.
"These results reflect significant declines in global OE shipments after auto manufacturers halted production and weak replacement demand following sweeping shelter in place mandates," the tyre maker said.
It expects to report a pretax loss of $185m to $195m for the first quarter of 2020 and an adjusted loss before income taxes of $175m to $185m, which excludes approximately $10m of rationalisation and accelerated depreciation charges incurred during the quarter.
The results include an approximately $65m unfavorable impact driven by lower factory utilisation and other period costs, both directly related to shutting down its manufacturing facilities.
Given evolving economic 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, Goodyear "could" book a non-cash impairment charge during the quarter and its reported pretax loss could be higher by up to $185m.
Goodyear said it continues to evaluate its production plans around the world in light of the fluid situation. Most of the company's manufacturing facilities in the Americas and Europe, as well as several of its tyre plants in Asia Pacific, remain closed.
The company plans a phased restart of production during the second quarter, beginning in April with some of its commercial truck tyre facilities in the US and Europe.
"Decisions to resume production will be based on an evaluation of market demand signals, inventory and supply levels, as well as the company's ability to safeguard the health of its associates," the company said.
The plant in Pulandian, China is operating with 100% of its workforce and is able to meet customer demand. The facility is expected to continue ramping up production throughout the second quarter.
The company now expects 2020 capital expenditures to be no more than $700m and is also reducing its payroll costs through a combination of furloughs, temporary salary reductions and salary deferrals covering over 9,000 of its corporate and business unit workers, including substantial salary reductions and deferrals for the CEO, officers and directors.
It is reducing discretionary spending, including marketing and advertising expenditures.
Temporarily suspending the quarterly dividend will preserve approximately $37m of cash on a quarterly basis.