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Mar 31, 2020
Goodyear Q1 2020 Earnings Report
Goodyear's first quarter results were significantly impacted by the COVID-19 pandemic, with sales declining by 15% and a net loss of $619 million.
Key Takeaways
Goodyear reported a challenging first quarter in 2020, with sales down 15% to $3.1 billion due to the impact of the COVID-19 pandemic. The company reported a net loss of $619 million, or $2.65 per share, compared to a net loss of $61 million, or $0.26 per share, in the prior year. The company is taking actions to reduce costs and preserve cash, including temporarily closing manufacturing facilities and reducing payroll costs.
First quarter results were significantly affected by the sharp declines in demand due to the COVID-19 pandemic.
Cash and available liquidity of $3.6 billion following successful U.S. credit facility refinancing.
Global manufacturing facilities are resuming production during late April / early May.
Industry conditions are continuing to improve in China.
Goodyear
Goodyear
Goodyear Revenue by Segment
Goodyear Revenue by Geographic Location
Revenue by Segment
Americas Revenue
CapyFin.comEMEA Revenue
CapyFin.comAsia Pacific Revenue
CapyFin.comRevenue by Geographic Location
Americas Revenue
CapyFin.comEMEA Revenue
CapyFin.comAsia Pacific Revenue
CapyFin.com Forward Guidance
Goodyear is taking actions to reduce operating costs and capital expenditures in response to the COVID-19 pandemic. The company expects 2020 capital expenditures to be no more than $700 million.
Positive Outlook
- Phased restart of production during the second quarter, which began earlier this month with some of its commercial truck tire facilities in the U.S. and Europe.
- The company expects the majority of its manufacturing facilities to resume operations by the end of May.
- The company’s plant in Pulandian, China is operating with 100% of its workforce, but is not yet operating at full capacity and is expected to continue ramping up production during the second quarter.
- Implementing new protocols covering employee screening and other protective measures recommended by the Centers for Disease Control and Prevention to ensure the safety and well-being of its associates as operations gradually resume.
- Credit Facility Refinancing On April 9, 2020, the company refinanced its $2.0 billion asset-based revolving credit facility.
Challenges Ahead
- The company has temporarily suspended its quarterly dividend in light of the increased uncertainty resulting from the COVID-19 pandemic.
- First quarter results were significantly affected by the sharp declines in demand due to the COVID-19 pandemic.
- Most of the company’s manufacturing facilities in the Americas and Europe, as well as several of its tire plants in Asia, were closed to protect the safety and well-being of its associates and conserve cash.
- The company expects the closure will result in approximately $130 million of annual savings in 2021 when compared with 2019.
- The decline reflects lower volume and reduced price/mix, partially offset by favorable raw material costs.
Revenue & Expenses
Visualization of income flow from segment revenue to net income