Goodyear Tire & Rubber Co. suffered a net loss of $619 million during the first quarter of 2020 versus a net loss of $61 million during the same period last year.
The Akron, Ohio-based tiremaker's global sales during the quarter totaled $3.1 billion, a 15% decline compared to the same period last year.
Its unit volume for 1Q 2020 totaled 31.3 million, an 18% decline from the first quarter of 2019. Goodyear's original equipment tire volume plummeted 21% and its replacement tire shipments fell by 16% during the first quarter of 2020.
In addition, the company reported a segment operating loss of $47 million during the first quarter of 2020, down $237 million from a year ago
“Our first quarter results were affected significantly by the sharp declines in demand in the wake of the COVID-19 pandemic,” says Richard J. Kramer, Goodyear's chairman, CEO and president.
Sales in Goodyear's Americas region totaled $1.7 billion, 11% lower than what it recorded during the first quarter of 2019, driven by lower volume and other factors.
Overall tire unit volume in the Americas fell by 13%, with replacement tire shipments declining 14% and OE volume falling 10%, "reflecting lower vehicle production," according to company officials.
"Americas’ operating results for the first quarter of 2020 were break-even, an $89 million decrease compared to the prior year. The decline was driven by lower volume and lower factory utilization. These factors were partially offset by improvements in price/mix and favorable raw material costs."
Goodyear previously announced that it 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.
It also is implementing actions "to reduce payroll costs through a combination of furloughs, temporary salary reductions and salary deferrals covering over 9,000 of its corporate and business unit associates, including substantial salary reductions and deferrals for the company’s CEO, officers and directors."
In addition, the tiremaker is reducing discretionary spending, including marketing and advertising expenditures. "Together, these actions will help to mitigate the financial impact of lower industry demand as a result of COVID-19," say company officials.
Goodyear adds that it is "accelerating restructuring actions to further improve its cost structure and position the company for recovery."
The firm recently reached a tentative bargaining agreement to permanently close its Gadsden, Ala., plant as part of the company’s strategy "to strengthen the competitiveness of its manufacturing footprint."
Closing the factory is expected to result in approximately $130 million of annual savings in 2021, when compared with 2019.