AKRON (dpa-AFX) - The weakening tire company Goodyear is planning a radical overhaul with divestments, cost reductions and debt reduction. In this way, the US company wants to trim its business to generate more returns. The sale of parts of the company is expected to generate more than two billion US dollars and thus significantly reduce the debt burden by the end of 2025, as the rival of tire manufacturer Continental announced on Wednesday in Akron (Ohio). The parts to be divested include the chemicals business, as well as the Dunlop tire brand and the off-road specialty tire business for mining trucks, for example.
The company's share price rose by seven percent in pre-market US trading, having already gained five percent the previous day.
The management estimates that the entire restructuring will cost 1.1 billion dollars. Net debt is to be reduced by around 1.5 billion dollars within two years as a result of the project, according to the statement. While the Group also identifies additional sales potential, Goodyear wants to reduce annual costs by one billion dollars by the end of 2025. This should double the operating margin to ten percent by the final quarter of 2025.
For comparison: Conti generates operating margins of around 13 percent with its tire division. However, the Hanover-based company is having problems with its automotive supply business - at the beginning of the week, it announced a cost-cutting program in the division, which is likely to result in the loss of a mid-four-digit number of jobs.
Goodyear had announced a review of its own strategy. The company will have to look for a new boss to implement it. The previous incumbent, Richard J. Kramer, spoke of a clear path to a more profitable and more focused company in view of the plans that have now been adopted. The manager, who has been at the helm of the company for 14 years, will retire next year. The Board of Directors is now conducting an internal and external search for a candidate.
In the past third quarter, the Group's turnover fell by a good three percent to 5.1 billion US dollars. In addition, Goodyear's day-to-day business was less profitable. On the bottom line, the company even posted a loss of 89 million dollars, compared to a profit of 44 million dollars a year earlier. The red figures were mainly due to the costs of a restructuring program in Europe, Australia and New Zealand./men/tav/mis