American tyremaker Goodyear was warned that its third-quarter earnings were likely to be much lower than initially expected due to lower demand and shipping disruptions after the terrorist attacks in the United States.
American tyremaker Goodyear was warned that its third-quarter earnings were likely to be much lower than initially expected due to lower demand and shipping disruptions after the terrorist attacks in the United States.
The company said there was less demand for replacement tyres now, while shipments to vehicle manufacturers had dropped six per cent from last year for consumer tyres and 30 per cent for commercial models.
“Our business, like many, saw an abrupt decline in demand after the attack,” Goodyear chief executive Sam Gibara said. “As a substantial portion of our third-quarter volume is shipped in September, our volumes will not be as strong as originally planned.”
Analysts had expected the Ohio-based company to earn 22 American cents, with estimates ranging between five cents and 35 cents a share, but third-quarter net income will fall to about five cents a share from 11 cents a year ago.
Goodyear shares fell 55 cents to $17.85 (R151). They have fallen 22 per cent this year.
The attacks on September 11 have caused consumers to rethink some spending, forcing manufacturers to cut production. This has had a huge effect on tyre sales.
Goodyear said it had already been forced to cut production last month due to less demand. This was despite Goodyear’ s market share gains and extra business from the Firestone tyre recall debacle. Firestone replaced 6,5 million tyres on vehicles, mainly Ford Explorers, last year after fears of tread separation. Goodyear said in August it had provided one million tyres for replacement on Ford vehicles affected by the recall.
The company said it was not sure about its fourth-quarter earnings. “Because of these unprecedented conditions and continued market deterioration in our major markets, we continue to assess the weakened outlook for the fourth quarter,” Gibara said.
