Goodyear's Poland Facility Faces Fire Wrath, Expects EMEA Sales To Decline In Q3 & Q4

Goodyear Tire & Rubber Company GT provided an update on fire damage in its Debica, Poland facility and related financial impact on its earnings.

The company temporarily shut down its tire manufacturing facility in Poland facility following the fire outbreak on August 20 and resumed production at 55% capacity on August 22, which is now operating at about 70% capacity.

The company expects the full ramp-up of the plant not until Q4 2024 as damaged equipment needs replacement.

GT aims to mitigate the impact of lost production by boosting inventory and production at other existing facilities. 

Financial Impact: GT projects EMEA consumer sales to be negatively affected by $20 million- $25 million in Q3 and $10 million to $15 million in Q4 2023.

Moreover, EMEA's operating income is anticipated to be curbed by $10 million to $15 million in both Q3 and Q4 2023. 

GT will provide an estimated impact on 2024 earnings after the availability of a confirmed restoration schedule.

The company's insurance policy covers $15 million of damage per occurrence, which will reach the deductible limit in Q3 and projects a significant portion of the expense to be reimbursed by the insurance provider.

Also, this month, GT approved a rationalization plan in the Asia Pacific and proposed a reduction of around 700 positions, exiting nine warehouse locations and the sale of about 100 retail and fleet store locations.

The rationalization is expected to be finished by the end of 2024, and GT estimates total pre-tax charges from this of $55 million-$65 million.

Also Read: Redefining Roadprints: Goodyear Revamps Presence In Asia-Pacific With Strategic Shake-Up

Price Action: GT shares closed higher by 0.25% at $12.17 on Thursday.