Goodyear Tire & Rubber Co. lost money in the first quarter largely because of expenses related to modernizing German tire factories.
The Akron tire maker also on Friday reported lower revenue for the quarter ending March 31, driven largely by currency translation and lower international sales.
Goodyear lost $61 million, or 26 cents per share, on revenue of $3.6 billion. That compares to net income of $75 million, or 31 cents per share, on revenue of $3.8 billion a year ago.
Adjusted income showed a profit of $45 million, or 19 cents per share, compared to $122 million, or 50 cents per share, for the first quarter of 2018.
Net income beat analyst expectations while revenue fell short.
Goodyear shares fell 35 cents, or 1.8 percent, to $19.22. Shares have ranged from a low of $17.30 to a high of $26.30 over the past 52 weeks.
“We gained momentum in the U.S. during the quarter, as our consumer and commercial replacement businesses both grew share, while increasing the value we capture in the marketplace,” Richard J. Kramer, chairman, chief executive officer and president, said in a prepared statement. “In addition, we took steps to increase our long-term competitiveness. The plans we announced to modernize our Hanau and Fulda manufacturing facilities in Germany will improve our supply of cost-effective premium tires in Europe, helping us achieve our goal of having the right tire, at the right place, at the right time, at the right cost."
Goodyear said it took $93 million in charges related to plans to modernize two German tire factories. Goodyear this year said it plans to spend $122 million to upgrade the plants to make larger, more profitable tires and will also cut 1,100 jobs at the factories.
Darren Wells, Goodyear’s chief financial officer, told industry analysts in a conference call that the German plant upgrades, which will include more automation, will take about three years to complete. The 1,100 job cuts will result in annual income improvements of $60 million to $70 million annually, he said.
Goodyear also will expand online tire sales following the launch of its consumer website, goodyear.com, in 2015, Kramer said.
“In June, we will launch our commercial e-commerce pilot marking another first for our company and industry,” Kramer said. “This new platform provides us with an opportunity to better meet the changing needs of commercial truck fleets and owner operators and increase the business and online competitiveness of Goodyear's commercial tire dealers.”
Goodyear’s TireHub distribution initiative in partnership with competitor Bridgestone Americas that was announced last year is working well, Kramer said.
First-quarter tire unit volumes totaled 38 million, down 3 percent from 39 million a year ago. Original equipment tire volume was down 7 percent, reflecting weaker U.S. volumes and lower automotive production in China and India. Replacement tire shipments were down less than 1 percent compared with a year ago.
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