CLEVELAND (Feb. 11, 2009)—Goodyear's fourth quarter 2008 earnings probably will be worse even than the 55 cents per share loss KeyBanc Capital Markets Inc. originally projected, according to an analysis by Saul Ludwig, KeyBanc's chief financial analyst.
Lower than expected sales caused Goodyear's unabsorbed overhead to be 6 million units more than expected, Ludwig said in a Feb. 11 update on Goodyear's outlook. The tire maker is likely to announce more production cuts globally in the first quarter of 2009 and possibly the second quarter as well, he said.
“CEO Bob Keegan's motto, 'Cash is king,' will likely be reinforced as cash is now even more important than earnings in the near term,” Ludwig said. The bottom line is that Goodyear needs to be more aggressive in closing high-cost plants in both Europe and North America, but the cash costs of such closures may cause delays, he said.
Goodyear will announce its fourth quarter earnings Feb. 18.