"Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw material costs could change based on future cost fluctuations and changes in foreign exchange rates," the company said in the SEC filing.
"We continue to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials to minimize the impact of higher raw material costs."
Conversely, the company said inflation and other costs will drive non-raw material costs to be $10 million higher in the second quarter than in the year-ago period.
The company said it expects a $35 million net benefit as a result of the recovery from a tornado on April 11, 2023, that rolled through Goodyear's manufacturing plant in Tupelo, Miss. The tornado idled operations at the plant for two months.
That number was offset, Goodyear said, by lower production at its plant in Debica, Poland, caused by a fire there in August in the curing area of the facility. Previously, Goodyear said sales in the Europe-Middle East-Asia (EMEA) region were cut by $40 million in 2023 and operating income by as much as $30 million.
Goodyear said it expects to see savings moving forward from the permanent closure of its tire manufacturing plant in Malaysia by year-end. The closure, which Goodyear called part of its strategy to improve profitability and reduce production costs, will result in a staff reduction of 550.
The company said total pre-tax charges are expected to be approximately $40 million ($20 million after minority), with approximately $16 million of that from cash charges primarily for employee-related and other exit costs. The rest represents non-cash charges primarily for accelerated depreciation.
Goodyear said it has accrued approximately $10 million ($5 million after minority) for this closure plan as of March 31, "which is expected to be substantially paid during the second quarter of 2024."
Goodyear reiterated in the filing that the Goodyear Forward transformation plan, implemented late last year, has resulted in approximately $75 million in segment operating income.
The company said it expects global tire unit volume in the second quarter to be flat compared with the 2023 period.
Goodyear said it expects unabsorbed overhead to be $30 million higher in the second quarter compared with the 2023 quarter, due to the production stoppage at the Tupelo facility.
