AKRON—A fire in August that damaged the curing area of its tire plant in Debica, Poland, likely will cut Goodyear's sales in its Europe, Middle East and Africa (EMEA) region by up to $40 million this year and cut operating income by as much as $30 million.
The fire on Aug. 20 "significantly" damaged a portion of the tire curing area and prompted Goodyear to idle the plant temporarily. Production resumed on Aug. 22 at roughly 55 percent of capacity, Goodyear said in an 8K filing with the Securities and Exchange Commission.
Since then the plant has ramped up to about 70 percent of capacity, Goodyear said, and is not expected to get back to full capacity until the fourth quarter of 2024 due to the lead time to replace the damaged equipment. The rated capacity at the 84-year-old plant is 48,000 units a day of passenger, light and medium truck, farm and industrial tires, according to the Rubber News Global Tire Report.
Goodyear said it is mitigating the impact on its customers by leveraging existing inventory and increasing production at other facilities. Goodyear has not disclosed the origin of the fire.
Goodyear said in the filing it expects lower EMEA consumer sales of $20 million to $25 million in the third quarter and $10 million to $15 million in the fourth quarter. It did not comment on potential shortfalls in 2024.
As for operating income, Goodyear said it will be impacted by the lost sales as well as unabsorbed fixed costs and other period expenses. The impact should be $10 million to $15 million in both the third and fourth quarters.
The company expects to provide an estimated impact to 2024 after confirming the restoration schedule.
Goodyear said it has third-party insurance with a $15 million per occurrence deductible that covers property damage, cleanup expenses and qualifying business interruption impacts.
The tire maker expects that "a significant portion" of the business interruption impacts to be reimbursed by insurance.
Goodyear acquired an ownership stake in the Debica plant in 1995 and took it over fully in 2009.