Goodyear Releases Monthly Investor Update
19 December 2000
Goodyear Releases Monthly Investor Update
AKRON, Ohio, Dec. 19 Goodyear's Investor Relations
department today published its monthly update for individuals interested in
tracking Goodyear's progress on a more frequent basis.
Operating Highlights
North American Tire
* Goodyear's November shipments to the replacement tire market were well
above the industry shipments increase of about 5 percent year-over-year.
Shipments of the Goodyear brand continued to set high records for the
third consecutive month.
* Original equipment tire shipments in November decreased for Goodyear and
for the industry. This was due primarily to production cutbacks at
DaimlerChrysler.
* The original equipment and replacement commercial truck tire markets for
Goodyear and the industry continue to deteriorate.
* Petro-chemical raw material prices remained high in November, while
natural rubber prices edged up from their October level.
* Price increases have been announced in the replacement market and their
positive impact should be felt in the first quarter of 2001. Original
equipment price negotiations are expected to conclude within the next
few weeks. These increases are intended to offset the substantial
recent cost increases of raw materials, labor and energy.
European Union
* Replacement market sales, especially for snow tires, were very soft in
all major countries due to abnormally warm temperatures throughout
Europe. Industry shipments of winter tires are reported to be at their
lowest level since 1989.
* The phase out of the Dunlop Birmingham plant in the UK continued to
negatively affect conversion cost in November. However, the phase out
was completed at the end of November.
* Exchange issues due to the euro's weakness continue to adversely impact
financial results. At the end of October and November, the euro was at
0.84 and 0.87 respectively to the U.S. dollar, below our projected
exchange rate of 0.88 for the fourth quarter.
* A 3.5 percent to 6 percent price increase for consumer replacement auto,
light truck, farm and earthmover tires has been announced in all Western
European countries and should result in higher pricing early next year.
Eastern Europe
* Due to unseasonally warm weather, snow tire sales softened in November
in Central and Eastern Europe.
* The severe economic crisis in Turkey has brought consumer demand to a
virtual standstill. Also, South Africa's economic deterioration has
caused retail sales to slow.
* An average price increase of 4 percent for all product lines was
effective Nov. 1, 2000, in all countries of the region except Turkey.
Latin America
* Original equipment volumes primarily increased over last year.
* Operating results continue to be impacted by raw material cost increases
as well as a weaker Brazilian real.
* Efforts are being made throughout the region to improve pricing while
additional cost-cutting measures are being implemented to recover
margins.
Asia
* Original equipment shipments for November were up significantly over
last year. However, replacement sales in the Asean countries continue
to suffer from Chinese low-cost imports.
* Competitive pricing pressures affected margins.
Engineered Products
* In November, weak global demand for conveyor belts, hoses and power
transmission products significantly impacted sales volumes and margins.
Sales of automotive products were particularly low due to reduced
original equipment production schedules.
* Production cutbacks were necessary to balance inventories.
Chemicals
* Raw material prices remained high in November causing a negative impact
on the division's financial performance.
Corporate Highlights
* In a cost cutting move, Goodyear is offering a voluntary early
retirement package to about 8.5 percent of its U.S. white-collar
workforce, or about 700 associates. About half of the reductions would
occur at Goodyear's Akron, Ohio, headquarters, with the other half at
locations across the U.S. Other significant reductions have been
announced in Eastern Europe, Latin America, Asia and Australia. These
moves are part of a worldwide effort to reduce costs.
* In November, Goodyear received notice from National Highway
Transportation Safety Agency that it will conduct a preliminary
evaluation of its Load Range E light commercial tires. Goodyear
constantly monitors the performance of its tires and is confident that,
put in proper perspective, all of its Load Range E tires on the road
today have excellent durability and performance. For the latest
information see Goodyear's website at http://www.goodyear.com
* In November and December, Fitch, Standard & Poor's and Moody's lowered
their ratings on Goodyear's debt. These rating actions concluded a
review that commenced in Sept. 2000. The agencies noted the difficult
economic and marketplace conditions around the world, including rapidly
escalating raw material and energy costs as well as the weak euro.
This news release contains forward-looking statements based on current
expectations and assumptions that are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed by such
statements. These risks and uncertainties include price and product
competition, customer demand, the ability to control costs and expenses,
general industry and market conditions and general domestic and international
economics, including interest rate and currency fluctuations.