Goodyear announces restructuring of Australian and New Zealand operations
Akron, OH – On September 19, 2023, The Goodyear Tire & Rubber Company filed with the United States Securities and Exchange Commission their rationalization plan in Asia Pacific to improve profitability in its Australia and New Zealand operations. The proposed plan will change the Company’s operating model to a third-party distribution and retail sales model instead of a company-owned approach. The proposed plan will lead to a reduction of approximately 700 positions, the exit of nine warehouse locations, and the sale or exit of approximately 100 retail and fleet store locations. The proposed plan remains subject to consultation with employee representatives. This rationalization plan is a part of a broader set of actions the Company expects to take in order to fundamentally streamline its business, improve its competitive position and drive growth. The Company expects that it will share this broader plan with investors during the fourth quarter.
The Company expects to substantially complete this rationalization plan by the end of 2024 and estimates total pre-tax charges associated with this action to be between $55 million and $65 million, of which $40 million to $50 million are expected to be cash charges primarily for associate-related and lease exit costs, with the remainder primarily representing non-cash charges for accelerated depreciation and other asset-related charges. The Company expects to record approximately $20 million of pre-tax charges in the third quarter of 2023 and approximately $5 million of pre-tax charges in the fourth quarter of 2023 related to this plan. The majority of the remaining charges will be recorded in 2024. The majority of the cash outflows associated with this plan will occur in 2024.
These actions are expected to improve Asia Pacific’s segment operating income by approximately $50 million to $55 million in 2025 and annually thereafter, primarily through a reduction of selling, administrative and general expenses.