Goodyear sees 11% 1Q drop in sales because of fire
Published by www.jamaicaobserver.com on May 16, 2007
May 16, 2007

Goodyear Jamaica Limited yesterday reported an 11 per cent drop in sales in first quarter results which, the tyre manufacturer said, were significantly impacted by a fire at its warehouse and offices on January 11.

"The first quarter was an unusual period for Goodyear Jamaica," said Steve Miller, general manager of Goodyear Jamaica. "Much of our efforts were concentrated on business continuity activities. However, we are very pleased with the customer service resulting from these activities. We thank our dealers for their support and understanding during this period."

Sales of $288 million were 11 per cent below the comparative quarter in 2006, primarily due to reduced product availability resulting from the fire, which destroyed a large percentage of Goodyear Jamaica's inventory.

The company posted a net loss of $3.8 million, compared to net income of $12.8 million a year ago. The results were impacted by increased costs associated with the quick import of tyres from other locations within Goodyear's global network and import duties paid on product that was re-exported to other markets in the Caribbean. The value of export duties paid totalled $17.1 million in the first quarter and is expected to be fully recoverable within the year, the company said.

"In addition, Goodyear Jamaica expects to receive insurance proceeds to compensate it for lost revenue and increased costs resulting from the fire," the firm said in a news release. "The company expects to have settlement by the third quarter of this year."

"In the immediate aftermath of the January fire, after securing the safety of our associates, our attention immediately turned to minimising the business impact on our dealers," said Miller. "Although some of our alternative supply sources were more expensive than our normal sources, we were able to sharply decrease the cycle time from product order to customer delivery, which minimised the impact on our dealers and on consumers."

Selling, general, and administrative costs of $34.3 million were 41 per cent more than 2006 due, in part, to fire-related office relocation expenses, Goodyear said.

"The prospects for the remainder of 2007 look positive as our fill rates continue to improve and our business strengthens its presence in the Jamaican market," said Miller.

Goodyear Jamaica Limited is a subsidiary of The Goodyear Tyre & Rubber Company, one of the world's largest tyre companies. The company manufactures tyres, engineered rubber products and chemicals in more than 90 facilities in 28 countries around the world and employs over 75,000 people worldwide.

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