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Goodyear projects 14% rise in raw material costs

The Goodyear Tire and Rubber Company projected a 14% rise in the cost of its raw materials for the first half of 2022, to $800 million.

This estimate includes the benefit of raw material cost saving measures and excludes raw material cost increases related to Cooper Tire.

Historically, natural and synthetic rubber and other commodity prices have been volatile, and this estimate could change significantly based on future fluctuations in costs and changes in exchange rates.

In addition, Goodyera’s raw material costs reflect the impacts of wage, energy and transportation inflation affecting its suppliers.

The company continues to focus on opportunities to further improve the 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 seek raw materials. alternative premiums to minimize the impact of higher costs.

However, Goodyear too is balancing these priorities with the aim of increasing the certainty of its supply.

Goodyear

In the first half of 2022, the company expects price and product mix benefits to continue to outweigh the impact of higher raw material costs.

Goodyear expects the combined impact of these higher costs to negatively affect its first quarter of 2022 compared to the fourth quarter of 2021.

During 2022, the company expects to invest approximately $300 million in working capital as it continues to increase its inventory levels to meet customer demand and support service levels.

It also projects its capital expenditures to be between $1.3 billion and $1.4 billion.

Beyond the expenses required to maintain its facilities, capital expenditures in 2022 will increase capacity to address supply constraints and growing demand for even more complex tire designs.

Another of its estimates is that its cash flows from operating activities less capital expenditures will break even in 2022.

Finally, its results in 2022 will also be affected by approximately 40 million dollars of amortization of intangible assets related to the acquisition of Cooper Tire.

 

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