Shares of The Goodyear Tire & Rubber Company (NASDAQ:GT) are plummeting today after the company announced a slew of cost-saving measures amid a challenging macro environment and rising inflation.
GT is slashing its headcount by 5% or ~500 jobs worldwide. The demand for the global replacement tire industry has been weak and witnessed a 12% decline in EMEA. This means the company’s EMEA unit incurring an $80 million operating loss for the fourth quarter.
As a result of the cost rationalization actions, GT expects to incur pre-tax charges of ~$55 million and expects to realize a quarterly benefit of about $15 million from the second quarter. Previously, GT had disclosed plans to shutter its production unit in Melksham, U.K. and exit its TrenTyre retail activities in South Africa.
Further, the company is slated to announce its fourth quarter numbers on February 8 and analysts are estimating an EPS of $0.18 for the period. In the year-ago quarter, GT had posted an EPS of $0.57 versus the Street’s expectations of $0.33.
Overall, Wall Street has a consensus price target of $13.67 on GT, implying an 18.66% potential upside in the stock. That’s after a 45% slide in the company’s share price over the past year.
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