Goodyear NZ narrows annual loss after shedding workers, exiting retailing
By Jonathan Underhill
June 11 (BusinessDesk) - Goodyear & Dunlop Tyres (NZ), the New Zealand unit of the biggest US tyre maker, narrowed its full-year loss after exiting commercial tyre and retread operations, firing workers and selling its Beaurepaires retail stores. The company's annual accounts were again tagged by its auditors.
The net loss narrowed to $1.68 million in calendar 2013, from a loss of $20 million a year earlier that included $10.4 million of restructuring costs, according to the company's annual report. Total revenue in the latest year tumbled 48 percent to $60 million.
Goodyear NZ's 2013 accounts show the company succeeded in slashing some costs as a result of restructuring. Wages and salaries dropped 65 percent to $8.5 million. Marketing expenses fell 60 percent to $1.2 million and operating lease rentals declined 46 percent to $4 million. Purchases from external parties fell 66 percent to $19 million.
"During the year, the company implemented new restructuring programs in addition to the execution of previously announced restructuring programs from prior years," the company said in notes to its accounts. "These programs include the exit of commercial tyre and retread operations, a reduction in headcount through involuntary redundancies and the exit of its company owned and licensing retail operations via a sale to an external third party."
Provisions in 2013 fell to $397,100 from $2.97 million in 2012. The company is funded through either a joint HSBC and ANZ bank facility with Goodyear & Dunlop Tyres (Australia), which is ultimately guaranteed by its US parent, or a loan from related party Goodyear Luxemburg. New York-listed Goodyear Tire & Rubber's shares have soared 83 percent in the past 12 months to recently trade at US$26.93 and are rated a 'buy' based on a Reuters analyst survey.
"Given the negative equity position, the directors have implemented various restructuring programs and believe that these measures undertaken and the access to funds noted above provide sufficient support to enable the company and group to meet its obligations as they fall due," the company said in notes to its accounts. As a result, the financial statements have been prepared on a going concern basis, it said.
The net loss for 2013 was the fourth in a row and auditors PricewaterhouseCoopers tagged the report with an 'emphasis of matter', referring to the latest loss and noting that total liabilities exceeded assets by $16.3 million as at Dec. 31. The excess of liabilities over assets and reliance on funding "indicates the existence of a material uncertainty that may cast significant doubt about the company and group's ability to continue as a going concern," the auditor says.
Last year Goodyear exited local retailing, selling 52 Beaurepaires retail stores and shifting 180 employees to Beau Ideal, owned by TyreLine Distributors’ founder Grant Rushbrooke. Beau Ideal would also take on Goodyear’s local retail marketing and licensing programmes. Goodyear sold its heavy commercial tyre service in 2012.
Larger rival Bridgestone New Zealand, the local unit of the world’s biggest tyre maker, posted a profit of $9.6 million for 2013, just down from 2012's decade high of $10.2 million, on sales of $219 million.