(Bloomberg) — Goodyear Tire & Rubber Co. tumbled the most since the beginning of the Covid-19 pandemic after the company said inflationary pressures are likely to continue this year, tarnishing a quarter in which results outpaced expectations.
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The tiremaker is grappling with several challenges, including rising costs, staffing difficulties and semiconductor shortages that are straining auto production, Goodyear executives said on an earnings call with analysts Friday. The company has countered rising expenses through productivity gains, but inflation will be above levels that Goodyear can offset at least through the first half of the year.
“We expect cost pressures to persist over the next several quarters,” Chief Executive Officer Richard Kramer said on a call with analysts.
Goodyear shares reversed premarket gains during the call and fell as much as 24% during regular trading in New York, the biggest intraday decline since March 2020. The stock was on pace to close at its worst one-day loss since 1987.
Friday’s drop came even though the company reported adjusted fourth-quarter earnings of 57 cents a share, far exceeding the 32-cent average of analysts’ estimates compiled by Bloomberg. Sales jumped to $5.05 billion, Goodyear said, also topping expectations.
Cash flow this year will be around break-even, Goodyear said on the call. Analysts had predicted $471 million in free cash flow.
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