Steven Miller, general manager of Goodyear Jamaica, pitches the Goodyear Wrangler tyre in this July 16, 2007 Gleaner photo, in Kingston. - Rudolph Brown/Chief Photographer
Goodyear Jamaica Limited has decided to end its four decade run in Jamaica, saying this week it will wind up the company once shareholders approve the move.
The move comes 11 years after the company stopped making tyres here at its plant in St Thomas, choosing instead to import from connected operations for resale.
The vote is set for December 19 at an extraordinary meeting in Kingston. Shareholders will be asked to approve Anura Jayatillake and Audley Gordon of Deloitte TouchTohmatsu as joint liquidators at a fee of $1.5 million plus "costs, charges and expenses".
2007 fire
Goodyear Jamaica has been struggling to regain its footing following a January 2007 fire that erased its inventory.
Equity in the company is now valued at $467.9 million, down from $471 million at December 2007. Its stock market value as at Tuesday was $178.2 million or $3 per share.
The stock was trading at $4 and above a month ago.
The fire actually gutted the warehouse of the tyre company's sole distribution agent at the time, Tyre Sales and Services Limited - a company owned by Neal & Massy Holdings of Trinidad - and while Goodyear has since contracted a new partner, the interruption of business and reformulation of its distribution network has taken heavy toll on its bottom line.
The slump
Losses, however, were down to $2.98 million in the nine-month period to September 2008, com-pared to a $9.2 million deficit in the comparative 2007 period. The third quarter contributing $3.9 million to the slump in each of the two periods.
Goodyear's general manager Steven Miller, citing disclosure rules, was unwilling to offer much detail on the winding up of the company, whose main role has been marketing and oversight of regional markets.
"At the extraordinary general meeting, shareholders will vote on a resolution to liquidate Goodyear Jamaica Limited's assets," said Steven Miller, general manager of Goodyear Jamaica Limited.
"Once the requisite number or percentage of shareholders vote in favour of liquidation, the business of the company changes and a liquidator is named who will collect all moneys owed to the company and pay off all debts owed by the company and distribute the remainder to the shareholders."
Goodyear's assets totalled $686 million at September 30 - down from $806 million - while liabilities amounted to $218 million.
Fixed assets were valued at $9.4 million, intangibles at $10.8 million, and retirement benefits at $78.4 million.
The company's balance sheetwas most heavily weighted in liquid assets of $587.8 billion, for which no break-out was provided in the unaudited nine-month accounts.
Miller gave no specific reason for seeking voluntary liquidation, but Goodyear has been faced with year-over-year decrease in profits.
Within the current period, year to date September, its expenses have ballooned, while sales have largely been flat.
The bright spot for the company was gross profit which rose from $71 million to $102 million, but the advantage gained was totally erased by heavier expenses in the nine-month period.
Goodyear spent $115 million on marketing and administration, up $20 million year on year.
The result was operating loss of $4.5 million, but even this outcome was tempered by savings on cost of sales, resulting in a two third cut in operating loss from $13.8 million in the 2007 period.
Revenue in the third quarter dropped off by 10 per cent, from $327.6 million to $292 million.
Still topline income was up over the nine month period though negligibly so - moving from $916 million to $930.6 million, a 1.6 per cent increase.
The fall off in profitability factored in the decision by Goodyear to quit Jamaica after 40 years, but it was not, as Miller noted, the only consideration.
"The decline in company profit is a data point ... but there are multiple data points that helped to drive the board to its recommendation," he said.
Since fire gutted Tyre Sales' warehouse, the company has not been able to recover.
Goodyear, whose annual revenues top $1.2 billion, made net profit of $13.6 million at the end of 2007, but this was about half of the $25.4 million recorded in 2006.
In 2007, export revenues grew 20 percentage points to 53 per cent of total revenue, but domestic revenue decreased by 19 per cent.
New marketer
Just two months ago, in September, Goodyear Jamaica named Tropical Battery as its new marketer and distributor, saying that the move will free up Jamaica to focus on oversight of all its businesses in the Caribbean.
Miller said this week that it was too early to comment on how the regional business would be handled once the Jamaican company is wound up.
"I can't speak to the regional model now," he said, "It would be speculation at this point."
But: "Closer to December 19, with greater disclosure of what will happen, we will have clearer definition on those activities," he said.
Presently, Goodyear Jamaica provides marketing and adminis-trative support for the Eastern Caribbean, which includes primary markets of Trinidad and Tobago, Barbados, as well as Haiti and Cayman Island.
"Right now it's business as usual," said Miller
"Goodyear is focused on supplying customers with quality products and services and will continue to do so ... and we are sure that Tropical Battery will satisfy consumers' needs," he said.
Goodyear Jamaica is a subsidiary of Goodyear Tire & Rubber Company based in the United States.
The parent holds 35.64 million or 60 per cent of the 59.4 million issued shares.
sabrina.gordon@gleanerjm.com
TOP 10 SHAREHOLDERS
1. Goodyear Tire & Rubber Company - 35.64 million shares
2. MF&G Trust & Finance Ltd A/C No 528 - 1,017,203 shares
3. National Insurance Fund - 967,662 shares
4. LOJ PIF Equity Fund - 901,853 shares
5. Albert Gordon - 801,771 shares
6. First Jamaica-HEART/NTA Pension Scheme - 649,000 shares
7. Guardian Life Limited/Pension Funds - 628,940 shares
8. Global Insurance Company - 542,796 shares
9. NCB Capital Markets Ltd A/C 2231 - 500,000 shares
10. MF&G Trust & Finance Limited A/C No 57 - 476,634 shares.
