S&P shifts Goodyear outlook to negative

S&P said it changed its outlook for Goodyear Tire & Rubber Co. to negative from stable and affirmed the BB- ratings on the issuer and its senior unsecured debt.

“The negative outlook reflects our expectation that credit metrics will remain weaker than previously expected and the risk that they could weaken further should consumer demand for Goodyear's products materially fall over the next 12 months.

“Goodyear's fourth-quarter performance was significantly weaker, primarily in Europe. The replacement market was especially weak (down 13.7% for Goodyear in Europe) and margins fell significantly due to a worse mix (less high-margin winter tires), higher input costs (especially energy), and higher unabsorbed overhead costs,” S&P said in a press release.

The agency warned it could downgrade Goodyear if it does not sustainably boost its FOCF to debt above 5% while keeping debt to EBITDA under 5x.

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