By Denna Bowman
Goodyear tyres have issued a warning that its global pension plans are “significantly under-funded” and attempts to fill the hole could put the 110-year-old business at risk.
The heavily-indebted US tyres manufacturer confirmed in a Securities and Exchange Commission filing that it planned to contribute between £178 million and £210 million to its global pension plans in 2010.
However, this is dramatically less than the £278 million it allocated to its US and non-US pension schemes last year. Goodyear also said that pension expenses could “materially increase” in the future if funding levels declined further.
The unfunded amount of the projected benefit obligation for the firm’s US plan was around £1.3 billion as of the end of 2009 and £484 million for its non-US scheme.
Goodyear said: “The current underfunded status of our pension plans will, and a further material increase in the underfunded status of the plans would, significantly increase our required contributions and pension expenses, which could impair our ability to achieve or sustain future profitability.”
Goodyear reported an annual net loss of £242 million for 2009, blaming weak commercial truck demand, high raw material costs and pension expenses.