The Goodyear Tire & Rubber Co. held an investor meeting today when CEO and President Rich Kramer discussed strategies and goals for the next three years, plus the company’s capital allocation plan.
“We haven’t lost sight of where our balance sheet is and where our balance sheet needs to be moving forward,” said Kramer. “We are committed to creating shareholder value.”
Kramer said that Goodyear’s outlook for 2013 segment operating income is about $1.5 billion, with a target annual growth of 10-15% through 2016.
“Based on our confidence in the business, we are reconfirming our 2013 outlook of positive cash flow, excluding pension pre-funding, through 2016,” said Kramer. “In addition, Goodyear’s capital allocation plan includes the reinstatement of a quarterly cash dividend on its common stock and a $100 million share repurchase program.”
He said the company’s ongoing success and confidence in its strategies allow it to provide immediate returns through the common stock dividend and share repurchase program. Goodyear last paid a common stock dividend in December 2002.
Goodyear’s directors have declared a quarterly dividend of 5 cents per share of common stock. The dividend is payable Dec. 1, 2013, to shareholders of record Nov. 1, 2013. The payout represents an annual rate of 20 cents per share.
Kramer said Goodyear’s Asia business is strong, where the company’s new passenger and truck plant in Pulandian, China, is now fully operational. Goodyear’s Asia business is growing at both the consumer and commercial levels, with solid OTR and farm business in India.
“China is the fastest-growing consumer tire market in the world,” said Kramer.
With Goodyear’s Europe, Middle East and Africa (EMEA) business, Kramer said the company has restructured in response to a weak economy, including the closing of the Amiens North factory in France. The company also has implemented a profit improvement plan with targeted market segments, emerging market growth and productivity of between $75-100 million through 2015.
Kramer also covered Goodyear’s seven “megatrends” that were first announced in 2011. Kramer said the company was “right on” with those trends, and they are helping the company scope out a strong business plan.
“When I took this job, people asked me, ‘When is North America going to make a profit?’” said Kramer.
Steve McClellan, president for Goodyear North America, discussed strategies of how Goodyear has been turning the North American business around.
“Consumer replacement is strategically focused in targeted market segments that include high value-added (HVA) segments where consumers are willing to pay more for the value of Goodyear tires,” he said.
“One of our biggest distribution channels is the large regional retailer. Their original model relied heavily on private label products. The private label business was not profitable for us. We provided innovative branded products to meet HVA market demand, and the Goodyear brand generated demand for the retailer.”
Additional information from the presentation is available at Goodyear’s investor relations website at http://investor.goodyear.com.
