Keegan: Goodyear Well Positioned Despite Economic Uncertainty

In his address at Goodyear’s 2008 annual shareholders’ meeting on April 5, chairman and CEO Robert J. Keegan said the company is well positioned for future success despite economic uncertainty in 2008. This, he said, is the result of the determination and innovative thinking exhibited by thousands of Goodyear associates around the world that helped turn the company around.

“Our company’s product, brand and customer mix has become considerably richer,” said Keegan. “We are more focused on the premium segments of the global tire markets, which have relatively inelastic pricing dynamics. Our ability to generate top-line growth is underpinned by our product leadership strategy. We focus our industry-leading new product engine on increasing our mix of high-value-added tyres. The introduction of impactful new products to our portfolio globally raised the bar again in 2007.”

In addition, Keegan said the company’s total debt and legacy obligations, which peaked at more than US$12 billion in 2006, are expected to fall to about half that in 2008. Goodyear has made significant changes to its fixed cost structure, eliminating worldwide more than 25 million units of high-cost tyre production capacity since 2004. “We remain diligent in our planning relative to economic conditions,” Keegan added. “However, the improvements we have made in our go-to-market model, in our cost structure and in our balance sheet give me confidence that Goodyear is well positioned to continue to progress.”

Among the company’s 2007 accomplishments noted by Keegan were:

Record revenue from continuing operations of $19.6 billion, 5 per cent above 2006

An 8 per cent increase in revenue per tire, driven by improved pricing and a richer product mix

A strike-adjusted 24 per cent increase in segment operating income

Strong growth in the company’s emerging market tyre businesses

A total debt balance that was $2.5 billion lower than at then end of 2006

Growth at twice the industry rate for the Goodyear brand in North America

The highest operating income for North American Tire since 2000 after adjusting for strike impact

Significant progress against the company’s cost-savings targets

Keegan said he is pleased with the company’s progress. “We continue to drive initiatives that will accelerate the pace of change at Goodyear. We are now able to quickly adapt to the changing dynamics of our industry and look forward to capitalising on the changes our markets will present,” he added.

“Our associates are clearly delivering. We still have challenges ahead of us in an uncertain economy, but there is no question that we are on the right path. We know it, and our peers know it.”

Keegan also referred to Fortune magazine’s recent recognition of Goodyear as the world’s most admired motor vehicle parts company a “huge accomplishment” for employees. “The world now has begun to recognise that something special is happening at Goodyear. This recognition by our industry peers is a source of pride for each of us,” he said.