Goodyear strategises to meet record $1.6 billion operating income target in 2013

Goodyear chairman and CEO Richard J Kramer says that the company has “a clear view of our destination as a business and well-defined strategies for driving value” as it strategises its path back to profit, having posted net losses of $216 million and $375 million in 2010 and 2009 respectively. The company believes that what it terms “seven MegaTrends” over the next five years to a decade will favour its approach, which includes a focus on high-profit segments. The company is holding an investor conference in New York today to discuss how to meet its target of $1.6 billion operating profit – a would-be record for the company – by 2013. The company also announced an operating income target of $450 million in 2013 for the North American Tire segment, as well as improved margins worldwide.

“Having momentum coming out of the deep economic recession, we are now positioned to confidently drive higher levels of performance across our businesses,” said Kramer. “We see the tyre industry being guided by seven MegaTrends over the next five to ten years. We believe these trends favor Goodyear and our well-established innovation capability. We have a clear view of our destination as a business and well-defined strategies for driving value going forward. Our focus will be winning in the segments where the highest profits are available for Goodyear and for our customers.”

Goodyear also outlined its expectations for the coming years. It anticipates making capital investments of between $1.1 billion and $1.3 billion per year in 2012 and 2013, up slightly from the $1.1 billion to $1.2 billion in 2011. Between $500 million and $600 million each year will be focused on “profitable growth opportunities through plant modernisations, expansions and new construction. These investments will support a 3 per cent to 5 per cent annual increase in unit volume, focused on high-value-added tyres in high-margin segments, Goodyear’s statement continued.

Goodyear also said that it expects to reduce its underfunded pension obligations to $1.2 billion — or by more than half — by 2013. It expects to make pension contributions of $550 million in 2012 and $525 million in 2013 in addition to contributions of approximately $275 million in 2011. As a result of these planned actions, the company’s pension expense is expected to decrease by $100 million a year by 2013.

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