Goodyear Well Positioned Despite Economic Uncertainty
April 8th, 2008In his address at The Goodyear Tire & Rubber Company’s 2008 Annual Shareholder Meeting today, Chairman and Chief Executive Officer 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 and created positive business momentum.
“Our company’s product, brand and customer mix has become considerably richer. We are more focused on the premium segments of the global tire markets, which have relatively inelastic pricing dynamics,” Keegan said.
“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 tires. 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 $12 billion in 2006, are expected to fall to about half that in 2008. Goodyear has made significant improvements in its fixed cost structure, eliminating more than 25 million units of global high-cost tire production capacity since 2004.
“We remain diligent in our planning relative to economic conditions. 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,” he said.
Among the company’s 2007 accomplishments noted by Keegan were:
- Record revenue from continuing operations of $19.6 billion, 5 percent above 2006;
- An 8 percent increase in revenue per tire, driven by improved pricing and a richer product mix;
- A strike-adjusted 24 percent increase in segment operating income;
- Strong growth in the company’s emerging market tire businesses;
- A total debt balance that was $2.5 billion lower than at then endof 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, and
- 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 capitalizing 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 called Fortune magazine’s recent recognition of Goodyear as the world’s most admired motor vehicle parts company a “huge accomplishment” for associates.
“The world now has begun to recognize that something special is happening at Goodyear. This recognition by our industry peers is a source of pride for each of us,” he said.
