BOSTON—Goodyear's executive team outlined a number of goals during a gathering of stock analysts in Boston on Sept. 15.
It intends to increase its annual segment operating income to $3 billion by 2020, up from $2.1 billion in 2016, and generate cumulative free cash flow of $4.3 billion to $4.9 billion from 2017 to 2020.
Richard J. Kramer, Goodyear chairman, president and CEO, said Goodyear is raising its quarterly dividend by 3 cents per share to 10 cents per share total, a 43 percent increase starting with the December 2016 payout, and is targeting a 2 percent shareholder yield long term.
“The tire industry is healthy, growing and offers attractive opportunities to grow profitably,” Kramer said.
“Our strategy is built to take advantage of key industry drivers including the transition to increasingly complex, large-rim diameter tires and the growing influence of empowered consumers in all aspects of the tire buying process.”
Kramer said Goodyear management believes the combination of the company's innovation and technology leadership, industry-leading products and strong global brand provides the company with a competitive advantage to execute its strategy and deliver on its performance targets.
“Our capital allocation plan demonstrates Goodyear's commitment to creating value by maintaining financial flexibility to execute our strategic plan, continuing to strengthen our balance sheet and investing for future growth while also providing significant direct returns to shareholders.”
In its presentation, the company showed it expects to have $7 billion to $7.4 billion available for capital allocation during the 2017-2020 fiscal years.
Of that, Goodyear is budgeting $1.8 billion to $1.9 billion for capital expenditures targeted at capacity expansions, $700 million to $800 million to restructurings, $3.5 billion to $4 billion for dividends and share repurchases and $800 million to $900 million to debt repayment.
These measures will help it meet its goals of creating shareholder value, the company said.
In addition to raising the dividend, Goodyear said it repurchased $563 million worth of shares June 30 and expects to buy back approximately $500 million more through year-end or early 2017.
Besides Kramer, others participating in the analysts meeting were Laura Thompson, executive vice president and CFO; Stephen McClellan, president, Americas; Jean-Claude Kihn, president, Europe, Middle East and Africa; and Christopher Delaney, president, Asia Pacific.