BOSTON—Goodyear is budgeting nearly $800 million through 2019 to boost production capacity for high-value-added tires in a bid to stay ahead of the demand curve for such tires.
Officials at the Akron-headquartered company disclosed the expansion projects—slated at plants in the U.S., Mexico, South Africa, China and India—during a briefing with financial analysts in Boston Sept. 15.
Goodyear's top executives also unveiled a growth and capital allocation plan that targets $3 billion in operating income by 2020 and between $4.3 billion and $4.9 billion in free cash flow through 2020. The firm's operating income goal is up from $2.1 billion in 2016.
It expects to have $7 billion to $7.4 billion available for capital allocation during the 2017-20 fiscal year periods.
Of that, the firm is budgeting $1.8 billion to $1.9 billion for capital expenditures targeted for capacity expansions, $700 million to $800 million for restructurings, $3.5 billion to $4 billion for dividends and share repurchases, and $800 million to $900 million for debt repayment.
The tire industry is healthy and growing with opportunities to grow further, according to Richard J. Kramer, chairman, CEO and president.
Goodyear's strategy is built to take advantage of key industry drivers, he said, including the transition to complex, large rim diameter tires and “influence of empowered consumers in all aspects of the tire buying process.”