AKRON—Goodyear is moving ahead with plans that will result in a far different company in the future.
It will be a company that, if the Akron-based firm achieves everything it hopes, will include a more optimized portfolio, a doubling of its profit margin by the end of 2025 and a far less-leveraged company with much lower debt.
Goodyear also will have a new leader sometime next year, as Richard Kramer, chairman, CEO and president for the last 14 years, has informed the board that he will retire in 2024. Those retirement plans, Goodyear said today, previously had been discussed with the board, and the world's No. 3 tire maker has retained a leading executive search firm to execute a search considering both internal and external candidates.
The Akron-based tire maker today revealed its "Goodyear Forward" plan, which calls for a wide range of initiatives, including the potential sales of its chemicals/synthetic rubber business, the iconic Dunlop brand and its off-the-road equipment tire brand.
Goodyear projects the sale of those assets could bring in excess of $2 billion.
Other planned actions unveiled in a Nov. 15 news release and presentation to financial analysts include:
• Cost reduction actions that would bring annual benefits of $1 billion by the end of 2025;
• Top line actions in North America to optimize its brand and tier positioning, rationalize SKUs and drive other benefits that would create an annual benefit of $300 million by the end of 2025;
• With the benefits of the cost reduction and top line actions, see its segment operating income margin double to 10 percent by the end of 2025; and
• Increase its net leveraging position over that same time period through its strengthened financial profile, enhanced earnings, cash flow generation and debt reduction of about $1.5 billion—bringing Goodyear closer to an investment-grade rating.
"Our plan is a combination of the acceleration of existing projects and the initiation of new projects, all focused on sustainable value creation," Kramer said on the Nov. 15 investor's call. "Goodyear Forward is not just a great plan on paper, but a plan that is specific and actionable with detailed timelines and accountability that makes it credible and achievable.
"Management and all our leaders are aligned and working together and will be accountable for seeing the Goodyear Forward plans for our (future) will sharpen our focus, fuel profitable growth and dramatically strengthen our business."