Goodyear moves to improve shareholder yield - draft

Boston, Massachusetts – Goodyear is raising its quarterly dividend by 3 cents per share, starting with the December 2016 pay-out, and is targeting a 2-percent shareholder yield longer term, company executives told a gathering of stock analysts in Boston 15 Sept.

“The tire industry is healthy, growing and offers attractive opportunities to grow profitably,” Chairman, CEO and President Richard 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.”

The quarterly dividend increase – to 10 cents a share – represents a 43-percent increase.

Akron-based Goodyear’s executive team also outlined a number of goals, including raising the annual segment operating income to $3 billion (€2.7 billion) by 2020 from $2.1 billion in 2016 and generating cumulative free cash flow of $4.3 billion to $4.9 billion from 2017 to 2020.

Kramer said Goodyear management believes the combination of the company’s innovation and technology leadership, industry-leading products and strong global brand “provide us with a competitive advantage to execute our strategy and deliver on our 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 through June 30 and expects to buy back approximately $500 million more through year-end or early 2017.

Besides Mr. 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.