Goodyear targets high-profit segments over volume

ERJ staff report (DS)

Akron, Ohio -- Richard Kramer, CEO of Goodyear told analysts today that Goodyear has had in place since March 2011 a strategy of targetting high-profit tyre sements over volume. "Our focus on targetted market sements leads us away from volume for volume's sake," said Kramer. He added, "We will stay focussed on selected profitable segments."

Kramer said "We put a strategy out in March and we are going to stick to that strategy. That strategy is about focussing on our targetted market segments; on our branded business and on our innovative products."

Kramer repeated this as the corporate strategy across all segments of the business and said it was bringing results, both in terms of improved revenues per tyre and in terms of a defence against low-price imports.

The company said it saw record sales revenues, despite a small decline in the number of tyres sold. Kramer also said Goodyear has been succesful in offsetting cost increases -- including raw materials, labour and energy costs -- by improving the price/mix ratio.

Darren Wells, CFO, said Goodyear has been substituting different material in its compounds to reduce the impact of raw materials cost increases. He said the company has made savings of $47 million as a result of efforts to substitute lower-cost materials in its compounds and to reduce the amount of material required to produce each tyre.

Wells said Goodyear had sold 23 percent more winter tyres in Europe in the 2010/2011 period than in the previous season, which was partially off-set by a 5 percent decrease in Summer tyre sales in the region. He noted that sales of winter tyres in Europe have begun earlier this year (2011) than in previous years.

In North America, Kramer noted that inventory levels have recovered and the comapny is now comfortable with its levels of inventory. It does not expect to build levels further, but is now satisfied that its inventory levels give it the flexibility it needs to repsond to customer demands, and exects to benefit from stronger demand when consumer confidence returns to the North American market.

Kramer also noted that the company's plant in Dalian, China began making tyres for public sale during the month of June. he said the plant will double Goodyear's capacity over its existing factory, which is scheduled to close once the new plant is fully on stream.

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