The Goodyear Tire & Rubber Company (NASDAQ: GT) (“Goodyear” or the “Company”) today announced a transformation plan – “Goodyear Forward” – to optimize its portfolio, deliver significant margin expansion and reduce leverage to drive sustainable and substantial shareholder value creation. This plan follows a comprehensive evaluation by the Strategic and Operational Review Committee (the “Review Committee”) of the Board of Directors to evaluate all strategic, operational and financial opportunities to maximize value.
“Our transformation plan represents a clear path to create a more profitable and focused Goodyear,” said Goodyear Chairman, CEO and President Richard J. Kramer. “The Review Committee explored all value maximizing opportunities and identified specific, detailed initiatives to streamline our portfolio, expand margins and fortify our balance sheet, and do so with expediency. Building on our strengths, this plan will enable Goodyear to enhance and expand our leadership position, deliver profitable growth across markets, create significant value for our shareholders and – ultimately – lay the foundation for success for the next 125 years.”
“This plan is the result of a comprehensive, bottom-up assessment of Goodyear’s business, led by the Review Committee,” said Laurette T. Koellner, Independent Lead Director of Goodyear’s Board. “The full Board supports this plan and is confident it will deliver substantial and durable value creation for shareholders. We appreciate the constructive input of our shareholders throughout this process.”
On behalf of Elliott Investment Management, one of Goodyear’s largest investors, Senior Portfolio Manager Marc Steinberg and Portfolio Manager Austin Camporin said, “We believe the ‘Goodyear Forward’ transformation plan represents a significant set of steps toward a stronger and more profitable Goodyear. We thank Rich for his leadership and the Review Committee for its collaborative engagement, and we look forward to continuing our dialogue with the Company as it implements these initiatives and works to deliver the substantial upside value that we see for all Goodyear shareholders.”
The Review Committee consisted of five directors, including two new independent directors appointed in July 2023. Over the course of 16 weeks, the Review Committee engaged in deep analysis and deliberation with assistance from industry-leading financial advisors and consultants. The review culminated in a detailed and actionable plan to streamline the business, accelerate growth and enhance competitive positioning. The full Board will oversee the execution of the Goodyear Forward plan and remains committed to the ongoing assessment of value-enhancing opportunities. The Company will provide regular updates to shareholders on its progress executing the plan.
Goodyear Forward will deliver:
- Gross proceeds in excess of $2 billion from portfolio optimization. Following a comprehensive assessment of all assets, Goodyear has determined to actively pursue strategic alternatives for its Chemical business, the Dunlop brand and the Off-the-Road equipment tire business.
- Cost reduction actions driving an annual, run-rate benefit of $1 billion by the end of 2025. The Company has initiated a specific and actionable cost reduction plan encompassing footprint actions and plant optimization; purchasing; SAG; supply chain; and R&D. With many unique workstreams, Goodyear has a clear line-of-sight to 100% of the cost savings.
- Top line actions driving an annual, run-rate benefit of $300 million by the end of 2025. The Company has identified opportunities in North America to optimize brand and tier positioning, rationalize SKUs, increase customer and channel profitability and enhance coverage in premium product lines.
- Segment operating income margin doubling to 10% by the end of 2025. With the benefits of cost reduction and top line actions, and net of the impact of expected asset sales and inflation, the Company expects segment operating margin to double from approximately 5% in 2023 to 10% by the fourth quarter of 2025.
- Net leverage of 2.0x – 2.5x by the end of 2025. Goodyear will strengthen its financial profile through enhanced earnings, cash flow generation and debt reduction, moving the Company closer toward an investment-grade rating. The Company expects debt reduction of approximately $1.5 billion, net of approximately $1.1 billion for restructuring.
Rich Kramer to retire in 2024 after 24 years, 14 years as Chairman, CEO and President
AKRON, Ohio, Nov. 15, 2023 – The Goodyear Tire & Rubber Company (NASDAQ: GT) (“Goodyear” or the “Company”) announced today that Richard J. Kramer has informed the Board of his plans to retire as Chairman, CEO and President of the Company in 2024.
In connection with Kramer’s planned retirement previously discussed with the Board as part of the Company’s ongoing and active succession planning process, the Goodyear Board retained a leading executive search firm to execute a search considering both internal and external candidates.
During his tenure as CEO, Kramer led Goodyear’s evolution into a technology-driven mobility company and fortified the Company’s position as a leader in the global tire industry. Under his leadership, Goodyear delivered the five highest years of annual segment operating income in the Company’s history. He also led a transformation of the business to fully fund and de-risk its pension plans, reduce costs, streamline manufacturing and invest for growth. Notably, Kramer guided the Company through the COVID-19 pandemic and led Goodyear’s largest-ever acquisition – Cooper Tire – in 2021.
Kramer stated, “Reflecting on the past 14 years, it has been an incredible privilege to lead this iconic American company as Chairman, CEO and President. As we embark on our next stage of growth, I am confident that our Goodyear Forward plan will build an even stronger foundation for the next generation of leadership to continue paving the way for Goodyear’s enduring success. I am fully engaged in driving the successful execution of the plan and, with the support and involvement of the Board, will assist with the transition when my successor is identified. Over the coming months, we have substantial work to do to execute the Goodyear Forward plan to deliver profitable growth and value, leveraging our renowned leadership in brands, technology and premium products.”
“On behalf of our entire Board, I extend deep gratitude to Rich for his outstanding leadership and innumerable contributions to Goodyear over the course of his distinguished career. He successfully navigated Goodyear through a number of challenging cycles, including the aftermath of the financial crisis and the global pandemic. Throughout his tenure, Rich has led the Company with a clear long-term vision that positioned Goodyear as a leader at the forefront of the industry, with unmatched competitive advantages,” said Laurette T. Koellner, Independent Lead Director of Goodyear’s Board. “Consistent with Rich’s intent to retire and as part of the Board’s ongoing succession planning process, the Board is committed to a thorough, comprehensive and timely search to identify a proven leader with the skills and expertise to further advance the Goodyear Forward plan.”
Under Kramer’s leadership, Goodyear has been recognized among Newsweek’s Most Responsible Companies, Time’s World’s Best Companies, Fortune’s World’s Most Admired Companies and Forbes’ World’s Best Regarded Companies. Goodyear also has earned recognition for its commitment to sustainability and employment of military personnel and people with disabilities.