2013 investor day - goodyear corporate ?· tire business •china consumer capacity still under...

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  • 2013 Investor Day

    September 20, 2013

  • Forward-Looking Statements

    Certain information contained in this presentation constitutes forward-looking statements for purposes of the

    safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors,

    many of which are beyond our control, that affect our operations, performance, business strategy and

    results and could cause our actual results and experience to differ materially from the assumptions,

    expectations and objectives expressed in any forward-looking statements. These factors include, but are not

    limited to: our ability to realize anticipated savings and operational benefits from our cost reduction initiatives

    or to implement successfully other strategic initiatives; increases in the prices paid for raw materials and

    energy; pension plan funding obligations; actions and initiatives taken by both current and potential

    competitors; deteriorating economic conditions or an inability to access capital markets; work stoppages,

    financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital

    expenditures; a labor strike, work stoppage or other similar event; our failure to comply with a material

    covenant in our debt obligations; potential adverse consequences of litigation involving the company; as well

    as the effects of more general factors such as changes in general market, economic or political conditions or

    in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and

    Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and

    current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of

    today and should not be relied upon as representing our estimates as of any subsequent date. While we

    may elect to update forward-looking statements at some point in the future, we specifically disclaim any

    obligation to do so, even if our estimates change.

    2

  • Agenda

    Rich Kramer Chairman and CEO

    Overview

    Industry MegaTrends

    Strategy

    Steve McClellan President North America

    Operational Update

    Darren Wells Executive Vice President and CFO

    Financial Outlook

    Capital Allocation Plan

    Question/Answer Goodyear Management

    3

  • Meeting Highlights

    4

    Based on our confidence in the business

    Reconfirming 2013 outlook

    SOI of about $1.5 billion

    Positive cash flow (excluding pension pre-funding)

    Targets through 2016

    Annual 10-15% SOI growth per year through 2016

    Annual positive cash flow (excluding pension pre-funding)

    Targeting 2.5x Adjusted Debt / EBITDAP by 2016

    Balanced Capital Allocation Plan

    Dividend and stock buy-back plan beginning Q4/2013

  • 5

    Shareholder Return Program

    Shareholder return program demonstrates strong commitment

    to shareholders and confidence in strategy

    Reinstating regular dividend: $55 million per year

    $0.05 per share quarterly dividend beginning in fourth quarter

    Anticipate increases over time

    Establishing share repurchase program: $100 million

  • Q2/2013 Highlightsthey are worth repeating

    Record segment operating income of $428 million(a)

    All business units achieved higher year-over-year SOI

    All-time records for North America and Asia Pacific

    Three business units posted higher tire unit volumes versus last year

    Strong cash flow

    Cash flow positive in Q2 and continued progress managing working capital

    Pension underfunded status benefitting from higher interest rates

    Increasing confidence in 2013 targets

    SOI expected of about $1.5 billion, at high end of original $1.4 - $1.5 billion range

    Cash flow positive (excluding pension pre-funding)

    6 (a) See Segment Operating Income reconciliation in Appendix on page 66.

  • Strategy Roadmap

    Where We Are

    Key How Tos

    Our Destination

    Key Strategies

    #4

    Industry

    MegaTrends

    #1

    #3

    #5 #2

    7

  • 8

    Where We Are #1

    September 2013 March 2011

    11 Industry Growth = ~10%

    Natural Rubber = $2.38

    Euro = $1.42, Real = 1.67

    13 Industry growth = ~1%

    Natural Rubber = $1.11

    Euro = $1.35, Real = 2.21

    Weaker demand

    Lower raws

    Stronger $

    Coming off of 2010 at $917 million

    of SOI with margin of 4.9%(a) Expect to finish 2013 at ~$1.5 billion

    SOI with margin of ~7.5%

    North America at essentially

    breakeven SOI N. America approaching $600 million

    SOI and creating economic value

    Pension risk over-shadowing

    the tire company Clear path forward on pension

    performance based on underlying

    tire business

    China consumer capacity still under

    construction; truck not yet begun China consumer and truck plant fully

    operational, and Asia at record SOI

    Targeting cash flow positive Cash flow positive and dividend

    paying company

    Great progress.in challenging environment (a) See Segment Operating Income and margin reconciliation in Appendix on page 66.

  • Key Strategy: NA Profitability

    Strong business performance

    Trailing 4 quarters approaching $600

    million of SOI, far exceeding original

    $450 million target

    Despite weak-volume tire industry

    Consistent business momentum

    16 straight quarters of year-on-year SOI

    improvement

    Excellent execution of Goodyear strategy

    Market-back innovation excellence

    Target profitable market segments

    Operational excellence & enabling

    investments

    USW contract recently extended into 2017

    Sustainable business that is creating value

    9

    Record

    Terms: Trailing 4 Quarters of SOI in $ millions

    #2

  • Key Strategy: Win in China

    High growth business (ex. ANZ) ... with excellent long term prospects

    Winning in China

    New passenger and truck plant fully

    operational

    Solid return on our CapEx investment

    Gaining share

    Record SOI in Asia

    After working through natural disaster

    (i.e., Thailand flood) and plant start-up

    costs

    Broad Asian business

    Growing consumer & commercial

    Solid off-the-road and farm (India)

    Restructuring in Australia/New Zealand in

    response to weak economic conditions

    10

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    12.0%

    14.0%

    $0

    $50

    $100

    $150

    $200

    $250

    $300

    $350

    $400

    Q4/10

    Q1/11

    Q2/11

    Q3/11

    Q4/11

    Q1/12

    Q2/12

    Q3/12

    Q4/12

    Q1/13

    Q2/13

    SO

    I a

    s %

    of

    Re

    ve

    nu

    e

    SO

    I in

    $

    m

    illio

    ns

    SOI: AsiaTerms: Trailing 4 Quarters of SOI in $ millions

    Record

    Factory

    start-up

    #2

  • Key Strategy: Continued Success in LA

    High margin business on the road to recovery

    Team responding to market transition

    Closed open markets

    - Primarily local manufacturing

    local and significant imports

    - Monobrand multibrand

    distribution

    Back to the basics of open market

    Innovation via exciting new products

    Increased HVA capability (Americana)

    Solid marketing programs

    Working through challenges of Venezuela

    and Argentina

    Evidence of recovery

    Experiencing volume growth

    3 straight qtrs of yr-on-yr SOI growth

    Renewed

    11

    Recovery

    underway

    Terms: Trailing 4 Quarters of SOI in $ millions

    #2

  • Key Strategy: Continued Success in EMEA

    Developing recovery planfull journey will take several years

    Renewed

    Struggling in weak economy

    Restructuring in response

    o Amiens North closure ($75 million)

    o Profit Improvement Plan

    1. Target Market Segments

    2. Emerging Market Growth

    3. Productivity ($75-$100 million

    2013-2015)

    Not backing off innovation

    Technology strength evidenced by

    industry-leading Summer Tire labels

    Our recovery plan is targeting a return

    to historical margins by 2016

    12

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    7.0%

    8.0%

    9.0%

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700

    $800

    Q4/10

    Q1/11

    Q2/11

    Q3/11

    Q4/11

    Q1/12

    Q2/12

    Q3/12

    Q4/12

    Q1/13

    Q2/13

    SO

    I a

    s %

    of

    Re

    ve

    nu

    e

    SO

    I in

    $

    m

    illio

    ns

    SOI: EMEA

    Recovery (early signs)

    Terms: Trailing 4 Quarters of SOI in $ millions

    Historical

    Margin (6-7%)

    #2

  • 13

    Our Destination

    #3

    Segment Operating Income(a) $ in millions

    Our performance provides confidence in achievability of Destination

    (a) See Segment Operating Income reconciliation in Appendix on page 66.

  • Our Destination

    Strategy leads to sustainable g

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