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April 28, 1997 02:00 AM

GOODYEAR INCOME RISES IN QTR.: TIRE MAKER INCREASING REPLACEMENT MARKET FOCUS

Larry Wingert TIRE BUSINESS STAFF
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    AKRON—Goodyear's continued efforts to contain costs combined with increased sales volumes to produce a 12.3-percent jump in earnings on relatively flat sales for the first quarter of 1997, ended March 31. For the three months, Goodyear reported net income of $170.4 million, compared with $151.8 million a year ago, while sales slipped to $3.23 billion from $3.25 billion in the 1996 quarter.

    Company Chairman and CEO Samir G. Gibara discussed the results during Goodyear's annual shareholders meeting April 14 in Akron.

    Goodyear's worldwide tire unit sales rose 3.6 percent during the quarter—3.3 percent in the U.S. and 3.9 percent internationally, but sales for the tire segment sagged 0.7 percent to $2.75 billion, which the company attributed to competitive pricing and a stronger U.S. dollar.

    First-quarter sales in the U.S. slid 1.2 percent to $1.71 billion, though operating income climbed 10.7 percent.

    In Canada, Goodyear's sales for the three months grew 4.5 percent to $174.1 million, while operating income soared 83.9 percent.

    Mr. Gibara told shareholders Goodyear is on the right path toward achieving its mission: ``to be ranked by all measures as the best tire and rubber company in the world, and... to regain our position as the undisputed leader in the industry.''

    As it approaches the 21st century, Goodyear has set two major goals, Mr. Gibara said:

    ``"First, to ensure fast and profitable growth in all of our core businesses. Our objective is to hold a No. 1 or No. 2 position in all of the industries and in each of the markets in which we participate... .

    ``"Second, to be the lowest cost producer of the three global players in the tire industry (Goodyear, Bridgestone Corp. and Group Michelin).''

    One of the company's strategies for growth is to focus on increasing Goodyear's share of the larger, more profitable and more stable replacement tire market worldwide, ``without compromising our strong (original equipment) position,'' Mr. Gibara said.

    Another is to be able to introduce new products faster than competitors can. Goodyear is embarked on a three-year program to reduce the cycle time between concept and market by 40 percent, Mr. Gibara said.

    A third strategy is to expand the company's worldwide distribution base. Last year, Goodyear expanded its North American distribution by more than 10 percent, Mr. Gibara said, adding about 1,200 retail tire outlets carrying the Goodyear brand.

    The tire maker also has undertaken a multi-year program to improve its company-owned retail stores, he said, ``that includes investment in modernizations and new formats to make these operations state-of-the-art and more profitable by the year 2000.''

    Goodyear's remaining growth strategies involve stepping up its acquisition and joint venture activities, as well as redeploying non-core and underperforming assets, Mr. Gibara said.

    At a press conference following the meeting, Mr. Gibara said he believed Goodyear's relations with its independent dealers have improved markedly over the past three years, and are probably as strong as they've ever been.

    Still, he said, ``It's not our obligation to love our dealers. Our obligation is to make them competitive.''

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