LAS VEGAS (Jan. 28, 2000) — Goodyear still plans on becoming a $20 billion to $23 billion company by 2003, but don´t expect any major moves to occur in 2000.
Instead, look for the tire maker to digest and consolidate following last year´s strategic alliance with Sumitomo Rubber Industries Ltd.
That deal gave Goodyear control of Dunlop tire operations in North America and Europe, adding $2.5 billion in annual sales and 6 percentage points of global tire market share.
"This is a year when we get back to the basics of concentrating on sales growth in our existing businesses," said Chairman Samir Gibara during Goodyear´s annual dealer conference in Las Vegas.
It´s only natural to take a pause following a major acquisition before resuming a new round of expansion, he added.
Goodyear struggled last year in a number of areas. Its fill-rate level fell below 50 percent, angering tire dealers, its stock price slid precipitously, the company was dropped from the Dow Jones Industrial Average and its North American Tire unit posted an operating loss of $108.9 million in the third quarter.
"We had a bad year last year," Mr. Gibara acknowledged. "But that doesn´t take away from our ability to reach our sales goals."
Still, don´t expect to see the start of a turnaround in 1999´s financial results, which will be released Feb. 9.
"They will reflect neither the solid groundwork we have accomplished for the future nor Goodyear´s unquestionable underlying strengths," he said.
However, the first quarter of 2000 and each quarter thereafter will show improvement, the chairman said.
He also foresees an upswing later for the company´s stock price, which dipped from a mid-year high of about $65 a share to currently below $25.
The company´s removal from the Dow required millions of shares of Goodyear stock to be sold, creating a supply and demand imbalance and downward pressure on the stock price, Mr. Gibara said.
But he expects share demand will pick up as the company´s performance improves, the automotive industry regains favor with institutional investors and the selling by Dow fund holders slows by mid year.
In 2000, Goodyear will focus on four areas to become a better supplier, Mr. Gibara told dealers.
The first priority is consolidation and integration. "This is important to you in North America because we will be helping fill your needs for competitively priced, good-quality, value-line tires from our low-cost facilities in Eastern Europe and Turkey, as well as Brazil, Mexico and Venezuela," he said.
The company also will expand its aftermarket tire business faster than the original equipment segment to provide more replacement tires, higher fill rates, faster delivery and better service.
Goodyear will continue to modernize its plants and invest heavily in research and development to improve product quality, he said. The company also will continue its practice of sourcing products globally to meet local needs.
"In a nutshell, our corporate strategy for 2000 will reinforce our No. 1 position in our No. 1 market — North America," Mr. Gibara said.