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Goodyear eyes gains in income for 2013

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AKRON—Goodyear is forecasting its consolidated segment operating earnings will increase by up to 20 percent this year despite only marginal growth in unit tire volume worldwide.

The Akron-based tire maker expects 2013 segment operating income to rise to $1.4 billion to $1.5 billion from $1.25 billion this past year on unit tire volume growth of low single-digit percentage, company executives told financial analysts Feb. 12 in a conference call detailing the firm's fiscal 2012 financial results. The 2012 segment operating income represents an earnings ratio of nearly 6 percent.

Goodyear expects to realize a net bottom-line benefit this year from lower raw materials costs. That gain could be as much as $175 million in the first quarter; the company did not quantify the benefit over the full year, however, citing the volatility of that market in the recent past.

In order to mitigate some of the impact of raw materials costs, Goodyear said it is focusing on price and product mix, on substituting lower-cost materials where possible, on reducing the amount of material required in each tire and pursuing alternative raw materials including innovative bio-based materials.

Additionally, Goodyear said its decision to close its Amiens, France, farm and car tire plant and exit the farm tire business in Europe/Middle East/Africa will boost that segment's operating income by about $75 million annually.

Richard J. Kramer, chairman and CEO of Goodyear, said the company's plan in Europe is focused in three areas: increase in share in the targeted market segments—such as ultra-high-performance tires and run-flats—accelerated growth in emerging markets, and driving productivity improvements in the supply chain, including manufacturing facilities.

On the sales side, Goodyear said it expects long-term growth globally but at a slower pace near-term due primarily to continued economic weakness in Europe.
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