AKRONGoodyear's management told shareholders at their annual meeting in Akron on April 13 that the company is targeting long-term growth through a balanced approach of investing in our business and carefully managing costs.
Chairman and CEO Richard Kramer noted the tire maker achieved record annual segment operating income of $1.7 billionan 8-percent increase over 2013and generated $1 billion of free cash flow from operations.
These results help fuel our capital allocation plan, which balances investing in our business, paying down debt, and returning cash to shareholders, he said.
In 2015, our market-back innovation will not be limited to tires. As you likely have heard, Goodyear will become the first tire manufacturer in the U.S. to start selling consumer replacement tires online; in fact, we will launch the first phase of our roll-out this week.
This new buying option will allow consumers to purchase tires online and have them installed by authorized dealers in our industry-leading distribution network.
The preference for buying goods and services onlineoften through mobile devicesis being driven by a new generation of consumers. In the U.S. alone, 80 million Millennials with $1 trillion in buying power are entering the market. By embracing digital technology to simplify the tire buying processand keeping our network of aligned dealers as an integral part of the processwe believe we will be the industry leader in this space and with these new consumers, he said.
Mr. Kramer also noted that the company's new tire plant, to be built in a yet-to-be-announced location in the Americas, will support market growth in both North America and Latin America. (At Tire Business' presstime April 23 , an unconfirmed Reuters story said Goodyear plans to build the factory in Mexico. A Goodyear spokes-man would not comment on the report.)
We expect our new, state-of-the-art manufacturing plant to come on line in 2017 and will provide us with more of the high-value tires consumers are increasingly demanding in those regions, he added.
Goodyear grew its market share in Brazil and Mexico with a double-digit increase in consumer replacement volume as it revamped its portfolio to take advantage of the MegaTrend shift to HVA products, he said.
Meanwhile, winning in China is at the heart of our strategy in Asia, and we recently opened a new development center in Pulandian (China) to strengthen our competitive position in the world's fastest growing tire market. The new facility will give us an advantage in the marketplace and help us build closer relationships with OEMs in China to increase the speed to market and meet their needs faster and more efficiently, Mr. Kramer told shareholders.
The Europe/Middle East/Africa market remains our most challenging business, he admitted.
We had year-over-year segment operating income growth of $140 million in 2014. Our product leadership in the region was confirmed by strong third-party endorsements and our continued leadership in European tire labeling. The Goodyear EfficientGrip Performance tire recently earned 'double-A' grades for wet grip and fuel efficiency, the highest grade possible according to EU standards. We expect to add more AA tires to our highly graded portfolio in 2015.
During the meeting, shareholders re-elected 13 members of the company's board of directors to one-year terms. They also approved amendments to Goodyear's Articles of Incorporation and Code of Regulations to reduce the voting standard to remove directors, to eliminate cumulative voting and to reduce the voting standard for certain business combination transactions.
They also voted to ratify the appointment of PricewaterhouseCoopers L.L.P. as Goodyear's independent registered public accounting firm for 2015.
A shareholder proposal regarding simple majority voting was not approved. In an advisory vote, shareholders approved the compensation of the tire maker's named executive officers.