Goodyear: Net impact of SRI breakup positive

AKRON (June 5, 2015) — Goodyear expects the dissolution of its global business alliance with Sumitomo Rubber Industries Ltd. (SRI) to reduce its segment operating income by $10 million to $20 million in fiscal 2016 but increase net income by up to $50 million, Goodyear Executive Vice President and CFO Laura Thompson told financial analysts this morning.

The Akron-based tire maker expects the deal to be finalized by the fourth quarter, Ms. Thompson said, so any impact on the firm's finances wouldn't be seen until next year.

She said the positive impact on the bottom line will come primarily from not having to pay dividends in Europe to minority interest partner SRI.

The net effect of the dissolution would be an increase in unit sales volume of about 2 million to 3 million units, Ms. Thompson said, based largely on the anticipated increase in business with the Goodyear brand in Japan, where Goodyear will control the destiny of its brand for the first time in 16 years.

While unit sales would be up, Goodyear estimates the net effect on sales revenue would be a drop of $100 million to $160 million — with the biggest drop coming in North America, where SRI will be assuming control of the Dunlop-brand motorcycle tire business.