Goodyear focused on ensuring access to capital through balance sheet improvement, new CEO says

By Jennifer Lanning Drey

Portland, Ore., April 28 - Protecting and improving Goodyear Tire & Rubber Co.'s balance sheet to ensure stable and cost-effective access to capital is among Richard Kramer's strategic priorities as the new company chief executive officer, he said Monday during the company's first-quarter earnings conference call.

Kramer took over as chief executive officer of Goodyear on April 13.

Goodyear had $4.3 billion of cash and liquidity at quarter-end, Darren Wells, its chief financial officer, reported during the call.

The cash balance was down from Goodyear's year-end cash balance due to seasonal growth in working capital and the devaluation of its cash in Venezuela, he said.

Goodyear completed a successful debt exchange in March that reduced its 2011 maturities by more than 25%, pushing $262 million of maturities out to 2020.

In addition to the focus on the balance sheet, other strategic priorities mentioned by Goodyear's new CEO included driving innovation and increasing operating efficiencies, as well as getting the North American Tire segment to break even and then meet its next-stage metric goal of 5% EBIT to sales.

The company will also look to drive growth in emerging markets, especially high-growth markets such as Asia, Kramer said.

Q1 sales up 21%

Goodyear's first-quarter sales were $4.3 billion, up 21% from the 2009 quarter. The company said the first-quarter sales reflected the impact of a 14% increase in tire-unit volume due to improved global demand and growth in emerging markets.

Sales were also positively impacted by $224 million in favorable foreign currency translation and by $125 million from higher sales in other tire-related businesses, primarily third-party chemical sales in North America.

"We're pleased with the strong start to the year. Our businesses performed well, taking advantage of lower raw material costs and increasing demand," Wells said during the call.

The first-quarter net loss was $47 million, compared with a loss of $333 million in the same period of 2009.

"The prospects for our business long term remain very positive, especially as our industry continues its recovery. You can expect us to continue to capitalize on improving markets and capture the significant growth we see in emerging markets," Wells said.

Goodyear is a tire manufacturer based in Akron, Ohio.

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