Goodyear Tire & Rubber Co.’s stock
GT,
jumped 5.5% in premarket trade Wednesday, after the company unveiled a transformation plan that aims to raise more than $2 billion in proceeds from portfolio optimization and to generate cost cuts of $1.3 billion by the end of 2025. The company also said Chief Executive Richard J. Kramer will retire in 2024 and it has hired an executive search firm to find a successor. “The Review Committee explored all value maximizing opportunities and identified specific, detailed initiatives to streamline our portfolio, expand margins and fortify our balance sheet, and do so with expediency,” Kramer said in a statement. Goodyear is planning to pursue strategic options for its chemical business, the Dunlop brand and the Off-the-Road equipment tire business. Cost cuts will including footprint actions and plant optimization, as well as supply-chain and R&D cutbacks. The company expects an annual run-rate benefit to its top line of $300 million by the end of 2025. It expects operating income margin to double to 10% by the end of 2025. The company is targeting net leverage of 2.0 times to 2.5 times in the same time period and will work toward getting closer to an investment-grade rating. It expects debt reduction of about $1.5 billion net of about $1.1 billion for restructuring. The company will hold a call with analysts at 8.30 a.m. Eastern to discuss the move. The stock has gained 35% in the year to date, while the S&P 500
SPX,
has gained 17%.
