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5. The Goodyear Tire & Rubber Company Business Report FY ended Dec. 2017

The Goodyear Tire & Rubber Company Business Report FY ended Dec. 2017

Factor
1) Net Sales
-The Company’s net sales in the fiscal year ended December 31, 2017 of USD 15,477 million represented an increase of 1.4% over the previous year. The increase in sales was driven by an increase in price and product mix, resulting in a positive impact of USD 521 million. Favorable foreign currency translation and increased sales in other tire-related businesses generated positive impacts of USD 178 million and USD 89 million. These gains were partially offset by lower tire unit volumes, specifically in the EMEA and Americas, decreasing sales by USD 569 million.

2) Operating Income
-In the fiscal year ended December 31, 2017, the Company’s operating income decreased by 23.3% over the previous year to USD 1,522 million. The decrease in operating income was primarily due to higher raw material costs of USD 618 million, lower tire unit volumes of USD 166 million, and higher conversion costs of USD 139 million. The decrease in income was partially offset by higher price and product mix, which created a positive impact of USD 420 million, as well as lower selling, administrative and general expenses, which created a positive impact of USD 75 million.

Recent Developments

-The Company announced that its wireless sensor has been adopted for tires used in the Tesloop ride sharing service vehicles in the U.S. The sensor continuously measures tire temperature and pressure. The data can be used to estimate when to replace tires and prevent tire-related accidents like punctures. Tesloop is a startup established in 2015 for a ride sharing service using electric vehicles made by Tesla. The Company’s wireless tire sensors will be used for the Model X. (From an article in the Nikkan Jidosha Shimbun on October 31, 2017)

Contracts

-The Company announced that the 2018 Jeep Wrangler, unveiled at the Los Angeles Auto Show, will be fitted with two sizes of its Wrangler AT Adventure tires with Kevlar. The Wrangler AT Adventure with Kevlar provides versatility for both on- and off-road conditions. The tire features DuPont Kevlar for added strength, providing superior traction in rain and snow. (From a press release on December 5, 2017)

-The Company announced that its Eagle F1 Asymmetric 2 ultra high performance tire has been selected as original equipment for Honda Motor Co., Ltd.'s new British-made Civic Hatchback, which is scheduled to be released in Japan on September 29. The Asymmetric 2 is a high-performance tire developed by the Company in Europe. Asymmetric 2 tires are fitted on high-performance cars made by Porsche, Mercedes-Benz, BMW, and other automakers. The size of the tire for the new Civic Hatchback is 235/40R18 95Y XL. (From an article in the Nikkan Jidosha Shimbun on September 5, 2017)

-The Company’s Japanese operations announced that its Eagle F1 Asymmertric 3 tire has been selected as original equipment for new Porsche Panamera. The front tire size is 265/45ZR19 105Y XL, and the rear tire size is 295/40ZR19 108Y XL. The Eagle F1 Asymmertric 3 tire features a new grip booster compound technology which leads to improved grip when braking and handling on both dry and wet roads. (From a press release on February 23, 2017)

Outlook

-The Company expects that its tire sales volumes in the fiscal year ending December 31, 2018 will increase by approximately 3.0% from the 159.2 million units sold in 2017.

R&D Facilities

-The Company has two innovation centers located in Akron, Ohio, U.S., and Colmar-Berg, Luxembourg, as well as two research and development centers in Hebron, Ohio, U.S., and Hanau, Germany. The Company also has seven tire proving grounds.

Product Development

Rubber compound derived from soy oil
-The Company announced that it has developed a new technology that enhances tire grip performance by using a new rubber compound derived from soy oil. The flexibility of the new rubber compound is maintained regardless of ambient temperature changes. The soy oil compound can easily be mixed with silica compounds used in tire production. The Company expects the technology will improve productivity and save energy. (From an article in the Nikkan Jidosha Shimbun on October 3, 2017)

Concepts showcased at 2017 Geneva International Motor Show
-The Company showcased several new and emerging technologies in its latest concept tires at the 87th Geneva International Motor Show. The Eagle 360 Urban is an evolution of the Company’s 2016 spherical-shaped design concept for autonomous vehicles, further integrating the tire into the vehicle’s nervous system by giving the tire an AI ‘brain’ that allows it to sense, decide, transform and interact. The IntelliGrip Urban is a smart tire concept designed for autonomous, on-demand transportation, with a focus on maximizing uptime and reducing operating costs for ride-sharing service providers. (From a press release on March 7, 2017)

Patents

-As of December 31, 2017, the Company owns approximately 2,000 patents issued by the U.S. Patent Office and approximately 3,700 patents issued and granted from other countries. The Company currently has approximately 400 patent applications pending in the U.S., and 1,900 patent applications pending in other countries.

-The Company’s capital expenditures in the fiscal year ended December 31, 2017 were invested primarily in the construction, expansion and modernization of manufacturing capacity in the U.S., Mexico, China and India.

Investments outside U.S.

-In November 2017, the Company officially began regular production its new tire plant in San Luis Potosi, Mexico. The plant is the Company’s first new factory in the Americas in 25 years. The one-million-plus-square-foot facility represents a USD 550 million investment and is expected to produce six million tires per year, including the Goodyear Eagle F1 and the Goodyear Wrangler All-Terrain Adventure with Kevlar. (From a Mexico-Now article on November 2, 2017)


-The Company announced plans to create a new facility in Luxembourg that utilizes an innovative production process to meet growing demand for premium tires. Named Mercury, the proprietary process features highly-automated, interconnected workstations, using additive manufacturing technologies to efficiently produce premium tires in small-batch quantities on-demand for replacement and original equipment customers. The new facility, set to open in 2019, is in close proximity to the Company’s Luxembourg innovation center and tire proving grounds. The Company is investing USD 77 million in the facility, which will produce approximately 500,000 tires annually and create approximately 70 new, full-time positions. (From a press release on September 12, 2017)