The Goodyear Tire & Rubber Company Business report FY2007

Business Highlights

Business Overview
The worldwide tire unit sales in the replacement and OE markets during the period indicated were as follows.

(In million of tires) 2007 2006 2005 2004 2003
North American Replacement tire units 55.7 61.6 71.2 70.8 68.6
OE 25.6 29.3 30.7 31.7 32.6
European Union Replacement tire units 41.6 46.0 46.0 43.9 43.9
OE 17.8 17.5 18.3 18.9 18.4
Eastern Europe Replacement tire units 17.2 16.4 15.8 15.4 14.8
OE 3.0 3.6 3.9 3.5 3.1
Latin America Replacement tire units 14.7 14.9 15.0 15.0 14.2
OE 7.1 6.3 5.4 4.6 4.5
Asia pacific Replacement tire units 12.7 13.1 13.9 14.5 9.1
OE 6.3 6.3 6.2 5.0 4.3
Total Replacement tire units 141.9 152.0 162.0 159.6 150.6
OE 59.8 63.0 64.4 63.7 62.9
Total 201.7 215.0 226.4 223.3 213.5

-OE units sales in 2007 decreased by 3.2 million units, or 5.1%, due primarily to decreases in North American Tire, driven by lower vehicle production, and Eastern Europe Tire, due to the exit of non-profitable business. This decrease in OE unit sales was partially offset by increases in Latin America Tire and European Union Tire.

-With the 2007 Ford Shelby Mustang GT500, the Company again gets the honors. The vehicle is equipped with Goodyear Eagle F1 Supercar tires -- in size P255/45R18 in the front and P285/40R18 in the rear. The ultra-high performance Mustang, with limited numbers of the car appearing this summer, generates more than 450 horsepower. The project developed from a collaboration between performance car legend Carroll Shelby and Ford's Special Vehicle Team (SVT). Goodyear engineers worked with the SVT designers to develop the tires needed for the car. Goodyear's Eagle F1 Supercar tire features an ultra-performance tread compound, which helps provide exceptional dry traction and cornering grip. (From a press release by the company on 15.Jun)

-In March 2007, the Company announced that it has agreed to sell substantially all of its Engineered Products business to EPD, Inc., an entity sponsored by Carlyle Partners IV, L.P. (From a press release on Mar. 23)


At the year end (In millions US$) 2007 2006 2005
R&D expenditure 372 342 346

New product development
-In a dramatic move to lower trucking fleets' and owner-operators' total operating costs, the  Company introduced a new fuel-efficient commercial tire technology and three new tires for long-haul trucks at the Great American Trucking Show. The company's new Fuel Max Technology is focused on trucking's fuel and tire costs. The line includes new steer, drive and trailer tires and retreads for a complete "cradle-to-grave" tire system for trucking fleets and owner- operators. An 18-wheeler outfitted with tires featuring Fuel Max Technology could achieve up to 4 percent improved fuel economy. (From a press release by the company on Aug.24)

Investment Activities

Capital Expenditure
(in millions US$) FY2007 FY2006 FY2005
North American Tire 281 248 237
European Union Tire 179 133 126
Eastern Europe, Middle East and Africa Tire 62 58 51
Latin American Tire 115 67 72
Asia Pacific Tire
74 70 70
Total Segment Capital Expenditures 711 576 556
Corporate 28 61 45
Total 739 671 634

Overseas investment

-In February 2007, the Company announced that its Poland affiliate plans to invest more than $100 million to expand production of high-value tires. The investment, which will take place over the next four years, will be made at the company's TC Debica operation, one of Goodyear's lowest cost facilities. The investment is consistent with Goodyear's strategy to upgrade and expand existing capacity to produce high performance and ultra-high performance tires. (From a press release on Feb. 20)

-In August 2007, the Company said it is planning major global investments to fuel growth and plans to repay additional debt, both made possible by the recent sale of its Engineered Products business and the company's successful equity offering. Goodyear said it is considering potential new tire factories in Eastern Europe and Asia in addition to the company's previously announced intent to invest in existing tire factories to increase high-value-added capacity by 40 percent globally and increase capacity in existing low-cost plants by 33 percent. Together, these investments would drive the company toward its strategy of having 50 percent of its global capacity in low-cost countries by 2012.The investment program includes modernization in North America to Goodyear's Fayetteville, N.C., and Gadsden, Ala., tire plants for increased high-value-added capacity. (From a press release on August 15, 2007)