Financial Overview

(in million USD)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	Rate of change (%)	Factors
Overall
Net Sales	20,992	22,767	(7.8)	1)
Operating Income	1,248	1,368	(8.8)	-

Factor
1) Net Sales
-Net sales in 2012 of 21.0 billion USD decreased 1.8 billion USD, or 7.8%, compared to 2011 due primarily to lower tire volume of 1,639 million USD, unfavorable foreign currency translation of 766 million USD, primarily in EMEA, and 489 million USD in lower sales in other tire-related businesses, primarily due to lower sales of chemical products in North American Tire. These decreases were partially offset by improved price and product mix of 1,223 million USD.

Sales Units

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

(in millions of tires)

		FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
North American Tire	Replacement tire units	44.5	50.0	50.8
	OE	18.1	16.0	15.9
Europe, Middle East and Africa Tire	Replacement tire units	46.4	56.8	55.6
	OE	16.3	17.5	16.4
Latin America Tire	Replacement tire units	11.8	13.0	13.9
	OE	6.3	6.8	6.8
Asia pacific Tire	Replacement tire units	11.7	12.4	12.7
	OE	8.9	8.1	8.7
Subtotal	Replacement tire units	114.4	132.2	133.0
	OE	49.6	48.4	47.8
Grand total		164.0	180.6	180.8

-The decrease in worldwide tire unit sales of 16.6 million units, or 9.2%, compared to 2011, included a decrease of 17.8 million replacement units, or 13.5%, due primarily to a decrease in the consumer replacement business in EMEA as a result of economic weakness and uncertainty in the region and increased competition, and in North American Tire, primarily due to lower industry demand and decreased sales of lower end consumer products, partially offset by an increase of 1.2 million OE units, or 2.4%, primarily in North American Tire.

Contracts

-The Company announced that Mazda's 2014 "Mazda 6" sport sedan will be riding on Dunlop SP Sport 5000 tires when the vehicle goes on sale early 2013. The tire sizes are P225/45R19. (From a press release on November 29, 2012)

-The Company has announced that its Eagle F1 SuperCar G:2 tire was once again selected by Ford for the 2013 "Shelby GT500". The tire will appear on the 2013 "Shelby GT 500" in sizes P265/40ZR19 (front) and P285/35ZR20 (rear). (From a press release on October 9, 2012)

-Goodyear Japan, a subsidiary of the Company, announced that its EfficientGrip eco-friendly tires have been chosen for installation on Toyota's all-new "Auris". The Goodyear EfficientGrip tires featuring asymmetric tread patterns were developed by Goodyear in Europe. The tires with low rolling resistance also achieve a high level of water-repellent property and a quiet ride. The tire size is 205/55R16 91V. (From an article in the Nikkan Jidosha Shimbun on Sep. 25, 2012)

-Goodyear Japan, a subsidiary of the Company, announced that the Goodyear DuraGrip tire for passenger cars has been chosen by Toyota for its new "Corolla Axio". The size of the tire that has received technical certification approval is 175/70R14 84S developed by Goodyear Europe. The tire has an asymmetric tread pattern. It features low rolling resistance, prevents aquaplaning and improves noise reduction. (From an article in the Nikkan Jidosha Shimbun on May 28, 2012)

-The Company announced that the SP Sport Maxx GT 600 DSST CTT tire, co-developed by Nisan and Dunlop, has been selected as original equipment on the 2013 Nissan "GT-R". The tire, tested at Nurburgring in Germany, will appear on the 2013 Nissan "GT-R" in sizes P255/40ZRF20 (front) and P285/35ZRF20 (rear). (From a press release on April 5, 2012)

-Goodyear Japan, a subsidiary of the Company, announced that its "DuraGrip" tire was chosen as a standard factory-installed tire for the L-grade of the new Toyota "Aqua" hybrid. The DuraGrip tire is an asymmetric tire developed by Goodyear Europe as the summer tire for passenger cars. This tire featuring low rolling resistance, which is expected to help improve fuel efficiency, has achieved high levels in drainage and quietness as well, said the Company. (From an article in the Nikkan Jidosha Shimbun on January 12, 2012)

-The Company announced that it is supplying its tires for Chevrolet's two concept cars, the "Code 130R" and the "Tru 140S", which were presented at North American International Auto Show in Detroit, U.S. The tires for the two concept cars were co-developed with GM at the Company's Tire Design Studio in Akron, Ohio, U.S. and manufactured in Luxembourg facility. (From a press release on January 10, 2012)

Outlook

-The Company expects long-term growth in the global tire industry, but at a slower pace near-term due primarily to continued economic weakness in Europe. For the full year of 2013 in North America, the Company expects consumer replacement to be flat to up 2%, consumer original equipment to be up approximately 5%, and commercial replacement and original equipment to be flat. For the full year in Europe, the Company expects consumer replacement to be flat to up 2%, consumer original equipment to be down approximately 5%, commercial replacement to be up approximately 5%, and commercial original equipment to be flat to up 5%. The Company expects that its full-year tire unit volume for 2013 will reflect a low single digit percentage growth rate compared to 2012.

R&D Expenditure

(in million USD)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
Overall	370	369	342

R&D Structure

-The Company owns and operates two research and development facilities and technical centers as well as three tire proving grounds.

Technological Alliance

-The Company and DuPont Industrial Biosciences are working together to develop BioIsoprene, a bio-based alternative for petroleum-derived isoprene. BioIsoprene can be used for the production of synthetic rubber-which in turn is an alternative for natural rubber-and other elastomers. The development of BioIsoprene will help reduce the tire and rubber industry's dependence on oil-derived products. The two companies first signed on to the collaboration in 2008. Currently, the two companies have demonstrated proof of the technology through the production of a prototype tire made with BioIsoprene monomer. In May of 2011, DuPont acquired Denmark-based Danisco and its Genencor division which has spearheaded the research and development activities around the BioIsoprene product. (From a press release on March 6, 2012)

Product Development

Tires made with soybean oil
-The Company announced researchers at the Company's Innovation Center have found in their tests that using soybean oil in tires can potentially increase tread life by 10 percent and reduce the tiremaker's use of petroleum-based oil by up to seven million gallons each year. Prototype tires built in Lawton, Oklahoma, the U.S. will be tested at Goodyear's Proving Grounds in San Angelo, Texas in the coming months. The Company expects consumers will be able to purchase tires made with soybean oil as early as 2015. The United Soybean Board (USB) is helping fund the Goodyear project with a grant of 500,000 USD over two years. (From a press release on July 24, 2012)

Capital Expenditure

(in million USD)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
North American Tire	212	236	319
Europe, Middle East and Africa Tire	344	240	183
Latin American Tire	250	237	135
Asia Pacific Tire	286	314	281
Total Segment Capital Expenditures	1,092	1,027	918
Corporate	35	16	26
Total	1,127	1,043	944