Goodyear Tire & Rubber (GT) -) shares moved higher in early Wednesday trading after it unveiled plans to shed some of its key business units, as well as the departure of CEO Richard Kramer, in major shake-up of the the iconic industrial group.
Goodyear said it would consider 'strategic alternatives' for its Dunlop tire brand, as well as its chemical and off-road equipment tire units, which collectively could bring the group around $2 billion if ultimately sold, while pursuing a cost-cutting plan it says will save around $1 billion by the end of 2025.
Goodyear initiated a strategic review in July following pressure from activist investor Elliott Investment Management, which became one of the group's biggest shareholders in May. Elliott, which won three seats on the Goodyear board, accused the group of falling behind rivals such as Michelin and Bridgestone amid weak overall management.
"Our transformation plan represents a clear path to create a more profitable and focused Goodyear," said Kramer, who will retire at the end of the year after fourteen years as group CEO. "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."
"Building on our strengths, this plan will enable Goodyear to enhance and expand our leadership position, deliver profitable growth across markets, create significant value for our shareholders and – ultimately – lay the foundation for success for the next 125 years," he added.
Goodyear shares were marked 2.2% higher in early Wednesday trading to change hands at $13.96 each, a move that would extend the stocks' 2023 gain to around 37% and value the Akron, Ohio-based group at around $4 billion.
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