GOODYEAR TIRE

AND RUBBER
COMPANY
(NASDAQ: GT)

Analysts
Bi (Brian) Ge
Amey Dargude
Mihir Londhe
Rahul Gohil
Shruti Shah
Presented On 25th February 2016
Agenda

Introduction
Business Overview
Industry Overview
Macroeconomic Factors
Financial Analysis
Valuation
Technical Analysis
Recommendation
 Current Holding

Purchased 200 shares @ $34.74 on 7th Dec 2015

Current Market Price = $29.42
Loss on the position = $1064 (15.31%)

Yahoo Finance, RCMP Portfolio page

 Introduction

The Goodyear Tire& Rubber Company is an Ohio corporation

organized in 1898
The principal business is the development, manufacture, distribution
and sale of tires and related products and services worldwide.
Goodyear has the following portfolio of brands

Dunlop Fulda Sava Debica Kelly Goodyear

Goodyear Official Website

 Business Breakdown

Products GOODYEAR'S 2015 ANNUAL TIRE UNIT SALES - REPLACEMENT & OE (Tire Units)
Revenue by Region (in % of total revenue)
Tires
69%
Automobile
Trucks
Buses
Aircraft 31%
Motorcycle
Earthmoving and
47%
mining equipment
Farm implements 12%
Industrial equipment
10%
Tread Rubber and other
treading material 31%
Chemical Products
Automotive repair Replacement tire units
OE tire units
services
North America Europe, Middle East and Africa

Asia Pacific Latin America

Goodyear 2015 10K
 Business locations

North America
18 manufacturing
EMEA
facilities in US and 17 manufacturing
Canada facilities in 9 countries
Supplies tires to Supplies tires to vehicle
manufacturers of manufacturers
automobiles, throughout the region
motorcycles, trucks
and aircraft
Asia Pacific
8 manufacturing
Latin America
6 manufacturing facilities in 6 countries
Sells primarily Goodyear
facilities in 5 Around 50 Manufacturing Facilities in 22 brand tires across the
countries countries
Manufactures and region
Two R&D facilities and technical centers Sells Dunlop brand in
sells automobile and
Eight tire proving grounds Australia and New
truck tires Approximately 1,200 retail outlets Zealand
Building a new one Around 60 tire retreading facilities, and 170
Goodyear Official Website
 Management View

Risks in the Business Key Strategies

Face significant global

competition and market share
could decline
Raw material
Foreign currency risk
Possibility of higher capital
expenditure to remain
competitive
Substantial debt may hinder
growth
Extensive government
regulation
Focus on product development
Target profitable segments with
competitive advantage
Reduce cost and optimize
working capital
Deliver best customer service
Building human capital
Higher tire unit volume
expected for 2016

Goodyear 2015 10K

 SWOT Analysis

Strong R&D
High Leverage ratio
Manufacturing capabilities
Exposure to markets with
Strong market presence
weakening growth
Broad product portfolio

S W
O T
New products & services Stringent regulations
Business expansion Intense competition both
activities in global markets in price and quality
Buoyant demand for Unfavorable currency
automobiles exchange impact

Goodyear 2015 10K

 Macroeconomic Overview: Supply

Rubber Price USD Value

IBISWorld Database
 Macroeconomic Overview: Demand

HIS Global Insight

 Industry Overview

Market Share Product Mix

6% 3%
Passenger
9% Replacemnt Tires
7% Other
Passenger Original
21% 34% Bridgestone
Equipment Tires
Corporation 15%
Light Truck
The Goodyear Tire &
Replacement
16% Rubber company 67%
22% Medium and Heavy
Michelin
Truck Replacement
Cooper Tire & Tires
Rubber company
Other

IBISWorld Database
 Industry Overview
Very few powerful competitors
Low cost competition from Asian
companies
High market grown
High levels of product
differentiation
Industry Rivalry
Low concentration of
major suppliers
Volatility in prices of
major raw materials
Supplier's Bargaining Power
IBISWorld Database
Porters Five Forces
Original Equipment (High)
Threat of Substitutes Highly concentrated market
Low switching cost for buyers
4
Replacement market (Low)
High service level & short delivery
time
2 Small size buyers & not
concentrated
Buyer's Bargaining Power
`
0 Large capital requirements
High sunk cost
Strong brand name
Economies of scale &
updated
technology
Threat to new entrants
Financial Analysis: Ratios
Financial Analysis: DuPont Analysis and Greenblatt ratios
Financial Projections
Discount Rate
Valuations: DCF
 Valuations: Comparable

Bloomberg
 Technical Analysis

Yahoo Finance
 Recommendation

Key Issues

DCF Comparable
Valuation Valuation
$21. 44 $26.79 Economic Instability
Slower growth in
major market
Current High Debt level
price $29.42 Reducing revenues
for past 5 years
Appreciating Dollar

Sell 200 shares at

market

Yahoo Finance| Analysis

Thank You

Q&A