Goodyear Tire & Rubber Updates 2014-2016 Capital Allocation Plan - Quick Facts

(RTTNews) - Goodyear Tire & Rubber Co (GT) updated its 2014-2016 capital allocation plan, focusing on enhancing shareholder returns and capturing high-return growth opportunities in North America and Latin America. Because of the company's strong 2013 free cash flow, which enabled the full funding of its hourly U.S. pension plans in early 2014, the firm is reallocating nearly $1.1 billion of its 2014-2016 cash flow.

The updated capital allocation plan, aiming to increase shareholder value by providing about $650 million in returns to investors, includes: allocating an additional $300 million to growth capital expenditures to enable the company to build a new plant to serve its North American and Latin American consumer tire businesses and capitalize on the anticipated growth in high-value-added tire markets in the two regions; improving the quarterly cash dividend on Goodyear's common stock by 20 percent to 6 cents from 5 cents per share starting in September; increasing the share buyback by $350 million to allow Goodyear to buy up to $450 million of its stock through 2016; and allocating an additional $400 million towards debt reduction.

Also, Goodyear intends to invest about $500 million for the construction of new plant, thereby being most technologically advanced with initial capacity of about six million tires per year. Capacity can be increased as demand increases. Site selection is underway to identify the best location for the plant to support North America and Latin America customers. Tire production may begin in the first half of 2017.

Further, the company backed its 2014-2016 financial targets, including segment operating income growth of between 10 percent and 15 percent per year and annual positive free cash flow from operations. Additionally, the firm still sees a 2 percent to 3 percent increase in unit volumes for 2014 over 2013.