After dealing with plant closures, record low prices of stock, cuts in jobs, business unit sales and work stoppages, Goodyear Tire & Rubber announced it would restore its stock dividend.
The tire maker announced it would pay a dividend of 5 cents per common stock share effective December 1. The last dividend that Goodyear paid out was in December of 2002.
Along with the new dividend, Goodyear also announced a repurchase of up to $100 million of outstanding common stock. The buyback program would offset new issuing of shares under its equity compensation programs.
The dividend returning has signaled that the turnaround of the tire maker, which was hard fought, has been completed, which had been designed to return Goodyear to a profitable company, while helping it to navigate through downturns in the economy in both the United States and abroad.
One of the plan’s biggest accomplishments was the shift from producing tires that were low-end, which generated profit margins that were slim, to outputting more tires that are high-end.
The tires that are high-end are more complex and bigger to build, but command much higher prices.
Nearly 75% of Goodyear’s tires are now selling for close to $130 each or higher. In 2007, nearly 40% of all tires produced at Goodyear were low end that retailed for around $60 each.
Knowledge that Goodyear received from the production of these tires had helped the company develop tire products that are fuel-efficient and are entering the market as automakers are grabbing at technologies that help their autos squeeze additional miles from each gallon of gas.
However, this process has had its difficulties. The company had to close plants resulting in 1,900 jobs lost. Goodyear also left certain businesses like its farm tire unit and that cut over 1,200 jobs.
A strike for three months was endured by the company in 2006 over employees wanting more work concessions.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.