Goodyear Tire-Excellent Global Growth Potential

Everybody knows Goodyear Tire & Rubber Company (GT), chances are if you've been on the road recently, you have seen Goodyear's products in action. Step into a dealership and you will see shiny, new Goodyear tires gracing the wheels of new cars. There is more to the company, however, and it could be a great stock for your portfolio.
Goodyear Tire is a diversified, global tire producer. It successfully executed a turnaround from 2001-2003 when it was on the brink of bankruptcy. Business has since improved consistently with the exception of 2008/2009 during the financial crisis. The company has 53 manufacturing plants over 23 countries. The company is focusing on future growth in China, as well as increasing the North American profitability.
North America
Goodyear has been focusing on improving North American margins by implementing cost saving initiatives. Margins have been steadily improving since 2010 when they were a razor thin .2% up to the current levels of 3%. Goodyear hopes to increase their North American margins to 5% over the next several years.
Goodyear tires are sold in two distinct markets, the OE market (new cars) and the replacement tire market. Goodyear sells 73% of its tires on the replacement market. The entire U.S. Consumer Replacement Industry sales are well below the long term trend demand levels.
People have not had to replace their tires because the short and warm winters the U.S. has experienced over the past two years. However, consumers have continued to log significant miles on their tires, which are now due to be replaced. It is not a matter of if, but when consumers have to replace their tires. This is a positive for Goodyear as the replacement market has significantly higher margins.
Goodyear gets 43% of their revenues from North America, 35% from Europe/Africa/Middle East, and 11% from Asia. Plant utilization has also increased from 70% to 92% over the past several years. This represents a good trend while still giving it some room to continue to grow without having to expand by building new factories. Goodyear says that North American business has been the hardest to improve, but Goodyear now says they are expecting to meet target earnings one year ahead of schedule.
Europe, the Middle East, and Africa
Goodyear has said that while the overall industrial environment remained very weak in Europe during Q4. Europe, like much of North America, has had several warm winters. In Europe Goodyear is focusing on having a strong start to the 2013 summer season. They look to do this by having an excellent product lineup and improving service and value proposition. Goodyear says that a strong Q1 is critical for their success so this is something to watch closely.