By RTT News, September 20, 2013, 08:15:00 AM EDT
(RTTNews.com) - Tire manufacturer Goodyear Tire & Rubber Co. ( GT ) said Friday that it has reinstated its quarterly cash dividend after a gap of nearly eleven years, and launched a $100 million share repurchase program. The company also reiterated its outlook for fiscal 2013 segment operating income. Shares of the company are gaining almost 5 percent in pre-market trades.
Akron, Ohio-based Goodyear Tire said that at an investor meeting later today in New York, it will discuss its strategies and goals for the next three years as well as its capital allocation plan.
Goodyear said its capital allocation plan includes the reinstatement of a quarterly cash dividend on its common stock and a $100 million share repurchase program. According to the company, its ongoing success and confidence in its strategies allow it to provide immediate returns through the common stock dividend and share repurchase program.
Accordingly, Goodyear's directors have declared a quarterly dividend of $0.05 per share of common stock. The dividend is payable December 1, 2013, to shareholders of record November 1, 2013. The payout represents an annual rate of $0.20 per share.
Goodyear noted that future dividends will be subject to board approval. The company last paid a common stock dividend in December 2002.
Goodyear said its share repurchases are intended to offset new shares issued under equity compensation programs.
Richard Kramer, Chairman and Chief Executive Officer of Goodyear Tire said, "Our capital allocation plan demonstrates Goodyear's commitment to creating value for shareholders while maintaining financial flexibility to execute our strategic plan, continuing to strengthen our balance sheet and investing for future growth."
Looking ahead, Goodyear reaffirmed its outlook for 2013 segment operating income of about $1.5 billion, and projects annual segment operating income growth of 10 percent to 15 percent through 2016. In addition, the company is targeting positive cash flow, excluding pension pre-funding, through 2016.
In late July, Goodyear reported a profit for the second quarter that more than doubled from the prior year, as lower costs and expenses helped offset a decline in sales. The company's second-quarter net income available to common shareholders increased to $181 million or $0.67 per share from $85 million or $0.33 per share in the year-ago period. Net sales for the quarter decreased 5 percent to $4.89 billion from $5.15 billion in the same period last year.
GT closed Thursday's trading at $22.23. In Friday's pre-market trades, the stock is adding $1.09 or 4.90 percent to $23.32.
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