GOODYEAR TIRE AND RUBBER COMPANY (NASDAQ: GT) Analysts Zhi Cheng (Nicole) Low Shruti Shah Sashikanth (Sash) Yenika Presented on December 1, 2015

New Industry for Portfolio Diversification Screening Process New Industry for Portfolio Diversification Piotroski Score = 6 Market Cap. Mid Cap: 2B – 10B Altman Z-score = 1.98 Current Price vs. 52w High = -0.05 % > -10 % 20Day MA > 200Day MA

Company Introduction Business Description Market Cap TTM P/E Develops, manufactures, and sells tires, and rubber-related products for automotive and industrial applicants Market Cap $9.36 Billions TTM P/E 3.39x TTM EPS $10.26 Primary Industry Tire Manufacturing Year Founded August 29, 1898 Global Headquarters Akron, Ohio, U.S.A Employees Approximately 67,000 Sources: Goodyear Official Website and Yahoo Finance!

Business Overview and Segments Goodyear is a tire industry leader with powerful brands, a broad product offering and global distribution The North America segment is a supplier of tires to manufacturers of automobiles, motorcycles, trucks and aircraft. The EMEA segment is a supplier of tires to vehicle manufacturers across the region. The Latin America segment manufactures and sells automobile and truck tires. The Asia Pacific segment sells primarily Goodyear brand tires throughout the region and also sells the Dunlop brand in Australia and New Zealand. The Company manufactures and sells tires under the Goodyear, Dunlop, Kelly, Debica, Sava and Fulda brands and various other Goodyear owned-house brands, and the private-label brands of certain customers. Sources: Goodyear 2014 10K, pg. 6-20

Global Operating Facilities EMEA 17 manufacturing facilities in 9 countries Supplies tires to vehicle manufacturers throughout the region North America 18 manufacturing facilities in US and Canada Supplies tires to manufacturers of automobiles, motorcycles, trucks and aircraft Asia Pacific 8 manufacturing facilities in 6 countries Sells primarily Goodyear brand tires across the region Sells Dunlop brand in Australia and New Zealand Latin America 6 manufacturing facilities in 5 countries Manufactures and sells automobile and truck tires retail outlets for the sale of tires to consumer and commercial customers Around 50 Manufacturing Facilities in 22 countries Two R&D facilities and technical centers Eight tire proving grounds Approximately 1,200 retail outlets Around 60 tire retreading facilities, and 170 warehouse distribution facilities. Sources: Goodyear Official Website

Management Analysis Effective corporate governance policies All directors are independent, except CEO and one labor union-affiliated director 100% independent compensation, audit and nominating committees Shareholders have the right to call a special meeting at 25%

Management’s Strategic Priorities CURRENT POSITION INDUSTRY MEGATRENDS Growth in emerging markets Profitable segments in mature markets HVA (high value added) tires in mid-tier Green trend Tire labeling Internet changing buying behavior Changes are evolutionary not revolutionary KEY STRATEGIES KEY HOW TO’S INDUSTRY MEGATRENDS GT’S DESTINATION CREATING SUSTAINABLE GROWTH Sources: Goodyear 2014 10K, pg 4

W O T S SWOT Analysis Strengths Weaknesses Opportunities Threats Strong R&D Manufacturing capabilities Strong market presence Weaknesses High leverage ratios S W Opportunities New products & services Business expansion activities Buoyant demand for automobiles Threats Stringent regulations Intense competition both in price and quality Appreciation of US$ results in unfavorable foreign currency translation O T Intense competition, stringent regulations, and moderate global economic growth could have an adverse effect on Goodyear’s business, operating results and financial condition. However, new products and services could present ample growth opportunities to the company.

GT’s Three-year Performance Summary Sources: Goodyear 2014 10K

Stock Market Prospect Sources: Yahoo Finance!

Industry Overview Tire Manufacturing Industry Major market – USA & Europe Growing Market – Asia Pacific Major manufacturing products – motor vehicle and aircraft tires, inner tubes and tire repair materials Future Industry Outlook Cater to changing consumer preferences by developing and selling fuel efficient cars Expansion of product lines and streamlining operations Industry expected to grow at an annualized rate of 0.8% to $19.4bn by 2020 Sources: www.ibisworld.com

Industry Overview Drivers Challenges Automobiles per household feel from 802 to 797 per 1,000 vehicles Drivers Expected stable increase in Automobile production Increasing demand for advanced tire models Aging vehicles leading to more demand for replacement tires Increasing vehicle miles travelled Challenges Inconsistency in supply and demand leading to overcapacity Falling automobiles per household Sources: www.ibisworld.com & Global Industry Analysts, Inc.

Porter’s Five Forces Analysis Industry Rivalry (Moderate) Threat from New Entrants (Low) Buyer’s Bargaining Power Threat of Substitutes Supplier’s Bargaining Power (High) Large capital requirements High sunk cost Strong brand name Economies of scale & updated technology Very few powerful competitors Low cost competition from Asian companies High market grown High levels of product differentiation Low concentration of major suppliers Volatility in prices of major raw materials Original Equipment (High) Highly concentrated market Low switching cost for buyers Replacement (Low) High service level & short delivery time Small size buyers & not concentrated Essential component There aren’t any substitutes

Macroeconomic Overview Sources: www.ibisworld.com

Macroeconomic Overview Sources: www.ibisworld.com

Comparable Valuation Sources: CapitalQ and Yahoo Finance!

Financial Analysis Steady increase in profitability ratios despite declining asset turnover led to improved returns Income tax benefits in 2014

DuPont Analysis and Greenblatt Ratios Greenblatt ratios indicate further room for improvement in efficient use of operating assets DUPONT ANALYSIS

Financial Projections Revenue projections are made using the average price of raw materials and expected units to be sold KEY INCOME STATEMENT ITEMS KEY BALANCE SHEET ITEMS

WACC High leverage and volatility in key economies like Latin America

DCF Valuation

Implied Price VALUE PER SHARE SENSITIVITY ANALYSIS

Recommendation: BUY 200 shares At current market price GT provides diversification benefits to our existing portfolio Improving margins High demand from emerging markets Demand for high-value-added tires with features like fuel saving, wet traction or ride comfort Dividend yield 0.90% Current Stock Price: $34.88 DCF Valuation: $37.95 Relative Valuation:$43.26 Target Price: $39.54 Recommendation: BUY 200 shares At current market price Stock Price Stock Price Strong US$ Economic instability and political unrest in key markets Sources: Yahoo Finance!

THANK YOU! Q&A