Sales Down, Income Up at Yokohama Rubber

The short-lived dip in raw material costs the industry experienced in 2009 helped Yokohama Rubber towards a better bottom line result in the recently concluded financial year. The company has announced net earnings of 11.5 billion yen (₤83.5 million) for the fiscal year ended March 31, 2010. This gain compares with a net loss of 5.7 billion yen in the previous fiscal year and reflects a surge in operating profitability. Operating income rose 67.5 per cent, to 21.5 billion yen (£156.1), on a 9.8 per cent decline in net sales, to 466.4 billion yen (₤3.4 billion). Underlying Yokohama’s surge in operating income were the abovementioned reversal of the upward trend in raw material costs and the company’s progress in reducing selling expenses and other costs. Net profitability benefited additionally, meanwhile, from a sharp reduction in losses on currency translation adjustments.

Sales declined 8.1 per cent in Yokohama’s Tire Group, to 367.5 billion yen (₤2.7 billion), and declined 15.9 per cent in the company’s Multiple Business (diversified products) Group, to 98.8 billion yen (₤717.3 million). Yokohama however notes a “promising development” in the form of renewed sales growth in its tyre business during the fourth fiscal quarter (January 1 to March 31, 2010), both in Japan and internationally. Operating income in the Tire Group more than doubled, rising 106.9 per cent, to 20.5 billion yen (₤148.8 million). The downturn in raw material costs and Yokohama’s cost-cutting measures more than compensated for the decline in sales. In the Multiple Business Group, operating income declined 74.3 per cent, to 879 million yen (₤6.4 million), reflecting an overall weak sales performance.

Yokohama projects a 30.4 per cent decline in net income, to 8.0 billion yen (₤58.1 million) in the fiscal year to March 31, 2011. Management expects net sales to rise 11.5 per cent, to 520.0 billion yen (₤3.8 billion), buoyed by growing demand in an improving economic environment. But it expects operating income to decline 16.1 per cent, to 18.0 billion yen (₤130.7 million), on account of the appreciation of the yen and resurgent raw material costs.