Yokohama Rubber Reports First Quarter Net Income of 1.6 billion yen

Yokohama Rubber Co., Ltd., has posted net income of 1.6 billion yen (£11.775 million; 14.160 million euros; US$18.455 million) in the first quarter compared with a net loss of 1.8 billion yen in the same period of the previous fiscal year. That result is for the three months from April to June, the first quarter of the company’s fiscal 2011 (1 April 2010 to 31 March 2011). Yokohama's net sales climbed 23.4 per cent over the same quarter of the previous fiscal year, to 117.4 billion yen.

According to the company, the return to net profitability was driven by a strong turnaround in operating profitability. The company posted operating income of 5.9 billion yen in the fiscal first quarter, compared with an operating loss of 4.1 billion yen in the same period of the previous fiscal year.

Strong unit sales growth of tyres, buoyed by global economic recovery, led Yokohama’s gains in sales and earnings. Profitability improved as an upturn in capacity utilization and progress in cutting costs more than offset the adverse effects of rising raw material costs and the appreciation of the yen.

Operating income in Yokohama’s tyre operations totalled 5.3 billion yen (£39.013 million; 46.911 million euros; $61.121 million), up from a first-quarter loss of 3.7 billion yen in fiscal 2010. According to the report, group tyre sales rose 25.5 per cent, to 92.6 billion yen. Yokohama’s domestic tyre unit sales are said to have increased in the replacement market and in the original equipment market, and the company also posted unit sales gains in overseas tyre markets, led by growth in North America and in Asia.

Looking forward Yokohama is predicting operating income to total 4.0 billion yen in the first half of fiscal 2011 (1April  to 30 September 2010). That compares with an operating loss of 2.4 billion yen in the same period of the previous year. Underlying the projected upturn in operating profitability is projected sales growth of 17.8 per cent, to 238.0 billion yen. The projections call for Yokohama’s interim net loss to shrink 64.1 per cent from the first half of fiscal 2010, to 1.4 billion yen. According to the company, non-operating losses associated with the strengthening yen appear likely to prevent a return to net profitability in the fiscal first half.

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