Analysts raise Yokohama estimates

Financial analysts have raised their estimates for Yokohama Rubber after reviewing their raw material assumptions. Their rationale is that, “while not as smoothly as peers, Yokohama Rubber is passing costs on to customers, and despite uncertainties (downturn in US/Europe), we expect it to report 30 per cent growth in adjusted full year…earnings on lower raw material prices and full-year contributions from price hikes.”

As a result the analysts raised their operating profit estimate for the 12-month period ending December 2011 (excluding the effect of a fiscal year change) to 27.3 billion yen. According an investor’s note published on 25 August, the revision is mainly due to lower estimated prices for RSS3 natural rubber: “We previously estimated a rather harsh $6.2/kg, but [here] change it to $4.7/kg – closer to recent price levels. We now expect the adverse impact of raw material prices at 33 billion yen, lower than our previous estimate of 41.5 billion.”

In addition Deutsche Bank estimates that full year operating profit will grow 32 per cent year-on-year to 35.9 billion yen, up form 27.5 billion yen previously. Deutsche Bank maintained its “hold” rating.

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