Yokohama profits tumble 49%

The Yokohama Rubber Co. Ltd. first half 2016 profits declined 49.3 per cent, to 8.2 billion yen. Yokohama reports that the fall resulted from a 37.9 per cent decline in operating income, to 15.7 billion yen, on a 9.5 per cent decline in net sales, to 268.1 billion yen. The Japanese tyre manufacturer put the negative performance down to “a unit decline in Japanese vehicle production, weakening demand and declining prices in Yokohama’s principal product sectors, and the appreciation of the yen”.

Operating income in Yokohama’s tire segment declined 37.6 per cent, to 12.1 billion yen, on a 10.1 per cent decline in sales, to 208.2 billion yen. In the Japanese original equipment market, Yokohama’s sales declined amid a downturn in unit vehicle production and a downturn in tire prices, but the company achieved an increase in operating profitability by improving product mix. Contributing to the increase in unit sales volume were robust sales growth in North America, progress in developing new sales channels in Europe, and growth in shipments to automakers in China.

Therefore Yokohama revised down its full-year fiscal projections that it announced in February 2016. The company now projects that profit attributable to owners of the parent will decline 44.9 per cent, to 20.0 billion yen, on a 30.3 per cent decline in operating income, to 38.0 billion yen, and a 4.7 per cent decline in net sales, to 600.0 billion yen.

The only glimmer of good news is, following the acquisition of Alliance Tire Group B.V. in July 2016, Alliance sales will be consolidated into accounts in the third quarter (July to September) of 2016. This is expected to augment net sales by 27.0 billion yen, but diminishing operating income by 4.5 billion yen – mostly as a result of buying Alliance.