Yokohama Rubber: Profit up 56% in Q1 2017

Thanks largely to gains in its tyre business outside Japan and the first-time inclusion of Alliance Tire Group B.V. (ATG) in its consolidated results, Yokohama Rubber Co., Ltd. performed well in the first quarter of 2017. Net sales increased 14.2 per cent year-on-year to 147.7 billion yen (£1.0 billion), operating income was, at 9.1 billion yen (£61.8 million), 32.0 per cent higher than during the same period a year ago, and profit attributable to owners of parent was up 56.4 per cent to 5.7 billion yen (£38.7 million).

In Yokohama’s Tires segment, operating income increased 28.4 per cent, to 6.9 billion yen (£46.9 million), on a 4.3 per cent increase in sales, to 105.2 billion yen (£714.3 million). The company reports that business expanded strongly in the original equipment sector, led by growth in China. Business also expanded in the replacement sector. Sales in that sector increased in unit volume and in value, led by gains in North America. Another factor contributing to increased sales in the replacement tyre business was gains in Europe, supported by progress in cultivating sales channels. Within Japan, aggregate tyre sales remained basically the same as in the first quarter of 2016 in terms of unit volume and value, however Yokohama Rubber says operating profitability increased thanks to improvement in the company’s sales portfolio, particularly growing sales of Advan products and the BluEarth fuel-saving tyre range.

Operating income for Yokohama’s ATG segment totalled 637 million yen (£4.3 billion) on sales of 14.9 billion yen (£101.2 million). The company says sales in that segment accorded with management’s expectations in unit volume and in value. Global weakness in grain prices weighed on demand for agricultural machinery and thus undercut ATG’s business in the original equipment sector, but ATG sales increased in the replacement tyre business.

Non-tyre operating income within Yokhama’s MB segment declined 8.5 per cent, to 1.3 billion yen (£8.8 million), on a 4.2 per cent decline in sales, to 26.0 billion yen (£176.5 million).

Yokohama Rubber’s management has maintained the first half fiscal year projections that the company announced in February 2017. Those projections call for profit attributable to owners of parent to decline 8.9 per cent from the same period of the previous year, to 7.5 billion yen (£50.9 million), on a 10.9 per cent decline in operating income, to 14.0 billion yen (£95.1 million), and an 11.9 per cent increase in net sales, to 300.0 billion yen (£2.0 billion). Management also abides by the full-year projections announced in February. Those projections call for profit attributable to owners of parent to increase 59.7 per cent, to 30.0 billion yen (£203.7 million), on a 12.2 per cent increase in operating income, to 47.5 billion yen (£322.5 million), and a 10.7 per cent increase in net sales, to 660.0 billion yen (£4.5 billion).

Yokohama will adopt the International Financial Reporting Standards (IFRS) in fiscal 2017. Recalculating the full-year projections under those standards results in projections of 51.0 billion yen (£346.3 million) for operating income and 635.0 billion yen (£4.3 billion) for net sales.

Further information about Yokohama Rubber’s Q1 2017 results can be found in the Tyrepress.com company profiles and results section.