Yokohama Rubber: Sales and earnings up in H1 2017

Yokohama Rubber delivered its shareholders good news today upon reporting a 38.7 per cent year-on-year increase in profit attributable to owners of parent in the first half of 2017, with profit amounting to 11.4 billion yen (£79.8 million). Operating income during the six months to 30 June rose 16.8 per cent to 18.4 billion yen (£128.8 million), while net sales increased 15.9 per cent to 310.8 billion yen (£2.2 billion).

The Japanese manufacturer attributes this performance to higher sales in its Tires segment both within Japan and around the world, from increased sales of high-pressure hoses and in Hamatite-brand automotive sealants in its Multiple Business segment, and from the first-time inclusion of Alliance Tire Group B.V. in the company’s interim consolidated results.

Earnings benefited from higher sales, from price increases for tyres that Yokohama implemented in Japan from April onwards, and from a weakening of the yen. Those positive factors more than offset the negative impact that climbing raw material prices had on earnings.

In Yokohama’s Tires segment, operating income increased 8.9 per cent, to 13.1 billion yen (£91.7 million), on a 6.4 per cent increase in sales, to 221.5 billion yen (£1.6 billion). Business expanded strongly in the original equipment sector, led by continued growth in China and by growth in North America and in Russia. Both unit volumes and sales were higher in the replacement sector, helped in Japan by price increases and higher sales of Advan and BluEarth tyres, strong sales in Europe and North America, and by recovering demand in Russia.

In the ATG segment, operating income totalled 1.5 billion yen (£10.5 million) on sales of 30.3 billion yen (£212.1 million). Global weakness in grain prices weighed on demand for agricultural tyres, however the market exhibited signs of recovery, and sales in the ATG segment met management expectations in both the original equipment sector and replacement sectors.

Yokohama Rubber’s management has upwardly revised the full-year operating income projection it announced in February, a change made to reflect stronger-than-anticipated operating profitability in the fiscal first half, continued weakness in the yen, and lower-than-expected raw material prices. The revised projection calls for operating income of 50.0 billion yen (£350.0 million), a 5.3 per cent increase over the earlier projection. Management abides by the full-year projections for profit attributable to owners of parent and net sales announced in February 2017. Those call for profit attributable to owners of parent of 30.0 billion yen (£210.0 million) and for net sales of 660.0 billion yen (£4.6 billion). Yokohama will adopt the International Financial Reporting Standards in fiscal 2017; recalculating the full-year projections under those standards results in projections of 51.0 billion yen (£357.0 million) for operating income and 635.0 billion yen (£4.4 billion) for net sales.

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