Yokohama Rubber – Q3 2018 profit affected by asset impairment charge

Yokohama Rubber Co., Ltd. reports a 1.2 per cent year-on-year increase in sales revenue in the nine months to 30 September 2018, however profit indicators were lower than in the first three quarters of last year. The tyre and rubber products manufacturer has also revised its full-year fiscal projection in light of operations at its US tyre plant.

Sales revenue amounted to 460.8 billion yen (£3.1 billion) and business profit (a Japanese equivalent to operating income) rose 13.4 per cent during the reporting period to 36.5 billion yen (£244.8 million). Both figures were Yokohama’s highest ever for the first three quarters of a financial year.

Operating profit declined 8.3 per cent to 27.0 billion yen (£181.1), and profit attributable to owners of parent declined 25.5 per cent to 16.3 billion yen (£109.3 million). Those declines reflect a charge of 11.2 billion yen for asset impairment at Yokohama’s US tyre production subsidiary, Yokohama Tire Manufacturing Mississippi, LLC.

Full-year projection revised downward

The company has revised its full-year fiscal projection for sales and earnings; both are now expected to be lower than the projection announced on 19 February. The revisions reflect weaker-than-expected sales in Yokohama Rubber’s Tires segment in China, Russia, and the Middle East; weaker-than-expected sales in the MB (Multiple Business) segment in construction sealants; and the abovementioned charge for asset impairment.

In regards to this charge for asset impairment at Yokohama Tire Manufacturing Mississippi, Yokohama Rubber comments that “achieving profitability at the subsidiary has taken longer than management anticipated when production began there.”

Yokohama’s revised projections call for sales revenue of 650.0 billion yen (£4.4 billion), up 0.6 per cent over the previous year and down 3.0 per cent from the earlier projection; business profit of 61.5 billion yen (£412.4 million), up 5.6 per cent over the previous year and down 2.4 per cent from the earlier projection; operating profit of 55.0 billion yen (£368.8 million), up 1.4 per cent over the previous year and down 8.3 per cent from the earlier projection; and for profit attributable to owners of parent of 36.0 billion yen (£241.4 million), down 9.9 per cent from the previous year and down 10.0 per cent from the earlier projection. This revision has not occasioned any change in Yokohama’s planned dividend payments.

Further information about Yokohama Rubber’s latest fiscal results can be read here.