Yokohama Rubber posts ‘record-high’ results

The Yokohama Rubber Co., Ltd. reports “record-high” sales revenue and profit during the 2021 fiscal year. Sales revenue increased 21.7 per cent over the previous year during the 12 months to 31 December 2021, to 670.8 billion yen (£4.3 billion); business profit (sales revenue less the sum of cost of sales and selling, general and administrative expenses) rose 73.3 per cent, to 62.2 billion yen (£396.7 million); operating profit increased 132.4 per cent, to 83.6 billion yen (£533.1 million); and profit attributable to owners of parent was up 148.9 per cent, to 65.5 billion yen (£417.7 million).

According to the company, this upturn in sales revenue and earnings reflects its success in implementing price increases for tyres in North America and other overseas markets and the weakening of the yen against other principal currencies. Yokohama Rubber states that these factors “more than compensated” for the adverse effects of rising raw material costs and logistics expenses, of the disruptions in global supply chains, and of the challenges presented by the Covid-19 pandemic.

Performance by segment

Both sales revenue and business profit within Yokohama’s Tires segment increased over the previous year. Sales of original equipment tyres increased despite the impact that continuing global shortages of semiconductors have had on vehicle production volumes. Yokohama also posted sales growth in the replacement tyre segment, with sales gains taking place in North America, Europe, and in Asian markets outside Japan, led by business in India.

Sales revenue and business profit also increased over the previous year in Yokohama’s MB segment. Business in high-pressure hoses expanded, led by strong sales of hydraulic hoses in the resurgent construction equipment sector. Sales were basically flat in industrial materials, as delays in large projects undermined replacement business in marine products and offset Japanese sales growth in conveyor belts. In aircraft fixtures and components, sales declined on account of weak demand in the commercial sector.

Sales revenue and business profit also grew within Yokohama’s ATG segment (absorbed into the Tires segment as of 2022); both reached their highest level ever.

Lower profits expected this year

Yokohama Rubber’s management projects that full-year sales revenue in 2022 will increase 11.8 per cent over the previous year, to 750.0 billion yen (£4.8 billion), and thus reach another all-time high. That said, the continuing upward movement in energy and raw material costs and in logistics expenses are taking a toll on earnings, and management projects that business profit will decline 3.5 per cent from the previous year, to 60.0 billion yen (£382.6 million); operating profit will decline 30.1 per cent, to 58.5 billion yen (£373.1 million); and profit attributable to owners of parent will decline 38.9 per cent, to 40.0 billion yen (£255.1 million). Management will recommend paying a year-end dividend of 33 yen and will declare an interim dividend of 33 yen, which would result in an annual dividend of 66 yen.