TOKYO (Feb. 12, 2009)—Yokohama Rubber Co. Ltd. fell into the red in the quarter ended Dec. 31, prompting management to forecast a net loss for the fiscal year and to initiate measures to trim costs and pare inventories.
Yokohama's third quarter loss was $3.2 million as sales fell 1.5 percent to $1.5 billion, and operating income dropped 37.3 percent to $113.6 million. Net and operating income for the nine months fell 99.1 and 43.8 percent, respectively, to $2.16 million and $168.3 million. Sales were up 0.2 percent to $3.99 billion.
In response to the deteriorating business environment, Yokohama said it is working to trim costs, reduce expenses, curtail investment and pare inventories. It disclosed in the earning report it also will lower directors' compensation 10 percent and all other management-level personnel's compensation 5 percent.
Yokohama's tire group's sales grew in the quarter and the nine-month period, offsetting declines in the diversified products business group.
The tire group's operating income for the nine months fell 44.6 percent of $138.1 million as sales grew 2.2 percent to $3.11 billion. Yokohama said sales benefitted from growth in business with Japanese vehicle makers and from growth overseas.
The drop in operating profitability resulted from higher raw material prices, the appreciation of the yen and an increase in selling expenses, Yokohama said.
The multiple business group reported operating income and sales drops of 29.3 percent and 6.2 percent.
Yokohama's sales in North America slipped 1 percent in the quarter, to $284 million, but were down 4.4 percent for the nine months to $773.5 million. Operating income from North American operations rose during the quarter, to $18 million, but was off nearly 30 percent for the April-December period to $37.1 million.
For the fiscal year ending March 31, management is projecting a net loss of about $70 million on 5.2-percent lower sales of $5 billion.