TOKYO (Aug. 11, 2011)—Yokohama Rubber Co. Ltd. reported strong net income growth in the quarter ended June 30, but operating income dropped 29.9 percent as increased costs for raw materials more than offset price increases the company instituted during the period.
Net income jumped 74.3 percent in firm's first quarter to $34.8 million, but operating earnings fell to $51.1 million on 10.2-percent higher sales of $1.6 billion.
Yokohama attributed the revenue gain to strong tire sales in Japan and overseas and said unit sales growth and progress in reducing costs were sufficient to offset the adverse effect on earnings of an appreciating yen/dollar relationship and increased selling expenses.
Yokohama's tire operations reported 12.1-percent higher sales of $1.28 billion, but operating income slid 30.1 percent to $45.8 million, or 3.6 percent of sales, on the negative effects of rising raw materials prices.
Revenue rose on strong sales gains in the Japanese replacement market and growth in North America, Europe and China.
Sales in North America jumped 11.1 percent to $327.4 million, Yokohama said, and operating income attributable to North America rose 3 percent to $18.8 million.
Tokyo-based Yokohama projects that net sales in the six months to Sept. 30 will increase 8.3 percent, while operating income will decline 27.5 percent. Net income should be up 7.3 percent.
Separately, the company downplayed news reports from Indonesia that it is interested in bidding on taking over Indonesian tire maker P.T. Multistrada Arah Sarana Tbk.
While acknowledging that Multistrada “can be one of the candidates” Yokohama would consider buying to help it boost capacity, “at this stage we do not have any strong interest in joining final bid for it.”