TOKYO—Yokohama Rubber Co. Ltd. plans to commit $1 billion in investment in expanding and upgrading its tire production worldwide in the coming five years, increasing annual production capacity 13 percent by 2017 and nearly 31 percent by 2020.
The investment package is part of Phase IV of Yokohama's Grand Design 100 medium-term management plan, which calls for the firm to achieve an operating profit margin of at least 10.4 percent by 2017—up about a percentage point over 2014—while boosting sales 23 percent.
The Grand Design 100 plan was crafted nine years ago in tune with marking Yokohama's centennial as a firm in 2017.
The firm's tire unit investment plan will underscore Yokohama's efforts to increase its business with auto makers in overseas markets, the company said. Annual capacity is seen rising to 74 million units by 2017 and 89 million units by 2020, up from 68 million currently.
Yokohama said the plan will include tire plant construction and expansion projects in North America, Russia, Europe and China.
YRC already has one plant under construction in the U.S., a $300 million project in West Point, Miss., for truck tires that the company sees as a cornerstone for expanding its business in the commercial tire sector. That strategy includes developing business in the ultra-large off-the-road radial sector.
Yokohama also said its Phase IV goals include “working to channel all activity companywide into maximizing customer satisfaction and undertaking vigorous investment based on a strong financial position.”
From a technology point of view, Phase IV actions emphasize developing products and technologies for minimizing environmental impact, globalizing tire development functions and developing a “next-generation technological foundation.”
Common strategy for all operations will include taking a proactive approach to mergers and acquisitions and alliances, working to reduce costs by $300 million and considering the adoption of the International Financial Reporting Standards, YRC said.
In announcing its Phase IV goals, Yokohama said it exceeded the profitability target established in Phase III by reaching a 9.3 percent operating margin over the past three years. It fell about 1 percent shy of its sales target, though.