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May 17, 2016 02:00 AM

Yokohama reports drop in operating profit, sales

Tire Business Report
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    TOKYO—Yokohama Rubber Co. Ltd. suffered a 42 percent drop in operating profit for the quarter that ended March 31, as the negative effects of an appreciating yen, volume declines in vehicle production in Japan and a downward trend in tire prices worldwide more than offset declining prices for raw materials.

    Yokohama's operating profit fell to $61.1 million, while sales dropped 6.8 percent to $1.15 billion, reducing the operating ratio 3.5 points to 5.3 percent.

    Yokohama's tire segment fared no better, reporting a plunge of 41.9 percent in operating income to $48.1 million on 6.9 percent lower sales of $896.8 million.

    The Tokyo-based tire maker posted gains in unit volume and in yen value in the Japanese market for replacement tires, but business in the domestic original equipment sector slumped on lower vehicle production and a downward trend in tire prices.

    Internationally, Yokohama posted unit sales growth although overseas revenue declined on the effects of the appreciating yen and escalating price competition. In North America Yokohama posted unit sales growth, led by gains in tires for sport-utility vehicles, and its sales mix improved in the North American market.

    In Europe, strong sales of winter tires in 2015 carried over into sales momentum in summer tires in early 2016.

    Yokohama is maintaining the first half and full year fiscal projections for 2016 that it announced in February 2016, which call for a 13 percent decline in operating income and a 1.2 percent increase in net sales in the first half and a 0.9 percent increase in operating income and a 3.5 percent rise in sales.

    These projections do not take into account YRC's pending acquisition of off-road tire maker Alliance Tire Group B.V. The company will release updated fiscal projections when it has calculated the probable effect of that acquisition on its fiscal performance.

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