Yokohama Rubber first-half earnings improve on record sales

HIRATSUKA, Japan—Yokohama Rubber Co. Ltd. (YRC), buoyed to a measurable extent by the first-time inclusion of results of the former Trelleborg Wheel Systems, reported a 4.6-percent improvement in operating profit for the six months ended June 30 on record sales.

Operating income rose to $205.4 million on 13.2-percent higher sales revenue of $3.23 billion, including more than $220 million in sales attributed to Trelleborg Wheel Systems—now operating as Y-TWS—which YRC acquired in a $2.3 billion deal that closed in early May.

Net profit rose 18.8 percent to $201.6 million, aided by gains on the sales of idle assets and the divestiture of the Friend Tire Co. tire wholesaling subsidiary in the U.S.

First-half sales growth reflected "stepped-up marketing of high-value-added tires, improvements in the product mix in the company's tire sales portfolio, and progress in securing price increases for tires," YRC said.

YRC's traditional tire business (consumer and commercial) reported a 12.9-percent drop in operating income, to $16.7 million, on 14.1-percent higher sales of $2.84 billion.

YRC noted that increased sales of OE automotive tires, helped by a recovery in new-vehicle sales, both in Japan and North America, more than offset weak sales for Japanese auto makers in China.

Replacement tire revenues also increased, with strong demand for winter tires in Japan and growth in sales of high-value-added products, such as tires for SUVs and pickup trucks, in Europe and in China.

In the truck and bus tire (TBR) business, YRC said its TBR plant in West Point, Miss., improved its supply capacity and returned to the black.

In Japan, the commercial tire business expanded practical testing of its tire solution services to electric-powered buses and also began deliveries of Yokohama tires for use on electric trucks.

In the off-road tires segment, YRC reported a 15.2-percent drop in at its Yokohama Off-Highway Tires business, which the company handled as the Alliance Tire Group segment prior to 2022. That decline, however, was more than offset by new sales from Y-TWS.

YRC's tire-related sales in North America were up 3.6 percent in the period to $959 million, with the traditional tire business up 9.2 percent and off-highway tire business down 21.7 percent.

Also contributing were sales gains across all principal product categories in YRC's non-tire MB (Multiple Business) segment as well as a weakening of the yen against other main currencies.

In terms of earnings, YRC reported a 7.8-percent drop in "business profit" to $186.2 million, due mainly to higher materials, energy and other costs at its tires segment and a sales decline in off-highway tires for agricultural equipment and other applications.

YRC at this time did not disclose results by geographic area.

Looking at the group's full-year outlook, YRC stood by projections issued in May: Sales revenue of roughly $7.3 billion (up 16 percent over 2022) with an operating ratio of 8.5 percent.