Yokohama raises fiscal outlook after doubling Q3 gains

TOKYO—Yokohama Rubber Co. Ltd. (YRC) has raised its fiscal 2021 financial outlook on the back of a strong third-quarter and nine-month performance.

Yokohama's third-quarter operating profit nearly doubled to $97.3 million on 13.2 percent higher sales of $1.42 billion, raising the operating margin three points to 6.8 percent. Net earnings double to $59 million.

For the January-September period, YRC reported a sevenfold increase in operating income, to $539.3 million on 22.3 percent higher sales of $4.19 billion, yielding an operating ratio of 12.9 percent. The operating income also was nearly 78 percent higher than that reported in 2019, while sales were nearly on par.

Net earnings for the nine-month period jumped tenfold to $395.3 million.

Yokohama said the figures posted for profit attributable to owners of parent, operating profit and business profit were "the highest ever for the first nine months of a fiscal year."

YRC's tire segment posted a 136 percent gain in operating income for the third quarter on 6.6 percent higher sales of $966.4 million, yielding an operating ratio of 5.5 percent. For the nine-month period, operating earnings were up 22-fold over 2019 at $201.3 million on 19.2 percent higher sales of $2.89 billion. Revenue was essentially on par with 2019, YRC said.

Tire segment sales in North American grew 10.7 percent in the quarter and 16.2 percent in the nine-month period to $309 million and $841.8 million, respectively.

Yokohama said it experienced a revenue increase in original equipment tires, despite the adverse effect of global shortages of semiconductor chips on vehicle production in Japan, North America, China, and other regions.

Sales revenue also increased in replacement tires, helped by "high-value-added" products.

Revenue and business profit for the nine months both climbed to record levels in Yokohama's ATG segment, which comprises agricultural machinery, industrial machinery, and off-highway tires.

For the third quarter, operating earnings grew 36.6 percent to $37.3 million on 64.7 percent higher sales of $259 million. For the nine-month period, earnings grew 80 percent to $101.8 million on 62 percent higher sales of $697.4 million. Revenue in 2021 also was 43 percent greater than that reported in 2019.

The strong performance, YRC said, reflected sales gains in all of ATG's principal product categories.

ATG sales in North America doubled in the third quarter to $128 million and were up 18.6 percent for the three quarters to $353.6 million.

In the multiple business segment, operating profit was up 24 percent year-on-year on 4.2 percent higher sales.

A market recovery in the construction equipment sector lifted sales in hose & couplings area, while revenue declined in industrial products, due mainly to lower demand from the marine industry.

In view of the strong nine-month performance, Yokohama revised its fiscal 2021 sales and earnings projections slightly over those disclosed earlier.