TOKYO—Despite reporting lower operating income in its first fiscal 2019 quarter, Yokohama Rubber Co. Ltd. has revised upward its full-year earnings forecast based on projected gains from the sale of undisclosed fixed assets.
For the quarter ended March 31, Yokohama reported a 50.1 percent drop in business profit — roughly equal to pre-tax operating income—to $53 million on 0.2 percent higher sales of $1.36 billion. Operating income fell 8.4 percent to $117.1 million.
In the tires segment, operating income fell 81.6 percent to $13.5 million on 3.9 percent lower sales of $910.2 million. YRC cited a decline in unit sales volume and an increase in production costs associated with reduced production volume for the drop in earnings.
OE-related sales revenue fell in all markets, YRC said, noting the impact of product changeovers in Japan for multiple vehicle models equipped with Yokohama tires and a downturn in unit vehicle production in China.
Replacement market sales revenue also declined. In Japan, sales fell due to weak demand for winter tires during a warm winter.
The firm's ATG segment, which includes off-road, farm and industrial machinery tires, reported gains in both profits and sales, which reflected growth in OE business in Europe and in replacement business worldwide.
Earnings climbed 28.3 percent to $22.3 million on 11.6 percent higher sales of $171.5 million. As a result, the segment operating ratio rose two points to 13 percent.
In the multiple business segment, sales revenue and business profit increased overall, helped by strong revenue in high-pressure hoses and overseas sales in the automotive sector.
For the full year, YRC revised its forecast for the increase in operating profit to 21.5 percent from 13 percent and for "profit attributable to owners of parent" to 29.1 percent from 15 pecent.