Yokohama Rubber Co. Ltd. reported net income of 5.7 billion yen on net sales of 147.7 billion yen for its first quarter ended March 31, 2017. That compares to income of 3.6 billion yen on sales of 129.3 billion yen for 2016’s first quarter.

Based on the exchange rate on March 31, 2017, Yokohama recorded net income of $51 million on net sales of $1.3 billion for the first quarter. The company’s income-to-sales ratio was 3.8%.

The company’s first quarter 2017 net income increased 56.4%, and net sales increased 14.2%.

Yokohama attributed the year-over-year improvements in net income and sales to overseas sales gains in its tires segment, from overseas sales gains in high-pressure hoses and in Hamatite-brand automotive sealants in its multiple business segment, and from the first-time inclusion of Alliance Tire Group B.V. in its consolidated results. Yokohama acquired Alliance Tire Group, which produces tires for agricultural and forestry machinery and for other off-highway tires, on July 1, 2016, and has incorporated that company’s operations in its consolidated accounts as the ATG segment.

North America leads growth in replacement tire sales

In the tires segment, operating income increased 28.4%, to 6.9 billion yen, on a 4.3% increase in sales, to 105.2 billion yen. The company says business expanded strongly in the original equipment sector, led by growth in China. Replacement tire sales increased in unit volume and in value, led by gains in North America. Also contributing to the sales growth in replacement tires were gains in Europe, supported by progress in cultivating sales channels.

Geographically, Yokohama’s aggregate tire sales were basically unchanged in Japan in unit volume and in value. Operating profitability increased in Japan, however, driven by improvement in the company’s sales portfolio. Yokohama its improvement centered on sales gains for its global flagship brand, Advan, and for the company’s BluEarth line of fuel-saving tires.

In the ATG segment, operating income totaled 637 million yen on sales of 14.9 billion yen. The company said ATG segment sales were in line with its expectations for unit volume and in value. Global weakness in grain prices weighed on demand for agricultural machinery and thus undercut ATG business in the original equipment sector, but ATG sales increased in replacement tires.

Sales in multiple business segment drop

Operating income in Yokohama’s multiple business segment declined 8.5%, to 1.3 billion yen, on a 4.2% decline in sales, to 26.0 billion yen. This segment consists primarily of business in high-pressure hoses, Hamatite-brand sealants and adhesives and electronic equipment coatings, conveyor belts, antiseismic products, marine hoses and pneumatic marine fenders, and aircraft fixtures and components.

Business benefited from a recovery in Chinese demand for high-pressure hoses for construction equipment, from growth in overseas sales of Hamatite-brand automotive sealants. Sales of industrial materials contracted despite overseas sales gains in conveyor belts as business shrank in marine products. Yokohama’s business in aircraft fixtures and components declined on account of weakness in the commercial sector.

Yokohama will adopt the International Financial Reporting Standards (IFRS) in fiscal 2017.

For more information, visit the investor relations section of the company’s website.