Yokohama's net income rises 74% in 1Q
Yokohama Rubber Co. Ltd. recorded net income of 2.8 billion yen on net sales o129.4 billion yen for its fiscal 2011 quarter ended June 30, 2011. That compares to income of 1.6 billion yen on sales of 117.4 billion yen for the same period last year.
(Yokohama will change its fiscal year in 2011 to a January-December period. That will result in a one-time-only nine-month fiscal period from April 1 to Dec. 31, 2011.)
Based on the exchange rate on June 30, 2011, Yokohama posted net income of $34.8 million on net sales of $1.6 billion for 1Q 2011. The company's income-to-sales ratio was 2.2%.
While profits were up 74%, operating income decreased 29.9%, from 5.9 billion yen to 4.1 billion yen. Yokohama credits its 10.2% increase in sales to strong sales of tires in Japan and overseas. Sales in Yokohama's tire operations increased 12.1%, to 103.8 billion yen.
"Unit sales growth and progress in reducing costs were sufficient to offset the adverse effect on earnings of the appreciation of the yen and increased selling expenses, but price increases for Yokohama products were insufficient to fully offset the effect of rising prices for raw materials," says the company.
"The yen appreciated less sharply, however, than in the same period of the previous fiscal year, and currency translation losses, therefore, narrowed greatly."
Japanese demand for original equipment tires declined in the wake of the Great East Japan Earthquake, but Yokohama posted strong sales gains in the Japanese replacement market and also registered growth in North America, Europe, and China. Yokohama adds that a 30.1% decline in the tire segment's operating income reflected the rising prices for raw materials.
For its nine-month fiscal year ending Dec. 31, 2011, the company projects the following:
* net income of 11 billion yen,
* net sales of 471 billion yen, and
* operating income of 21 billion yen.
Those projections are unchanged from the projections the company announced when it released its full-year fiscal results on May 20, 2011.