Yokohama Rubber Co. Ltd. is not sitting still as the new year unfolds despite a net loss in fiscal 2009. It not only initiated the second phase of its "Grand Design 100" strategy recently, but also established a "multiple business" base in Europe.
Grand Design 100, launched in April 2006, has two 12-year financial goals: to achieve annual net sales of 1 trillion yen and annual operating income of 100 billion yen by March 31, 2018, the end of its fiscal year. It is comprised of four three-year segments.
The chief financial targets of phase two of the medium-term management plan, which covers the three fiscal years from April 1, 2009, to March 31, 2011, are to raise net sales to 550 billion yen, to raise operating income to 38.5 billion yen (7% of net sales), and to lay the groundwork for further growth by increasing free cash flow to more than 30 billion yen.
Yokohama says its defining policy for phase two is "quality growth." The company will "reinforce its corporate foundation to support renewed growth amid the vagaries of the global economic downturn."
In Yokohama's Tire Group -- the main source of the growth envisioned for Phase II -- the company will concentrate on the following:
* expanding its presence in the global marketplace;
* expanding and upgrading production capacity to respond flexibly to market trends in different regions; and
* integrating regional operations in support of increased globalization.
Yokohama says it "will strive in technological strategy to assert strengths in environmental technologies and to support its policy of delivering the best products at competitive prices and on time." It also "will reinforce its corporate foundation by addressing corporate social responsibility in management, by undertaking waste reduction through its Muda-dori activities, and by structurally reorganizing its domestic operations."
New multiple business base in Europe
Yokohama also has established a multiple business base in Dusseldorf, Germany. The company expects the subsidiary, Yokohama Industrial Products Europe GmbH, to achieve sales of 1 billion yen in three years selling to original equipment manufacturers and the replacement market.
The new company began delivering high-pressure hoses to Japanese construction machinery makers in Europe this month. The facility is Yokohama's fourth worldwide; it joins high-pressure hose and metal fitting assembly plants in the United States, Thailand and China.
Leading the way
A number of senior management changes were announced following the start of the new fiscal year. Although Yokohama's board of directors has adopted the changes, they must be formally approved at the general meeting of shareholders June 26, 2009.
The promotions are as follows (with the executive's current position in parentheses):
* Tooru Kobayashi (director and managing corporate officer) and Norio Karashima (director and managing corporate officer) to directors and senior managing corporate officers;
* Takashi Fukui (managing corporate officer) and Hikomitsu Noji (corporate officer) to directors;
* Toshio Izawa (corporate officer) and Yuji Goto (corporate officer) to managing corporate officers;
The board also named Tatsuya Murata, Fumio Morita and Toshiyuki Nishida corporate officers.
Three executives are retiring as directors and corporate officers: Takashi Yamashita (director and senior managing corporate officer), Hideo Fujiwara (director and corporate officer) and Akihisa Takayama (managing corporate officer.
In other management news, Hideo Fujiwara will replace Seiichi Suzuki as corporate auditor. Fujiwara was promoted from director and corporate officer.
At the same time, Takashi Yamashita, Akihisa Takayama and Seiichi Suzuki will be appointed advisors.
Net sales drop 6.2%
Yokohama recorded a net loss of 5.7 billion yen on net sales of 517.3 billion yen for its fiscal year ended March 31, 2009. That loss compares with net income of 21.1 billion yen on sales of 551.5 billion yen for its 2008 fiscal year. Operating income declined 61.3%, to 12.8 billion yen.
Based on the exchange rate on March 31, Yokohama posted a net loss of $58.5 million on sales of $5.3 billion for fiscal 2009.
Sales declined in both the tire and diversified product divisions. The Yokohama Tire Group posted a 4.8% decline in sales, to 399.7 billion yen ($4.1 billion), and a 62% decline in operating income, to 9.9 billion yen ($101.7 million).
