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Yokohama posts 1H income of $172 million

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Yokohama Rubber Co. Ltd. posted net income of 13.7 billion yen on net sales of 269 billon yen for the first half of its fiscal year ended June 30, 2012. Operating income was 19.9 billion yen.

(The company shifted to calendar-year fiscal accounting as of 2012 from its previous April-to-March accounting. That resulted in a one-time-only nine-month fiscal accounting period last year, so there is no half-to-half comparison.)

Based on the exchange rate on June 30, 2012, Yokohama recorded net income of $172.2 million on net sales of $3.4 billion for the first half of 2012. It's income-to-sales ratio was 5.1%.

"The surge in profitability reflected unit sales gains in tires and in diversified products, progress in securing market acceptance for price increases, an abating of what had been a persistent upward trend in raw material costs, and continuing progress in reducing costs," says the company. "Those positive factors more than offset the adverse effect of the continuing appreciation of the yen."

In Yokohama's tire operations, operating income totaled 16.9 billion yen on sales of 211.1 billion yen. Sales in the Japanese original equipment market increased solidly in step with increased vehicle production. The growth in vehicle production reflected the restoration of production capacity diminished by the Great East Japan Earthquake of March 2011 and the government's reinstatement of incentives for purchasing fuel-saving vehicles.

Tire demand was also robust in the Japanese replacement market. Sales declined slightly from the same period of the previous year, when the post-quake relief effort produced an extraordinary surge in demand, but they were higher than in the same period of 2010.

Yokohama's sales in overseas tire markets declined. That decline resulted despite progress in securing market acceptance for price increases, and it reflected softening demand in European nations other than Russia, in North America and in China.

Yokohama says it is on track to post record sales and earnings for the full fiscal year, and has revised upward the fiscal projections that it released in February. Here are the revisions for the full-year (with February's projections in parentheses).

Projected net income: 30 billion yen (25 billion yen).

Projected net sales: 576 billion yen (575 billion yen).

Projected operating income: 49 billion yen (40 billion yen).

Yokohama also announced that its annual dividend will total 18 yen per share: an interim dividend of 8 yen and a year-end dividend of 10 yen.

To read about Yokohama Rubber's first-quarter results, click here.

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