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Yokohama’s 1Q Profits Drop Nearly 38%

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Yokohama Rubber Co. Ltd. reported net income of 3.6 billion yen on net sales of $129.3 billion yen for its first quarter ended March 31, 2016. That compares to income of $5.8 billion yen on sales of $138.7 billion yen for 1Q 2015.

Based on the exchange rate on March 31, 2016, Yokohama recorded net income of $32 million on net sales of $1.1 billion for the first quarter. The company’s income-to-sales ratio was 2.9%.

The company’s first quarter net income declined 37.9% and net sales were down 6.8%. Operating income declined 42.0% to 6.9 billion yen.

Affecting sales adversely were a unit decline in vehicle production in Japan and a downward trend in tire prices worldwide, according to the company. Those and other adverse factors more than offset the earnings contribution of declining prices for raw materials. Also affecting earnings adversely was the appreciation of the yen.

In Yokohama’s tire segment, operating income declined 41.9%, to 5.4 billion yen, on a 6.9% decline in sales, to 100.8 billion yen. The company says business in the original equipment sector in Japan slumped on account of the unit decline in vehicle production and a downward trend in tire prices.

Yokohama posted gains in unit volume and in yen value in the Japanese market for replacement tires. Leading those gains were robust sales of high-value-added tires under Yokohama’s global flagship brand, Advan, and fuel-saving tires under the BluEarth brand.

North America Tire Sales Increased

Yokohama posted unit sales growth outside Japan, though overseas sales declined in yen value on account of the appreciation of the yen and escalating price competition.

The company posted unit sales growth in North America, led by gains in tires for sport-utility vehicles, and its sales mix improved in the North American market.

In Europe, strong sales of winter tires in 2015 carried over into sales momentum in summer tires in early 2016. Also contributing to the unit sales growth outside Japan were gains in the original equipment market in China.

Sales in Multiple Business Segment Decreased

Operating income declined 41.6% in Yokohama’s Multiple Business segment, to 1.4 billion yen, on a 6.9% decline in sales, to 27.1 billion yen. Business in that segment consists principally of high-pressure hoses; sealants, adhesives, and electronic equipment coatings; conveyor belts; antiseismic products; marine hoses and pneumatic marine fenders; and aircraft fixtures and components. Business was weak in high-pressure hoses on account of declining demand for automotive hoses and for hoses for construction and mining equipment. The decline in the construction and mining sector reflected the global downturn in natural resources development and slowing infrastructure investment in China.

In industrial materials, sales decreased as a decline in Japanese steel production and as slumping prices for crude oil. Sales were basically unchanged in Yokohama’s business segment that handles Hamatite-brand sealants and adhesives and coatings for electronic equipment. That resulted as growth in overseas business in automotive sealants offset a decline in construction sealants amid weakening demand. Sales increased in aircraft fixtures and components, led by gains in the government sector.

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

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