Yokohama returns to profitability in first quarter
Yokohama Rubber Co., Ltd. posted net income of 1.6 billion yen on net sales of 117.4 billion yen for its first quarter ended June 30, 2010. That compares to a net loss of 1.8 billion yen on sales of 95.1 billion yen for the same period last year.
Based on the exchange rate on June 30, 2010, Yokohama recorded net income of $18 million on net sales of $1.3 billion for 1Q 2011 (Yokohama's 2011 fiscal year ends March 21, 2011).
According to Yokohama, "a strong turnaround in operating profitability" drove the company's return to prosperity. Driving operating income, in turn, was "strong growth" in tire unit sales.
The company posted operating income of 5.9 billion yen in the fiscal first quarter, compared to an operating loss of 4.1 billion yen in the same period of fiscal 2010.
"Profitability improved as an upturn in capacity utilization and progress in cutting costs more than offset the adverse effects of rising raw material costs and the appreciation of the yen."
Operating income in Yokohama's tire operations totaled 5.3 billion yen, up from a first-quarter loss of 3.7 billion yen in fiscal 2010.
Tire group sales rose 25.5%, to 92.6 billion yen. Yokohama's unit sales in Japan increased in the replacement and original equipment markets; the company also posted unit sales gains in overseas tire markets, led by growth in North America and Asia.
With its 1Q 2011 financial results, Yokohama has begun reporting sales and earnings separately for industrial products and for other diversified products (Yokohama formerly reported aggregate figures for all of its diversified business as "Multiple Business" results).
The company projects operating income of 4 billion yen in the first half of fiscal 2011, ending Sept. 30, 2010. That compares with an operating loss of 2.4 billion yen in the same period of the previous year.
Yokohama also projects:
* comparative sales growth of 17.8%, to 238.0 billion yen;
* a comparative net loss of 1.4 billion yen, a 64.1% improvement over the same period last year. "Nonoperating losses associated with the strengthening yen appear likely to prevent a return to net profitability in the fiscal first half."
The company will announce full-year fiscal projections when it releases its first-half fiscal results on Nov. 1, 2010.