Yokohama's 2018 Earnings Fall on Slightly Higher Sales

Feb. 14, 2019

Yokohama Rubber Co. Ltd. posted net income of 35.6 billion yen on net sales of 650.2 billion yen for the fiscal year ended December 31, 2018. That compares to income of 40.0 billion yen on sales of 646.3 billion yen in fiscal 2017.

Based on the Dec. 31, 2018, exchange rate, Yokohama record net income of $322.0 million on sales of $5.9 billion. The company’s income-to-sales ratio was 5.5%.

The company’s earnings were down 10.9% and operating profit fell 1.4% versus the year-ago period. Yokohama attributes the declines to an 11.2 billion yen charge for asset impairment at its U.S. tire production subsidiary Yokohama Tire Manufacturing Mississippi LLC.

Yokahama said net sales, which were up 0.6% year-over-year, were the highest ever in the company’s history. Likewise, operating income was up 1.7% to a record 59.3 billion yen.

In the tire segment, sales revenue declined in original equipment business in Japan and overseas. In Japan, business suffered from product changeovers for vehicle models equipped with Yokohama tires and from production adjustments at automakers in connection with natural disasters.

Yokohama said its overseas tire business suffered from production adjustments by automakers in China necessitated by weak sales. Yokohama won new fitments during the year on premium-grade passenger cars in Japan and overseas. The company said sales of replacement tires grew in the Japanese market. Business there benefited from strong sales in winter tires, led by the iceGuard 6 studless snow tire. Japanese business in replacement tires also benefited from vigorous promotion of the premium-grade tires of Yokohama’s global flagship brand, Advan, and the fuel-saving tires of the company’s BluEarth series.

Business in replacement tires outside Japan declined on account of adverse weather trends, currency instability in some emerging economies, and the negative effect on demand of concerns about U.S.-Chinese trade frictions.

In the ATG (Alliance Tire Group) segment, Yokohama said sales revenue increased on the strength of gains in original equipment, which reflected a continuing recovery in demand for agricultural machinery.

Yokohama’s full-year fiscal projections for 2019 call for sales revenue of 660.0 billion yen, up 1.5% over the previous year; business profit of 57.5 billion yen, down 3.0%; operating profit of 57.5 billion yen, up 7.5%; and profit attributable to owners of parent of 40.0 billion yen, up 12.3%.