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Yokohama Suffers From Lower OE Unit Sales in 1H

Posted on August 13, 2019

Sales revenue from Yokohama Rubber Co. Ltd.'s Tires Business Segment was down 1.6%. However, revenue from its Aliance Tire Group (ATG) subsidiary was up 7.1%.

Yokohama posted net income of 16.7 billion yen on net sales of 311.1 billion yen for the first half ended June 30, 2019. That compares to income of 17.8 billion yen on sales of more than 309.6 billion yen for the same six-month period in 2018.

Based on the exchange rate on June 30, 2019, Yokohama recorded net income of $154.5 million on net sales of more than $2.8 billion. Its income-to-sales ratio was 5.3%.

Operating profit was down 4.7%, from 26.3 billion yen in the first half of 2018 to 25.1 billion yen ($232.2 million) in 1H 2019.

Also in the company's Tires Business Segment, Yokohama said business profit declined 52.4% "on account of a downturn in unit sales volume, an upturn in unit costs associated with reduced production volume, and an increase in logistics costs."

Original equipment. Tire sales declined in the OE sector. "The weakness in Japan reflected the impact of product changeovers for multiple vehicle models equipped with Yokohama tires. Meanwhile, a Chinese downturn in unit vehicle production attributable to slowing economic growth weighed on Yokohama’s original equipment business overseas."

Replacement. Yokohama said it "maintained" sales in replacement tires at the level of the same period of the previous year. It supported replacement business by:

* promoting high-value-added products, such as tires marketed under its global flagship brand, Advan, and fuel-saving tires in the BluEarth series; and

* deploying the strategies of its medium-term management plan, Grand Design 2020.

Yokohama’s replacement business suffered from weak, warm-winter sales of winter tires in Japan, but business gained momentum in spring with solid sales of summer tires in Japan and with rising sales overseas, especially in North America.

In the ATG Business Segment, not only was revenue up 7.1%, but also business profit was up 20.2%. Revenue and profit also were up in the Multiple Business and "Other" segments.

Related Topics: commercial tires, consumer tires, light truck tires, OE tires, passenger tires, Yokohama financials

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