Yokohama Reports 18% Increase in First Half Earnings
Yokohama Rubber Co. Ltd. announced its first half of the year financial results with an 18.8% increase in net earnings.
The company also stated it increased operating profit by 4.6%; a 7.8% decline in business profit; and a 13.2% increase in sales revenue.
According to Yokohama officials, the sales revenue in the period under review is the highest ever for the company in a six-month period. The sales growth reflected “stepped up marketing on high-value-added tires, improvements in product mix and progress in securing price increases for tires.”
The decline in business profit comes from the high raw material and energy costs, in selling, general and administrative expenses and a sales decline in off-highway tires for agricultural equipment.
Contributing to the increase in profit were gains on sales of idle assets and a gain on the divestiture of Friend Tire Co., a tire wholesaling subsidiary in the United States. The wholesale operation was sold to Southern Tire Mart LLC in April.
First-half sales revenue in the Yokohama Rubber’s Tires segment increased over the same period of the previous year, but business profit declined. Sales revenue in OE automobile tires increased, supported by new-vehicle sales in Japan and North America.
Sales revenue increased for replacement tires.
Tire Sales
The company had a large increase in sales revenue in off-highway tires. Sales declined in the Yokohama Off-Highway Tires (YOHT) business, which was known as Alliance Tire Group in 2022 reporting. But more than offsetting that decline in YOHT was the acquisition of Trelleborg Wheel Systems Holding AB. (Since its acquisition, the Trelleborg business operates as Y-TWS.)
Yokohama Rubber's full-year projections for 2023 are unchanged since previously announced in May 2023. Those projections call for sales revenue of over $6.9 billion; $584.4 million in business profit; and operating profit came in at $601.7 million.
Management has declared an interim dividend of $0.24 per share, an increase of $0.0070 over the interim dividend originally scheduled and plans to recommend a year-end dividend of $0.24 per share. That would bring the whole year's dividend to $0.47 per share, an increase of $0.014 over the previous year.
The consumer tire business is aiming to expand the sales ratio of high value-added tires from 40% in 2019 to more than 50% by increasing sales of its Advan, Geolandar and winter tires. Yokohama is working to expand its OE positions for both the Advan and Geolandar lines, while also strengthening sales in the replacement market and expanding size lineups for winter tires.
The commercial tire business “continues to explore opportunities created by market changes,” according to officials. The company wants to focus on cost, service, digital transformation and strengthening its product line.
Yokohama says its medium truck tire plant in West Point, Miss. “improved its supply capacity and returned to the black in the recently completed first half.”
Financial Highlights
Sales revenue for the first half of 2023 was over $3.1 billion compared to $2.8 billion in 2022. Business profit in the first half of 2023 was $176.8 million and operating profit in the first half of 2023 was $194.9 million.