Yokohama Rubber posts record first-quarter sales

Hiratsuka, Japan—The Yokohama Rubber Co., Ltd., announced its business and financial results for the first quarter (January to March) of fiscal 2023. Profit attributable to owners of parent declined 4.4% from the same period of the previous year, to \9.7 billion; on a 2.4% decline in operating profit, to \13.2 billion; a 4.8% decline in business profit*, to \13.0 billion; and a 10.1% increase in sales revenue, to \204.3 billion.

Basically equivalent to operating income under accounting principles generally accepted in Japan and calculated as sales revenue less the sum of cost of sales and selling, general and administrative expenses.

The figure for sales revenue was the highest ever at Yokohama Rubber in the January-to-March quarter. It reflected successful marketing of high-value-added tire products, such as ADVAN-brand high-performance tires and GEOLANDAR tires for SUVs and pickup trucks, and improvements in product mix. It also reflected progress in implementing price increases and the weakening of the yen against other principal currencies during the quarter. Earnings in Yokohama Rubber’s tire business reflected increases in raw material prices, logistics cost, and energy costs and reduced unit production at automakers on account of shortages of semiconductor devices.

First-quarter sales revenue in Yokohama Rubber’s Tires segment increased over the same period of the previous year, but business profit declined. Sales revenue in original equipment tires increased as Yokohama Rubber won new fitments on vehicles in Japan and in North America and as sales benefited from the weakening of the yen against other principal currencies. Those positive factors more than offset weakness in shipments to automakers in China.

Sales revenue also increased in replacement tires. In Japan, sales revenue benefited from heavy snowfalls, which stimulated demand for studless winter tires. Yokohama Rubber achieved sales growth in China and in other Asian markets outside Japan by promoting high-value-added products in the ADVAN series and under other brands. Sales revenue declined in the Yokohama Off-Highway Tires unit (formerly the ATG [Alliance Tire Group] segment), which produces and markets off-highway tires (hereinafter, OHT) for agricultural and construction machinery and other application.

Yokohama Rubber has absorbed the ATG segment into its Tires segment as of fiscal 2022. That is on account of similarities between the two segments in regard to customers and product characteristics.

In Yokohama Rubber’s MB (Multiple Business) segment, sales revenue and business profit increased over the same period of the previous year. Sales revenue in hose & couplings increased, benefiting from a recovery in vehicle production in North America. Yokohama Rubber also posted growth in sales revenue in industrial materials as Japanese business in conveyor belts expanded and as demand for replacement fixtures and components recovered in the commercial aircraft sector.

Yokohama Rubber absorbed its business in aerospace products into the industrial products division on March 30, 2022.

Management at Yokohama Rubber has revised upward the full-year fiscal projections for 2023 that it announced in February 2023. That revision is on account of the acquisition of Trelleborg Wheel Systems Holding AB (hereinafter, TWS) on May 2, 2023. The revised projections call for profit attributable to owners of parent to total \57.0 billion, 23.9% higher than the earlier projection; on operating profit of \87.0 billion, 19.2% higher than the earlier projection; business profit of \84.5 billion, 15.8% higher than the earlier projection; and sales revenue of \1.0 trillion, 11.1% higher than the earlier projection.

The TWS acquisition is part of Yokohama Rubber’s strategic initiatives to expand its OHT business. Yokohama Rubber believes that, among commercial tires, OHT business is capable of securing stably high earnings. The acquisition will bring consumer tire to commercial tire sales composition of Yokohama Rubber’s tire business in line with the global tire market ratio of 1:1, from the current 2:1 ratio weighted toward consumer tires. In addition, this acquisition will lead to further growth of Yokohama Rubber’s OHT business through synergies generated by the combined strengths of both companies in all areas, from the development of new products and services to manufacturing, sales, quality control, and sustainability.