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Sales Up, Earnings Down at Yokohama Rubber in First Quarter of 2022

The Yokohama Rubber Co., Ltd., has announced its business and financial results for the first quarter (January to March) of fiscal 2022. Profit attributable to owners of parent declined 63.5% from the same period of the previous year, to 10.2 billion yen; on a 62.7% decline in operating profit, to 13.5 billion yen; a 2.5% decline in business profit, to 13.7 billion yen; and a 28.4% increase in sales revenue, to 185.6 billion yen.

* Yokohama Rubber divested its Hamatite sealants and adhesives business, formerly included in the MB (Multiple Business) segment, during the fiscal year ended December 31, 2021. It has reclassified its Hamatite business as discontinued operations in the figures presented below for the first quarter of that year.

*Business profit is equivalent to operating income under accounting principles generally accepted in Japan and consists of 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 success in securing price increases for tyres in North America and in other markets and the weakening of the yen against the dollar and the euro. Business profit declined despite the sales growth on account of the adverse effects of upturns in raw material costs and logistics expenses, the disruptions in global supply chains, and the challenges presented by the Covid-19 pandemic.

First-quarter sales revenue and business profit in Yokohama Rubber’s Tires segment increased over the same period of the previous year. Sales revenue in original equipment tyres increased despite the adverse effect of global shortages of semiconductor devices on vehicle production volume.

In replacement tyres, sales revenue rose overall. Yokohama Rubber promoted high-value-added tyre products in Japan, introducing new products under the ADVAN series and other brands. Sales revenue benefited in Japan from heavy snowfalls, which stimulated demand for studless winter tyres, and from a surge in purchases in advance of price increases. Sales revenue in replacement tyres rose in North America and in India and other Asian markets outside Japan as Yokohama Rubber responded effectively to robust demand.

Yokohama Rubber posted solid growth in off-highway tyres for agricultural machinery, industrial machinery, and other applications. The company formerly accounted for off-highway tyre business as the ATG (Alliance Tire Group) segment, but it has transferred that business as Yokohama Off-Highway Tires to the Tires segment as of the present fiscal year. That move is in recognition of commonality between off-highway tyres and Yokohama Rubber’s other tyre business in regard to customers and to product characteristics.

In Yokohama Rubber’s MB (Multiple Business) segment, sales revenue increased over the same period of the previous year, but business profit declined on account of such factors as rising raw material costs and a tight labor market in the United States. Sales revenue in hose & couplings rose in Japan and overseas, led by strong sales of hoses for construction equipment. Yokohama Rubber also posted growth in sales revenue in industrial materials. That growth occurred despite weakening demand for marine products. It reflected successful measures to bolster sales of conveyor belts in Japan and a recovery in demand in the commercial aircraft sector for replacement fixtures and components. Yokohama Rubber formerly accounted for its business in aircraft fixtures and components as a separate product category, but it transferred that business to industrial materials as of March 30, 2022.

Management at Yokohama Rubber abides by the full-year fiscal projections for 2022 that it announced in February 2022. Those projections call for profit attributable to owners of parent to total 40.0 billion yen on operating profit of 58.5 billion yen, business profit of 60.0 billion yen, and sales revenue of 750.0 billion yen.