Yokohama profits up 74% in Q1
The first quarter of the 2011 financial year saw Yokohama Rubber’s net income shoot up 74 per cent year-on-year to 2,822 million yen (£22.6 million). This sizable increase in income was driven by a 10.2 per cent increase in net sales in the three months to June 30; the company reports net sales of 129,394 million yen (£1.0 billion) during the quarter. This sales increase came mainly through the company’s tyre business, Yokohama Rubber notes. Operating income during the quarter was 4,140 million yen (£33.1 million), a 29.9 per cent decrease.
Unit sales growth and progress with cost reduction plans were able to offset the adverse effect on earnings caused by the appreciating yen and increase selling expenses, however price increases for Yokohama products were insufficient to fully offset the effect of rising prices for raw materials. The yen appreciated less sharply, however, than in the same period of the previous fiscal year, and currency translation losses therefore narrowed greatly.
Sales in Yokohama’s tyre operations increased 12.1 per cent to 103,796 million yen (£830.4 million), and operating income declined 30.1 per cent, to 3,708 million yen (£29.7 million). Japanese demand for original equipment tyres declined in the wake of the earthquake and tsunami, however Yokohama posted strong sales gains in the Japanese replacement market and also registered growth in North America, Europe, and China. The year-on-year decline in operating income reflects rising raw material prices.
Due to Yokohama’s fiscal accounting changing to a calendar year bases, this current financial year only be nine months long. The company projects that net sales in the six months to September 30, 2011, will increase 8.3 per cent over the same period of the previous fiscal year, to 258.0 billion yen (£2.1 billion); that operating income will decline 27.5 per cent to 6.0 billion yen (£48 million); and that net income will increase 7.3 per cent to 1.3 billion yen (£10.4 million).