Yokohama prioritising growth in final Grand Design 100 phase
Growth will be the focus of Yokohama Rubber’s energies in the fourth and final phase of its ‘Grand Design 100’ medium-term management plan. The Japanese tyre and rubber products manufacturer unveiled details of the three-year Phase IV on 13 February and announced it aim of raising annual net sales to 770 billion yen (£4.2 billion) and annual operating income to 80 billion yen (£438.2 million) by 2017, and to increase operating profit margin to 10.4 per cent within the same timeframe.
“In Phase IV of Grand Design 100, Yokohama will reaffirm the basics of its business and offer new value through Yokohama-like products that will appeal to customers,” stated the company. “That will include working to channel all activity companywide into maximising customer satisfaction and undertaking vigorous investment based on a strong financial position.”
Yokohama aims to increase its share of original equipment tyre business with international vehicle makers during the three years of Phase IV and will invest 120 billion yen (£657.4 million) to expand and upgrade tyre production capacity. The manufacturer’s plans call for increasing annual production capacity to about 74 million tyres by 2017 and to approximately 89 million by 2020, from some 68 million at the end of 2014.
The adoption of International Financial Reporting Standards (IFRS) will be considered during Phase IV, and across its entire business Yokohama intends to reduce costs by 30 billion yen (£164.3 million); a common strategy for all operations to this end will include “taking a proactive approach to M&A (mergers and acquisitions) and alliances.” Yokohama also plans to further globalise its tyre development functions.
The Grand Design 100 medium-term management plan was launched in 2006. The plan is made up of four three-year segments, each focusing on a strategic theme. Yokohama’s principal financial goals for Phase III, which ended in 2014, were aggregate, three-year targets: net sales of 1,800.0 billion yen (£9.9 billion), operating income of 150.0 billion yen (£821.7 million), and an operating profit margin of 8.3 per cent. The company exceeded its profitability targets with aggregate, three-year operating income of 165.4 billion yen and an operating profit margin of 9.3 per cent, though its aggregate, three-year net sales fell just shy of the sales target, at 1,786.6 billion yen.