ERJ staff report (DS)
Tokyo - The Yokohama Rubber Co., Ltd., reported a 53.7 percent decline in operating income, to 5.6 billion yen (Euro 45.6 million), on a 1.3 percent increase in net sales, to 256.6 billion yen (Euro 2092 million). Those results are for the six months ended 30 Sept., 2008. Net income declined 95.7 percent, to 554 million yen (Euro 4.5 million).
Yokohama said profitability was hit by the rising trend in raw material prices, the appreciation of the yen, and increases in logistics costs and other selling expenses. Those adverse factors were partially offset by sales growth and cost-cutting measures. Aggravating the effect of the decline in operating profitability on net earnings was the partial relinquishment of a tax benefit associated with the write-down of unrealized gains on inventories.
Continuing sales growth in Yokohama's tyre group offset a sales decline in the diversified products group. Yokohama posted a 2.7 percent increase in sales of tyres over the same period of the previous year, to 193.8 billion yen. Contributing to the growth in tyres were increased sales to Japanese automakers; business gains in Russia, China, and the Middle East; and price increases. Operating income in the tyre group declined 64.6 percent, to 3.2 billion yen, reflecting the upward trends in raw material prices, the appreciation of the yen, and growth in selling expenses.
Sales in the diversified products group declined 2.7 percent, to 62.8 billion yen. That decline occurred despite growth in high-pressure hoses for off-the-road equipment. Sales were especially weak in aerospace products, largely because of a decline in government business. Sales also declined in golf equipment. Operating income in the diversified products grou declined 8.3 percent, to 2.7 billion yen. Aggravating the effect of the sales declines in aerospace products and golf equipment on operating profitability was the appreciation of the yen. The strengthening yen undercut profitability notably in marine hoses and marine fenders. Sales outside Japan account for an especially large proportion of Yokohama's business in those products.
The stronger-than-expected appreciation of the yen and the sudden worsening of the global economic outlook have prompted downward revisions in Yokohama's full-year fiscal projections. Management now projects that net income will decline 54.9 percent, to 9.5 billion yen, on a decline of 21.5 percent in operating income, to 26.0 billion yen, and an increase of 1.0 percent in net sales, to 557.0 billion yen. The new projection for net income is 26.9 percent lower than Yokohama projected in May, when it announced its business and financial results for the previous fiscal year. The projection for operating income is unchanged from the earlier projection, and the projection for net sales is 1.4 percent lower.
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Press release from Yokohama