Tokyo – Yokohama Rubber Co. Ltd has posted sharp declines in its first three quarter results, with operating income dropping 38.0% to Yen18.9 billion (€163 million), on a 7.5% decline in net sales, to Yen410.2 billion.
The company linked the performance to the appreciation of yen as well as “weakening demand and declining prices” in Yokohama’s main markets.
Earnings were further hit by the first-time inclusion of the fiscal results of Alliance Tire Group BV, which Yokohama acquired in July 2016.
Operating income in Yokohama’s tire segment fell 25.8% to yen16.6 billion, on an 11.0% decline in sales, to Yen310.5 billion.
In the Japanese OE market, Yokohama said sales were impacted by a downturn in unit vehicle production and in tire prices. The company, however, said it achieved an increase in “operating profitability” due to declining raw material prices.
A “slow trend of demand” continued in the Japanese replacement market, Yokohama also noted.
Outside Japan, sales and earnings dipped as the strong yen and price competition offset an overall increase in unit sales volume.
Sales growth overall in North America, progress in new sales channels in Europe, and growth in shipments to automakers in China contributed to higher volume sales.
In its ‘multiple business’ segment, operating income declined 38.5%, to Yen4.7 billion, on a 9.8% decline in sales, to Yen80.9 billion.
The segment consists primarily of business in high-pressure hoses; conveyor belts; antiseismic products; marine hoses and pneumatic marine fenders.
Alliance Tire group posted sales of Yen12.9 billion for the three months to September and an operating deficit of Yen2.8 billion.
Declining prices and demand for agricultural equipment tires, Alliance Tire group’s main product sector, and price competition impacted the segment.
Yokohama, however, claimed that “vigorous marketing” helped it achieve its target for sales at the newly acquired subsidiary.
The Japanese company went on to confirm full-year fiscal projections announced in August 2016 for sales and earnings.
Those projections include a 44.9% decline in “profit attributable to owners of parent” to Yen20 billion, on a 30.3% decline in operating income, to Yen38.0 billion.
The acquisition of Alliance Tire Group, in the full year, is projected to raise net sales by Yen27.0 billion and decrease operating income by Yen4.5 billion.