Tokyo – The Covid-19 pandemic has severely impacted Yokohama Rubber Co.’s profits in the first half, as demand particularly declined in the tires segment.
Over the six months to end of June, operating profit fell 88.3% to Yen2.9 billion (€23 million), on 21% lower sales of Yen247 billion, the Japanese group announced 7 Aug.
The group’s tires business reported loss of Yen2 billion, on 20% lower sales of Yen166 billion.
Yokohama linked the decline in business profit to lower volumes, increased unit costs due to reduced production volume, and inventory-disposal costs associated with a product recall in North America in the fiscal first quarter.
Sales of OE tires declined in Japan and overseas as the Covid-19 pandemic depressed vehicle demand and prompted production adjustments by car makers worldwide.
Replacement tire revenue also fell, reflecting the impact of warmer-than-average winter temperatures at the beginning of the year in Japan and general weakness in consumer spending.
Yokohama said “resilience” in its MB (multiple business) and ATG (Alliance Tire Group) off-highway tires segments helped offset the losses made in the tire segment.
The MB business remained profitable, although “business profit” declined 65% to Yen1.4 billion, on 20% lower sales of Yen47.5 billion.
The pandemic, Yokohama said, affected 'every sector of the MB business severely.'
Sales revenue declined in high-pressure hoses as customers worldwide suspended operations and otherwise reduced their operational activity.
In industrial materials, sales were impacted due to temporary shutdowns while cancelation of projects undermined business in conveyor belts and civil engineering materials.
In Hamatite-brand sealants and adhesives, sales fell on account of project cancelations and the global downturn in vehicle production.
Slumping demand in the commercial aircraft sector resulted in a decline in sales revenue in aircraft fixtures and components.
In the ATG segment, sales fell 19% year-on-year to Yen30 billion. The unit, which manufactures agricultural, industrial and off-highway tires, saw profits decline 37% to Yen3.2 billion.
As in other business segments, Yokohama linked the declines to the “adverse effect of the Covid-19 pandemic on demand worldwide.”