Tokyo — The Yokohama Rubber Co. (YRC) has revised upwards its full-year fiscal projections for 2020 on the back of “stronger-than-expected” recovery in third quarter demand in some markets.
The Japanese rubber & tire group now expects operating profit to come in at Yen28.5 billion (€230 million), up 42.5% compared to estimates offered in August, Yokohama announced 13 Nov.
Business profit (operating income) is estimated to come in at Yen30.0 billion, up 42.9% compared to the previous forecast while sales revenue is anticipated to come in 5.4% higher than the previous estimate at Yen565 billion.
For the nine months to end of September, Yokohama reported a 63% drop in business profit to Yen9.3 billion, on 16.2% lower sales at Yen390 billion.
Operating profit for the period declined 74.5% to Yen8.5 billion.
Sales revenue in Yokohama’s tires segment declined 16% to Yen266 billion, while business profit fell plummeted 95% to Yen511 million.
In original equipment tires, sales revenue declined on account of “a sharp decline” in demand during the first two quarters.
The decline, Yokohama said, offset “a modest recovery” in Japanese demand, and a recovery in demand in China and elsewhere during the thrid quarter.
Sales revenue also declined in replacement tires, reflecting a sharp global decline in demand in the first six months of the year.
Yokohama’s Japanese business in replacement winter tires was weak on account of a warm winter, and the Covid-19 pandemic continued to weigh on Japanese consumer spending into the third quarter, Yokohama noted.
Sales of Yokohama replacement tires outside Japan also declined despite a recovery in China and in "some other markets."
Sales revenue also declined in Yokohama’s ATG segment, which manufactures tires for agricultural machinery, for industrial machinery, and for other off-highway applications.
Segment business profit fell 17.6% to Yen6.2 billion on 11% lower sales at Yen47.3 billion.
As in other business segments, that decline reflected the first-half impact of the Covid-19 pandemic on demand worldwide, Yokohama said.
The decline, it added, “masked” a sales upturn in replacement farm and heavy tires in the third quarter.
The Covid-19 pandemic also affected “every sector” of Yokohama’s multiple business (MB) segment. Segment sales revenue dropped 18% to Yen71 billion during the first nine months, while business profit declined 54% to Yen5.6 billion.
Demand recovered “in several markets” for high-pressure hoses in the third quarter of the year, offsetting a sharp first-half decline worldwide.
Sales revenue for industrial materials also decline during the nine-month period. Here, weakness in conveyor belts and in civil engineering materials offset strength in marine products, Yokohama said.
Sales revenue also declined in Hamatite-brand sealants and adhesives, reflecting interruptions in construction project interruptions and a first-half slump in automotive demand.
Continuing weakness in demand in the commercial aircraft sector undermined sales revenue in aircraft fixtures and components.