Tokyo – The Yokohama Rubber Co. has seen its first quarter profits drop sharply due in part to slow demand caused by Covid-19 pandemic.
Over the three months to end of March, the Japanese tire & rubber company posted a 90.4% decline in operating profit to Yen1.2 billion (€10.2 million) on 13.6% decline in sales of Yen129.1 billion.
It also registered a Yen258 million loss attributable to owners of parent, compared with Yen9.1 billion yen in profit during the same period last year, Yokohama announced 22 May.
Yokohama said sales fell in both its tires segment and multiple business segment, due mainly to a decline in demand associated with the outbreak of Covid-19.
In the tire business, the decrease in profit reflected lower unit sales volume, higher manufacturing costs as a result of reduced production volumes, and inventory-adjustment costs due to a tire recall in North America.
In the OE segment, revenue declined in Japan and overseas, as a result of Covid-19 and the suspension of operations by car makers.
Sales also declined in the replacement segment, particularly as winter tires performed weakly due to warmer-than-usual temperatures in Japan. The Japanese replacement market also suffered from the adverse effect of the Covid-19 outbreak on consumer spending.
Business unit ATG, which manufactures farm, construction and off-road tires, recorded declines in sales and profits, reflecting Covid-19 impact on demand worldwide.
In the multiple business segment, both sales and profits were hit by Covid-19 outbreak which 'severely affected' each product category.
Sales of high-pressure hoses fell as demand declined worldwide in the construction equipment sector and the automotive industry.
Yokohama also posted a decrease in sales in industrial materials as market conditions undermined business in conveyor belts, civil engineering products, and marine products.
Sales of Yokohama’s Hamatite-brand sealants and adhesives as well as aircraft fixtures and components also decline due to low demand.
Yokohama withdrew its full year financial forecast due to the “massive business disruption caused by Covid-19.”
The company said it will release a revised forecast as soon as the management gains “a firm grasp of the fiscal outlook.”