Yokohama net income fell 99 percent in first nine months

ERJ staff report (DS)

Tokyo - The Yokohama Rubber Co., Ltd., said operating income in the nine months to December 2008 declined 43.8 percent from the same period of the previous year, to 17.3 billion yen (euro 148.5 million), on a 0.2% increase in net sales, to 410.6 billion yen (euro 3525 million). Net income declined 99.1%, to 222 million yen.

Sales growth in Yokohama's Tire Group offset a decline in the Multiple (diversified) Business Group. Profitability suffered from the rise in raw material costs during most of the nine-month period, from the appreciation of the yen, and from the sharp decline in demand for tyres and hoses, which undermined productivity in those product sectors.

Yokohama's tyre Group posted a 2.2 percent increase in sales over the same period of the previous year, to 319.4 billion yen, though operating income in the group declined 44.6 percent, to 14.2 billion yen. The sales growth in tyres benefited from growth in sales to automakers in Japan during the nine-month period and from overall growth in overseas business. Those gains more than offset the adverse effect of the precipitous decline in demand that began in October 2008. The decline in operating profitability in the tyre Group resulted from the upward trend in raw material prices, the appreciation of the yen, and an increase in selling expenses, which resulted from expanded unit sales volume.

Sales in the Multiple Business Group declined 6.2 percent, to 91.2 billion yen, and operating income declined 29.3 percent, to 3.6 billion yen. The group posted sales gains in conveyor belts and in laminated bearings for protecting structures from earthquakes, but sales declined in hoses, sealants, aerospace products, and golf equipment on account of slumping demand. Aggravating the adverse effect of the sales declines on operating profitability were the rising costs for raw materials and the appreciation of the yen.

Management at Yokohama is projecting declines in sales and earnings for the full fiscal year to March 31, 2009. It projects that net sales will decline 5.2 percent from the previous year, 523.0 billion yen; that operating income will decline 57.7 percent, to 14.0 billion yen; and that the company will post a net loss of 7.0 billion yen, compared with net income of 21.1 billion yen in the previous year. In response to the deteriorating business environment, Yokohama continues working to trim costs, to reduce expenses, to curtail investment, and to pare inventories. The company announced today that it will take the additional measures of lowering directors' compensation 10 percent and all other management-level personnel's compensation 5 percent.

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Press release from Yokohama