Yokohama Rubber revises up full year outlook on TWS acquisition

Hiratsuka, Japan – Yokohama Rubber Co. (YRC) has upgraded its financial outlook for 2023 on account of the recent acquisition of Trelleborg Wheel Systems (Yokohama TWS).

The Japanese tire & rubber group now expects business profit (earnings) to come in at Yen84.5 billion (€566 million), up nearly 16% from its earlier forecast in February.

Group consolidate sales are expected to reach Yen1,000 billion, up by over 11% compared to the February estimates, YRC said 12 May.

“The TWS acquisition is part of Yokohama Rubber’s strategic initiatives to expand its OHT [off-highway tire] business,” said the group.

YRC said it believed that the OHT business, from among its other commercial tires, was “capable of securing stably high earnings”.

Furthermore, the acquisition will bring YRC's ratio of consumer tire to commercial tire sales in line with the global tire market ratio of 1:1, from the current 2:1.

For the first quarter of 2023, YRC reported a decline in earnings despite recording ‘highest ever’ first quarter sales.

Earnings for the three months to end of March fell 4.8% year-on-year to Yen13.0 billion, on 10% higher revenue of Yen204.3 billion.

The decline in earnings, said YRC, reflect the weaker results by the tires business which was impacted by higher raw material prices as well as logistics and energy costs.

The business unit’s earnings were down 11.6% year-on-year at Yen12.6 billion on 10.5% higher sales of Yen180 billion.

In addition to high costs, YRC said that the tire business, which now also includes OHT, suffered from a slowdown in demand for agricultural and construction tires. 

Passenger tire sales in the OE segment increased during the quarter, helped by new fitments in Japan and North America.

Sales also benefited from the weakening of the yen against other principal currencies, 'more than offsetting' weakness in shipments to car makers in China.

In the replacement segment, revenue in Japan grew due to higher winter tire sales amid heavy snowfalls.

China and other Asian markets also posted an increase in sales.

The OHT segment, on the other hand, reported a decline in revenue, as demand for fell for heavy tires.

The industrial rubber segment – multiple business – reported an increase in both sales and profit.

The increases, YRC said, were driven by increased demand for hose & couplings following a recovery in the North American automotive market.