The Yokohama Rubber Co., Ltd., announced its business and financial results for the first half (January to June) of fiscal year 2020, reporting an 88.3% decline in operating profit and a 20.6% decline in sales revenue.
The company said profit attributable to owners of its parent company declined 92.5% from the same period of the previous year, to 1.3 billion yen ($12.3 million), on an 88.3% decline in operating profit, to 2.9 billion yen ($27.4 million); an 86.8% decline in business profit, to 2.3 billion yen ($21.7 million); and a 20.6% decline in sales revenue, to 247.1 billion yen ($2.33 billion). (The calculations are equivalent to operating income under accounting principles generally accepted in Japan and calculated as sales revenue less the sum of cost of sales and selling, general and administrative expenses, Yokohama says.)
Yokohama said its Multiple Business and ATG (Alliance Tire Group, off-highway tires) segments offset the red ink incurred in the Tires segment amid the COVID-19 pandemic. The company said it “tackled successful improvements throughout its operations for coping with the pandemic-related business downturn,” according to its first-half financial report.
The company said sales revenue and business profit in the Tires segment declined from the same period of the previous year. This can be seen in the downturn in unit sales volume, an upturn in unit costs associated with reduced production volume, and inventory-disposal costs associated with a product recall in North America in the first quarter, Yokohama said.
Sales revenue also declined in OE tires in Japan and overseas with COVID-19 depressing vehicle demand in Japan and automakers adjusting their production worldwide, Yokohama said. Sales revenue also declined in replacement tires for Yokohama, driven by warmer-than-average winter temperatures at the beginning of the year in Japan, which lowered demand for winter tires, and general weakness in Japanese consumer spending, aggravated by COVID-19.
Yokohama said the COVID-19 pandemic affected business severely in every sector especially in its Multiple Business segment. Sales revenue declined in Yokohama’s high-pressure hoses business as well as in industrial materials, Hamatite-brand sealants and commercial aircraft fixtures and components.
Yokohama said it has revised its full-year fiscal projections for 2020 that it announced in February. The revised projections consider the effects of the COVID-19 pandemic and call for profit attributable to owners of its parent company to decline 70.2%, to 12.5 billion yen ($118 million), on a 65.8% decline in operating profit, to 20 billion yen ($188.8 million); a 58.1% decline in business profit, to 21 billion yen ($198 million); and a 17.6% decline in sales revenue, to 536 billion yen ($5.06 billion). Compared with Yokohama’s earlier projections, current projections are 67.1% lower for profit attributable to owners of its parent company, 63.3% lower for operating profit, 61.8% lower for business profit, and 18.8% lower for sales revenue.