Yokohama Rubber reveals three-year management plan to achieve 'hockey stick' sales growth by 2027

Yokohama Rubber reveals three-year management plan to achieve ‘hockey stick’ sales growth by 2027

The company said it will implement production strategies based on a motto of “low cost, speedy development of quality products.”

Yokohama Rubber revealed its new medium-term management plan, Yokohama Transformation 2026 (YX2026). The new plan will be implemented over the next three years, 2024–2026, as the successor to Yokohama Transformation 2023 (YX2023).

Under YX2026, Yokohama Rubber said it will further advance the exploitation of the strengths of its existing businesses and the exploration of new value. Management will resolutely implement the growth strategies established in each business as it aims to achieve “Hockey Stick Growth” during YX2026 to fiscal 2027, the company said. Management’s targets for fiscal 2026, the final year of YX2026, are sales revenue of ¥1,150 billion (approx. $7.7 billion), business profit of ¥130 billion (approx. $865 million), a business profit margin of 11%, and ROE (return on equity) of more than 10%.

Yokohama hockey stick growth
Yokohama says it aims to achieve “Hockey Stick Growth” during YX2026 to fiscal 2027.

In the consumer tire market, recent years have seen low-cost, low-price emerging tire makers expand their production capacity and increase their market share, Yokohama Rubber said. In response, during YX2026, Yokohama Rubber said it will accelerate its efforts to maximize the sales ratio of its high-value-added tires as it aims to increase the profitability of its consumer tire business. In addition, the consumer tire business has initiated the “1-year plant” challenge, which aims to bring new plants online within one year and achieve the low cost and high efficiency needed to compete with the cost-competitiveness of emerging tire makers and achieve “Hockey Stick Growth”. As part of its effort to maximize the sales ratio of high-value-added tires and enhance brand value, the business said it will promote its tires as original equipment (OE) for premium cars and continue its participation in motorsports events around the world. It also will continue its product and regional strategies focused on strengthening the development, supply and sales of tires that respond to specific trends in each regional market, Yokohama said.

During YX2026, Yokohama Rubber said it will implement technology and production strategies based on a motto of “low cost, speedy development of quality products.” Quality products refers to strengthening development of OE tires suitable for the next-generation of premium cars, low cost refers to efforts to drastically reduced costs that can’t be beat by other companies, while speedy development refers to the 1-year plant challenge that is the centerpiece of the consumer tire strategy aimed at achieving “Hockey Stick Growth” and its efforts to speed up tire development, Yokohama Rubber said.

According to the company, management will give serious consideration to environment-related investments that also contribute to corporate earnings. One example is the new plan under YX2026 to reduce its 2019-level Scope 1 & 2 emissions of greenhouse gases by 30% by 2026 and 40% by 2030 while also reducing costs. Also, to reduce Scope 3 emissions, Yokohama Rubber said it will promote greater use of sustainable materials and has targeted increasing its sustainable materials ratio to 28% in 2026 and 30% in 2030. However, during YX2026, it said it will consider raising the 2030 target to 40% without incurring any cost increases.

Regarding capital allocation during YX2026, Yokohama said the plan is to allocate about ¥320 billion (approx. $2.1 billion) of the estimated three-year ¥450 billion (approx. $3 billion) increase in cash to strategic investments and investments in ongoing operations. Lastly, regarding shareholder returns, Yokohama Rubber said it aims to stably and steadily raise its dividend in accordance with its basic policy of maintaining stable dividends while securing sufficient internal reserves to support its business development and fortify its financial position while continuing to actively invest in sustainable profit growth.

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