TOKYO-Yokohama Rubber Co. Ltd. plans to restructure its Yokohama Tire Corp. subsidiary after the U.S. unit fell $13.4 million into the red last year on an operating basis and reported a $79.8 million net loss.
The restructuring will include revamping the management structure, although Yokohama officials in Japan said there were ``no personnel changes to report.'' Yokohama Tire officials in Fullerton, Calif., referred all inquiries to Yokohama Rubber in Japan.
Yokohama's sales in North America for the year ended March 31 slipped 5.9 percent, to $557.8 million, as demand for truck and bus tires collapsed, leading to lower volume and intensified price competition, Yokohama said in its recently released annual report.
The $79.8 million net loss includes a charge of $38.5 million to cover the write-off of Yokohama Tire's goodwill. Yokohama said it decided to write off the goodwill in one lump sum, instead of over years, in order to ``ease financial burdens for years to come.''
Yokohama Rubber said it expects to trim the loss in North America to $20 million in fiscal 2002 and break even by fiscal 2006. To do so, the firm plans to improve logistics and update the product line across the board, in addition to revamping management.
The company provided no details on these planned changes, other than to say there were no changes planned at the company's tire plant in Salem, Va., or with its three-way truck tire joint venture, GTY Tire in Mount Vernon, Ill. Despite the North American losses, Yokohama Rubber returned to the black, reporting a fiscal 2001 net profit of $867,993 on sales of $3.5 billion for the year ended March 31.
The losses did, however, impact Yokohama's tire division profits, as operating income fell 6.7 percent to $103.7 million and sales slipped 0.9 percent to $2.45 billion.
For fiscal 2002, Yokohama forecasts 16-percent growth in operating income and a 3-percent rise in sales.
Over the past two years, Yokohama has sought to improve its balance sheet by reducing assets by more than $250 million, trimming personnel by 1,191 jobs and cutting interest-bearing debt by nearly $200 million, according to the annual report.
For the current year, Yokohama will complete the closing of its Hiratsuka, Japan, tire plant by December-about three months ahead of schedule-and embark on a project to increase daily capacity at its plant in the Philippines by 13.5 percent, to 5,900 units by next year.
Yokohama also has agreed in principle to cooperate more closely with Continental A.G. in tire marketing and manufacturing.
Pending completion of a deal later this year, Conti and Yokohama jointly will promote sales of the companies' tires to Japanese vehicle makers, and Conti will make capacity available starting in 2002 in North America for making Yokohama-branded car tires.