LAS VEGAS (Nov. 4, 2004) — Back in the black after three years in the red, Yokohama Tire Corp. (YTC) is targeting 50-percent sales growth by 2008.
That's based on the strength of its performance tire business and an expanded overall product range, top executives said during the Specialty Equipment Market Association (SEMA) Show in Las Vegas.
YTC, a wholly owned subsidiary of Japan's Yokohama Rubber Co. Ltd. (YRC), launched three product lines at SEMA, including an asymmetric-tread all-season tire the company expects will help it gain distribution in the heartland of the U.S., said Norio Karashima, YTC's president and CEO since August.
YTC's strengths up to now have been largely in the Sun Belt, the Pacific, Atlantic and Gulf coasts, Mr. Karashima said. The all-season tire, the AVID TRZ (for Three Ride Zones), was designed to help Yokohama market itself more effectively with and gain dealers in winter belt states, said Art Michalik, director of marketing communications for YTC.
In addition, Yokohama is now distributing its products through American Car Care Centers Inc. and TBC Corp., both of which have considerable distribution in the targeted regions, said James MacMaster, executive vice president, YTC business division.
The Avid TRZ will be available in 23 sizes starting in January 2005. The other tires launched during SEMA were the Advan Sport and Advan Neova high-performance tires.
YTC's sales should grow to $900 million or more by as early as 2008 and no later than 2012 on the strength of new sales initiatives and a renewed product line, said Mitsuhisa Ono, general manager for the company's North American Tire Business Dept.
YTC returned to the black last year on the strength of greater sales of higher value-added products in the past few years and stringent attention to its selling, general and administrative and interest expenses and despite higher raw materials costs and lower production, according to YRC's fiscal 2004 annual report.
The firm anticipates staying in the black this year on the effectiveness of new product launches, continued shift to higher value-added products and improved productivity at the firm's tire plant in Salem, Va., the report states. Workers at that plant have been working day to day without a contract since July 2003 when their previous six-year contract with Yokohama expired.
YTC earlier said it is focusing on expanding its high-performance and Yokohama-branded tire sales by developing and introducing two or three new products annually. The U.S. market, for example, will be the first priority in receiving new Yokohama medium truck tires, which are scheduled to be launched in early 2005, according to Hisao Suzuki, representative executive director and president of YRC's tire group.
YTC reported lower unit sales of passenger tires but higher truck and bus tire unit sales for the year ended March 31, resulting in a net income of $780,000 on sales of $612.4 million—an earnings ratio of 1.3 percent. This contrasts with a loss of $550,000 the previous year on sales of $598.7 million.
Overall, Yokohama's tire group reported slightly higher sales of $2.56 billion for the fiscal year, while operating income fell 11.5 percent, to $135.3 million, as surging rubber prices and higher export shipping costs offset the positive effects of higher unit sales.
Yokohama's tire sales increased in all its other export markets—Asia, Australia, Middle East and Europe—where the gain was 20 percent. These gains were offset partially by lower passenger tire sales in Japan.
Fiscal 2004 marked the first full year of Yokohama's Grand Design-10—a 10-year strategic plan during which the company hopes to expand its annual global capacity by more than 15 percent to 44 million units by March 2006.