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February 15, 2012 01:00 AM

Yokohama sticking to long-term 10% operating margin goal

Tire Business Staff
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    TOKYO (Feb. 15, 2012) — Hiccups in the global economy and business operating environment have forced Yokohama Rubber Co. Ltd. to push back its goal of hitting 1 trillion yen ($12.8 billion at current rates) in sales by two or three years, but the firm remains committed to achieving its operating income target by 2017.

    Yokohama spelled out its long-term sales and earnings goals in April 2006 when it rolled out “Grand Design 100,” its blueprint for the coming dozen years leading up to the firm's centennial in 2017. The plan comprises four three-year phases and calls for achieving a 10-percent operating earnings/sales ratio by that year.

    Despite the setback on the sales goals, YRC management said it expects to hit the 10-percent operating margin ahead of schedule. Management is shooting for an 8.3-percent margin the next three years after hitting 5.6 percent for the fiscal year ended Dec. 31.

    Yokohama is now into Phase III of Grand Design 100, and management has adopted “Robust and Responsive Growth” as the theme for the three-year period.

    The theme “expresses a determination to build on the progress that Yokohama has achieved in fortifying its corporate vitality and to position the company to respond flexibly to change and risk in the operating environment,” YRC said. It also addresses the uncertain outlook for the operating environment that Yokohama will face in Phase III.

    Among the threats to growth are: Europe's credit crisis; the persistently strong yen, which weighs heavily on exports; and scheduled increases in Japan's national sales tax. On the plus side, YRC pointed to industrial and consumer demand associated with the rebuilding effort in areas affected by the March 2011 earthquake and tsunami.

    Tires are the focus of Yokohama's growth plans. To that end, the company said it is working “to assert a distinctive identity” in the global tire market, to expand its global supply capacity by about 12 percent short-term and as much as 45 percent long-term and to deploy high-value-added tire products worldwide.

    In diversified products, Yokohama will draw on compelling strengths in technologies for the three functions of carrying, affixing and buffering.

    YRC issued a sales target of $8 billion in fiscal 2014—the third year of Phase III—and an operating margin of 9.5 percent.

    The company shifted to calendar-year fiscal accounting starting this year.

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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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