TOKYO (Aug. 11, 2013) — Yokohama Rubber Co. Ltd. reported lower operating and net income for the six months ended June 30 on slightly higher sales, but company management is sticking with their earlier full-year forecast of double-digit earnings gains.
Yokohama's operating income fell 4.2 percent to $199 million and net income dropped 5.3 percent to $136.6 million. Sales rose 0.3 percent to $2.82 billion, despite 0.6-percent lower tire division sales.
Sales and earnings benefited from Yokohama's trimming costs and from the weakening of the yen, and earnings benefited from declining raw materials prices. These positives were offset by a sharp decline in demand for OE tires in Japan, generally weak demand in overseas tire markets and escalating price competition in tire markets worldwide, Yokohama said.
The firm's tire operations suffered a 17.9-percent drop in operating income to $145.5 million, and sales slipped 0.6 percent to $2.19 billion.
Yokohama cited slackening OE demand in Japan, weak sales in North America and slumping demand in Europe and China. The firm's replacement market unit sales were up in Japan, but revenue slipped due to price competition and a shift domestically to more value-tier tires.
Despite the firm's depiction of sales in North America as "weak," the company reported its sale in North America rose 11.7 percent in the period to $663.2 million. Operating income from North American operations, however, fell 39.4 percent to $27.6 million, reducing the operating ratio 3.5 percentage points to 4.2 percent.
Yokohama recently disclosed it plans to build a truck and bus tire plant in Mississippi over the coming two years at a cost of $300 million.
For the full year, Yokohama has revised downward by 3.2 percent its sales projection by 3.2 percent to about $6.3 billion, but management is sticking with earlier forecasts of roughly 19 and 10 percent gains in operating and net income.