HIRATSUKA, Japan — Yokohama Rubber Co. Ltd. (YRC) reported record sales and earnings for the year ended Dec. 31, prompting company management to project more of the same in fiscal 2023.
Yokohama cited a number of factors for the record performance — business profit up 12.8% to $533.8 million and revenue up 23.3% to $6.55 billion — including increased sales of high-performance tires, "vigorous" business in agriculture and off-highway tires, improved price/mix in most markets and "strong" sales gains in North America.
YRC also stressed that its strong performance came despite a number of adverse factors, including fallout from Russia's invasion of Ukraine, rising raw material prices and logistics costs, reduced vehicle production, China's zero-Covid policy and the inflation-caused surge in energy prices.
YRC management said the company projects continued growth in 2023, albeit at lower, single-digit rates of growth — 4.6% sales and 4.2% business profit — that nonetheless will be records again.
The forecast does not include the impact of YRC's pending acquisition of Trelleborg Wheel Systems Holding A.B., which would boost annual revenue by an additional $1 billion or more. That deal is is now scheduled to be completed during the first half of 2023, after completion of compliance law reviews required by all concerned countries.
YRC's tire business — which accounts for nearly 88% of the company's revenue — also generated record sales and earnings for the year, based on improving original equipment business, higher sales of commercial tires in several markets, improved pricing and increased business in North America on both the consumer and commercial fronts.
The tire business reported 30.6% higher revenue of $5.74 billion and 16.8% improved business profit of $509 million, resulting in a slightly lower operating ratio to 8.9%.
The tire business figures include Yokohama's off-highway tire business results, which used to be reported separately. YRC noted that the OHT business outperformed the rest of the tire division, with revenue up 45% over fiscal 2021 to $1.2 billion.
Looking ahead, YRC management laid out a number of initiatives the company will pursure to help it keep growing, including:
- efforts to expand sales of higher value-added tires to over half of the company's consumer tire revenues from 40% in 2019 by promoting its lines of Advan and Geolandar tires alongside its winter tire products;
- efforts to expand business with OE customers, particularly for premium cars and electric vehicles (EVs);
- explore opportunities in the commercial business created by market changes, with a focus on four themes — cost, service, digital transformation (DX) — along with strengthening its product lineup.
At the same time, Yokohama noted that its truck tire plant in West Point, Miss., achieved record production last year of 727,000 units and is on pace to reach the plant's original target of 840,000 tires a year by 2025.
