Yokohama targets 'hockey stick' growth through 2026

HIRATSUKA, Japan — Yokohama Rubber Co. Ltd. (YRC) is pursuing a short-term business strategy that it says will bring about "hockey-stick growth" over the coming three years.

The heart of the strategy, YRC explained, will focus on "low-cost and speedy development of quality products," and will involve committing more than $2.3 billion for strategic investments and investments in ongoing operations.,

Through the plan, Yokohama set targets of achieving a business profit by 2026 of over $925 million (up 31% over 2023) and a profit margin of 11%, up from 10%.

Sales revenue is expected to reach $8.2 billion, up 17% from 2023.

Under the heading of "quality products," YRC said it aims to strengthen the development of OE tires suitable for "the next generation of premium cars."

The "low-cost" focus will see the group centering its efforts on "drastically reduced costs that can't be beat by other companies."

Furthermore, YRC said it will implement a "one-year plant" challenge for its "speedy" strategy.

Labeled as the "centerpiece of consumer tire strategy," the challenge aims to bring new plants on line within one year and achieve the " cost and high efficiency needed to compete with the cost-competitiveness of emerging tire makers."

This, YRC added, will help the group achieve its "hockey stick growth" targets and speed up tire development.

The moves, the group said, are in response to low-cost, low-price emerging tire makers that have been expanding their production capacity and their market share over recent years.

Furthermore, during YRC's new medium-term management plan, dubbed Yokohama Transformation 2026 (YX2026), the company said it would "accelerate its efforts to maximize the sales ratio of its high-value-added tires."

This will enable the group to increase the profitability of its consumer tire business.

To that end, the group said it would aim to "enhance brand value, promote tires as OE for premium cars, and continue its participation in motorsports events around the world."

In the off-highway tire (OHT) sector — where the firm has strengthened its business through acquisition several times over the past decade — YRC said the global market size is $28.5 billion and is expected to grow 6% a year, compared with the projected 2% annual growth for the consumer tires.

Agriculture and forestry machinery is estimated to account for about 40% of the global OHT market, with YRC claiming the "top share in this market segment."

Here, YRC said it plans to strengthen its market position by implementing a "multi-brand strategy" that will leverage its production, sales, and technology strengths in "all three tiers of this market segment."

Also, the new mid-term plan aims to expand the global operation of YRC's Interfit tire maintenance service, which will help realize the group's ambitious growth target.

For the construction and mining machinery segment, YRC said it would consider "programmatic" mergers and acquisitions as a measure to boost its "as yet rather small shares" in the global market.

Touching on the truck and bus tires segment, YRC said "emerging tire makers" are also expanding production capacity and increasing their supply globally.

However, it noted that the low-cost tires are facing antidumping and countervailing measures by Europe and the U.S.

As a result, YRC said it aimed to "strengthen sales in countries and regions where such measures are supporting the maintenance of appropriate pricing."

In terms of sustainability, the group said it would give "serious consideration to environment-related investments" over the three-year period.

The new plan, for example, aims to reduce the group's 2019-level Scope 1 & 2 emissions of greenhouse gases by 30% by 2026 and 40% by 2030 while also reducing costs.

Also, to reduce Scope 3 emissions, YRC will promote greater use of sustainable materials and has targeted increasing its sustainable materials ratio to 28% in 2026 and 30% in 2030