TOKYO — Despite reporting lower operating income in its first fiscal 2019 quarter, Yokohama Rubber Co. Ltd. (YRC) has revised upward its full-year earnings forecast based on projected gains from the sale of undisclosed fixed assets.
For the quarter ended March 31, Yokohama reported a 50.1% drop in business profit — roughly equal to pre-tax operating income — to $53 million on 0.2% higher sales of $1.36 billion. Operating income fell 8.4 percent to $117.1 million.
In the tires segment, operating income fell 81.6% to $13.5 million on 3.9% lower sales of $910.2 million. YRC cited a decline in unit sales volume and an increase in production costs associated with reduced production volume for the drop in earnings.
OE-related sales revenue fell in all markets, YRC said, noting the impact of product changeovers in Japan for multiple vehicle models equipped with Yokohama tires and a downturn in unit vehicle production in China.
Replacement market sales revenue also declined. In Japan, sales fell due to weak demand for winter tires during a warm winter.
The firm's ATG segment, which includes off-road, farm and industrial machinery tires, reported gains in both profits and sales, which reflected growth in OE business in Europe and in replacement business worldwide.
Earnings climbed 28.3% to $22.3 million on 11.6% higher sales of $171.5 million. As a result, the segment operating ratio rose two points to 13%.
In the multiple business (MB) segment, sales revenue and business profit increased overall, helped by strong revenue in high-pressure hoses and overseas sales in the automotive sector.
For the full year, YRC revised its forecast for the increase in operating profit to 21.5% from 13% and for "profit attributable to owners of parent" to 29.1% from 15%.