TOKYO — Yokohama Rubber Co. Ltd. (YRC) posted an 88.3% drop in operating income for the six months ended June 30 on 20.6% lower sales, prompting management to project double-digit declines in sale and earnings for the full fiscal year.
Yokohama's operating earnings dropped to $185 million on sales of $4.96 billion. Net income fell 70.2% to $115.5 million, the company reported.
Yokohama said resilience by its Multiple Business and Alliance Tire Group (ATG) off-highway tires segments offset an operating loss suffered by the tires segment amid the COVID-19 pandemic.
The company implemented a number of measures throughout its operations for coping with the pandemic-related business downturn.
The tire segment reported an operating loss of nearly $19 million on 20.7% lower sales of $1.54 billion.
YRC attributed the decline in business profit to a drop in unit sales volume, an upturn in unit costs associated with reduced production volume and inventory-disposal costs associated with a product recall in North America during the first quarter.
Sales revenue declined in original equipment tires in Japan and overseas as the COVID-19 pandemic depressed vehicle demand in Japan and necessitated continuing production adjustments by auto makers worldwide.
Sales revenue also declined in replacement tires, tied to diminished demand for winter tires in Japan and general weakness in Japanese consumer spending, aggravated by COVID-19. Replacement tire demand stagnated worldwide amid the pandemic, YRC said, without elaborating on its geographic regions.
Sales revenue declined 19.3% in the ATG segment to $278.5 million, reflecting reflected the adverse effect of the COVID-19 pandemic on demand worldwide.
For the full fiscal year, YRC said it expects operating profit and sales to fall 65.8% and 17.6%, respectively, versus fiscal 2019.