TOKYO — Yokohama Rubber Co. Ltd. suffered double-digit declines in sales and earnings in fiscal 2020, but the company anticipates a strong recovery in 2021 based on stronger-than-anticipated business results in the fourth quarter.
Operating income fell 37.8% during 2020 to $341 million on 12.3% lower sales of $5.34 billion, dropping the operating ratio nearly three points to 6.4%. Net income fell 37.3% to $246.4 million.
Yokohama cited record-high earnings in the fourth quarter for helping ease the depth of the profits decline for the year, saying the upturn included measures such as reductions in fixed costs, improvements in production costs, the "successful tailoring" of marketing to regional circumstances, increased production output and strong sales of winter tires in Japan.
For fiscal 2021, Yokohama is projecting earnings will rebound by double digits to near 2019 levels, with sales bouncing back by 8.7% over 2020. YRC listed the continuing impact of the COVID-19 pandemic as a caveat to its 2021 forecast.
In the tire segment, operating income fell 22.2% to $224.7 million on 11.6% lower sales of $3.74 billion, with business impacted "severely" in the first half by the COVID-19 pandemic, which led to full-year sales declines in both original equipment and replacement tires.
YRC said its OE business in Japan displayed "gradual improvement" in the second half of the year and sales in China increased over 2019. The company said it worked to "buttress sales" in replacement tires through the promotion of high-value-added products and other stratagems, and sales of winter tires were robust in the fourth quarter.
Business in the ATG OTR/farm tire segment suffered as well from the adverse effect of the COVID-19 pandemic on demand worldwide, YRC said, although sales revenue recovered in the second half on signs of recovery in replacement demand for agricultural tires.
Operating income in the segment fell 15.3% to $82.5 million on 8% lower sales of $608.8 million.
Tire business unit sales in North America fell 15.7%, YRC said, to $990.2 million, while ATG sales in the region were off just 2.2% to $266 million.
Starting this year, Yokohama will consolidate its various off-highway tire (OHT) businesses into a single entity in a bid to reinforce its brand power and tap into growth potentials. The move will bring together the ATG assets with its own off-the-road (OTR) tire businesses under a new entity named Yokohama Off-Highway Tires.