TOKYO — Yokohama Rubber Co. Ltd. suffered a 62.7% drop in operating profit for the quarter ended March 31 despite 28.4% higher sales.
Yokohama attributed the earnings decline to the adverse effects of rising raw-materials costs and logistics expenses, disruptions in global supply chains and challenges presented by a resurging COVID-19 pandemic.
Operating income slid to $115 million on revenue of $1.6 billion, dropping the operating ratio 18 points to 7.2%. Net income slid 63.1% to $87.4 million.
Despite the first-quarter earnings drop, YRC management is sticking with the full-year fiscal projections for 2022 announced in February — sales of about $6.5 billion and an operating ratio of 7.8%
The revenue generated in the quarter was a record for the January-to-March period, YRC said, and reflected success in securing price increases for tires in North America and in other markets and the weakening of the yen against the dollar and the euro.
In the tires segment — which now combines the Off-Highway Tires business with Yokohama's traditional tire sector activity — business profit edged up 10% to $120.8 million on 31.4% higher sales of $1.4 billion.
In replacement tires, YRC's sales in Japan benefited from heavy snowfalls and a surge in purchases ahead of price increases. Replacement market sales in North America, India and Asian markets outside Japan experienced "robust" demand.
Revenue from original equipment business increased despite the adverse effect of global shortages of semiconductor devices on vehicle production volume.
YRC's OHT business posted solid growth of tires for agricultural machinery, industrial machinery and other applications. YRC combined these businesses in recognition of commonality between off-highway tires and Yokohama Rubber's other tire business in regard to customers and to product characteristics.
This segment is expected to double in size once YRC's pending deal to buy Trelleborg Wheel Systems is completed. YRC bid $2.3 billion in March to buy TWS from Sweden's Trelleborg A.B. on a cash and debt-free basis.
Yokohama's tire-related business in North America grew by 51% in the quarter, to $488.9 million.
