Achieved record sales and profits and a business profit margin above 10% in fiscal 2023

In fiscal 2023, the Japanese economy was generally in a recovery trend, supported by a gradual rebound in corporate capital investment, improving business sentiment in a wide range of industries, rejuvenated inbound demand and progress in passing on cost increases to product prices. In the United States, personal consumption was solid and nonmanufacturing industries fared well, but production activity in manufacturing sectors other than high-tech remained in a prolonged downward adjustment phase. In China, the sharp decline in property development triggered a slowdown in the economy. Meanwhile, sluggish demand in Europe continues to make it difficult for European companies to pass cost increases into the prices of their products or services. In this global economic environment, Yokohama Rubber achieved record-high sales and profits, with sales revenue increasing 14.5% year on year to of ¥985.3 billion, business profit up 41.4% to ¥99.1 billion, operating profit up 45.8% to ¥100.4 billion, and profit attributable to owners of the parent totaling ¥67.2 billion, a year-on-year increase of 46.4%. In addition, we achieved a business profit margin higher than the 10% target in our medium-term management plan Yokohama Transformation 2023（YX2023）. Given these strong results, we decided to raise the year-end dividend to ¥50 per share, ¥16 above our initial plan, which brings the full-year dividend to ¥84 per share, an increase of ¥18 from our fiscal 2022 dividend. In fiscal 2024, we are again aiming for record highs in sales and profits. Our initial targets are sales revenue of ¥1,060 billion, up 7.6% year on year, business profit of ¥115.0 billion, up 16.0%, operating profit of ¥115.5 billion, up 15.1%, and profit attributable to owners of the parent of ¥74.5 billion, a year-on-year increase of 10.8%. We plan to increase our annual dividend for a fourth straight year, raising it to ¥93 per share, which will include an interim dividend of ¥42 and year-end dividend of ¥51.

YX2023 results greatly surpassed initial targets

Fiscal 2023 was the final year of our three-year medium-term management plan YX2023. Under YX2023, we strongly promoted a basic strategy of “exploitation” of the strengths of our existing businesses and “exploration” of new value that will meet the needs of our customers and society in an era of great change for the automotive industry across all the company’s business domains. In addition to strengthening product development, production, and sales, we promoted acquisitions, business restructuring, and other measures to strengthen our competitive strengths in each of our markets. We implemented a grand strategy that realized a major transformation of our Tire Business structure. Specifically, we strengthened the highly profitable OHT (off-highway tires) business to bring our 3:2 consumer tire to commercial tire sales in line with the 1:1 ratio in the global tire market. During YX2023, we also steadily implemented measures to enhance asset efficiency, including the sale of certain businesses and subsidiaries as well as cross-shareholdings and idle assets. While our fiscal 2023 sales revenue fell a bit short of the upwardly revised guidance for ¥1 trillion we announced in May 2023, we greatly exceeded YX2023’s initial sales revenue target of ¥700 billion. In addition, our business profit of ¥99.1 billion equates to our first-ever business profit margin above 10%. Meanwhile, cumulative cash flow from operations over the three years of YX2023 totaled ¥267.2 billion, well above the targeted level. Having achieved record high sales revenue and business profit every year during YX2023, we believe we have established a solid foundation for continued strong growth during our new medium-term management plan Yokohama Transformation 2026 (YX2026), which we launched at the start of this year and will implement for three years until the end of fiscal 2026.

YX2026 will be implemented under a new management structure

After receiving the approval of the Board of Directors’ resolution at the General Meeting of Shareholders on March 28, we have launched a new management structure headed by Masataka Yamaishi as Chairman & CEO, Chairman of the Board and Shinji Seimiya as President & COO. In addition, Nitin Mantri has been appointed to the Member of the Board and Senior Managing Officer & Co-COO. CEO Yamaishi will be responsible for overall management and the North America business, COO Seimiya will be in charge of technology and production as well as operations in Japan and Asia, and Co-COO Mantri will be responsible for the OHT business and Group businesses in other overseas markets. This new senior management team will provide strong leadership during the three years of the company’s new medium-term management plan YX2026.

Aiming for continued “Hockey Stick Growth”

During YX2026, we will further advance the “exploitation” of the strengths of our existing businesses and the “exploration” of new value as we strive to complete the transformation begun under YX2023 while being mindful to not leave any negative legacies for the next generation. Under this guiding philosophy, we will again aim for “Hockey Stick Growth” during YX2026. We will implement various measures that we expect will generate “Hockey Stick Growth” in fiscal 2027 at the latest. Our initial financial targets for fiscal 2026, the final year of YX2026, are sales revenue of ¥1,150 billion, business profit of ¥130 billion, a business profit margin of 11%, and ROE of more than 10%.

Enhancing corporate value while providing stable shareholder returns

Our fundamental policy for enhancing corporate value is “growth.” During YX2026, the entire Yokohama Rubber Group will work together to raise our corporate value by resolutely implementing the growth strategies established for each business and continuing to make proactive strategic investments to realize “Hockey Stick Growth.” Regarding shareholder returns, we intend to stably and steadily raise dividends in accordance with our basic policy to "maintain stable dividends while securing sufficient internal reserves to support business development and fortify our management structure” while continuing to actively invest in sustainable profit growth. Based on this policy, we have decided to apply a dividend payout ratio of 20% during YX2026 and will consider raising our total return ratio to 30% in fiscal 2027 and future years. For more details about YX2026, please see the feature page.

We believe that the implementation of our new medium-term management plan YX2026 will enhance our reputation as a company that is trusted by customers around the world. We look forward to the continued understanding and support of our stakeholders.

March 2024