New highs in sales revenue and business profit achieved in fiscal 2022
Strong results in our core tire business
In fiscal 2022, the Japanese economy benefited from a moderate increase in exports and a significant improvement in consumer sentiment. Overseas, capital investment in the United States was firm, but the Chinese economy remained in a sluggish condition. Europe suffered from rising inflation and prolongation of high energy prices. In this global economic environment, Yokohama Rubber posted record highs in sales revenue and business profit, expanding sales revenue 28.3% year on year to ¥860.5 billion and business profit 12.8% to ¥70.1 billion. However, operating profit declined 17.7% to ¥68.9 billion and profit attributable to owners of the parent fell 29.9% to ¥45.9 billion. The record highs in sales revenue and business profit were driven by the strong performance at our core tire business, which expanded sales of its high-value-added tires and off-highway tires, including agricultural tires. Product mix improvements, price increases in Japan and overseas markets, solid sales in North America, and a weaker yen also contributed to the tire business’ strong results. We distributed a year-end dividend of ¥33 per share as planned, bringing the full-year dividend to ¥66 per share, an increase of ¥1 on the previous year’s annual dividend. In fiscal 2023, we are aiming to again set record highs in sales revenue and business profit. We are targeting sales revenue of ¥900.0 billion, up 4.6% year on year, business profit of ¥73.0 billion, up 4.2%, operating profit of ¥73.0 billion, up ¥6.0%, and profit attributable to owners of the parent of ¥46.0 billion, up 0.2%. We plan to increase our annual dividend for a third straight year, raising the annual dividend to ¥67 per share, including an interim dividend of ¥33 and year-end dividend of ¥34.
Sales ratio of high value-added tires increased to 42%
Since fiscal 2021, we have been implementing our Yokohama Transformation 2023 (YX2023) three-year medium-term management plan. As part of this plan, the consumer tire business is aiming to expand the sales ratio of high value-added tires from 40% in 2019 to more than 50% by increasing sales of its ADVAN, GEOLANDAR, and WINTER tires. Toward that end, we have been making efforts to expand use of our ADVAN and GEOLANDAR brand tires as original equipment (OE) on new vehicles, strengthen sales in the replacement market, expand size lineups, including for WINTER tires, and strengthen sales of tires suited to local market needs. In fiscal 2022, this effort led to our ADVAN and GEOLANDAR tires being adopted as OE on many premium cars, including some new electric vehicles (EVs). In the replacement tire market, we introduced two new ADVAN tires and expanded sales under our “YOKOHAMA New Summer” campaign. Our motorsports activities again produced some excellent results, with a vehicle running on our ADVAN tires winning the GT300 class series championship of the SUPER GT Series and vehicles fitted with our ADVAN and GEOLANDAR tires capturing overall championships at major races in the United States and Asia. These activities increased the sales ratio of our high value-added tires to 42%.
Aiming to strengthen sales of GEOLANDAR tires in 2023
In fiscal 2023, we will strive to increase sales of our GEOLANDAR tires by introducing new tires and expanding the brand’s size lineup under a new “Mud Match” themed sales campaign. We also plan to expand sale of our ADVAN brand, which is now in its 45th year. We are now supplying ADVAN tires as OE on Toyota Motor Corporation’s new GR Corolla and will be taking on many other challenges, including launching new ADVAN tires for use on EVs, as we aim to raise the sales ratio of high value-added tires to 47%.
Responding to expanding demand for commercial tires
In fiscal 2022, our off-highway tire (OHT) business, considered a key driver of future growth, continued to expand sales, taking advantage of its cost advantages and the start of production at our new Visakhapatnam Plant in India ahead of schedule last August. The truck and bus (TBR) business continued to improve the supply capability of its Mississippi Plant in the United States, achieving record high production volume at the plant in 2022. The TBR business also invested to expand production at its Mie Plant in Japan. In fiscal 2023, we will operate the Visakhapatnam Plant at full capacity and proceed with the second stage of the plant’s expansion. We also plan to boost annual production at the Mie Plant to 100,000 tires. Meanwhile, the acquisition of Trelleborg Wheel Systems Holding AB is now scheduled to be completed in the first half of 2023, after completion of compliance law reviews required by all concerned countries.
MB segment concentrating its resources in growth businesses
We are concentrating our MB segment’s resources in its two strongest businesses—hose & couplings and industrial products—as we transform the segment into a generator of stable earnings. In the hose & couplings business in fiscal 2022, we progressed with the reorganization of our automotive hoses & couplings production network in the United States and Mexico and decided to invest to expand production of hydraulic hoses at our Ibaraki Plant in Japan. In our industrial products business, we expanded our share of the conveyor belt market in Japan to nearly 50% in 2022 and are now expanding the production capacity at our Hiratsuka Factory. As part of the effort to secure stable earnings by concentrating resources in the MB segment’s two core business, the aerospace products division was integrated into the industrial products division in 2022. In 2023, the hose & couplings business will further raise its Mexico plant’s share of total output to 31% and expand hydraulic hose production capacity at its plant in China. The industrial products business will continue its efforts to maximize its share of the conveyor belt market in Japan and plans to launch new products as part of that effort.
Strengthening sustainability-focused management
We regard sustainability-focused management as an important strategy that will strengthen our business. We accordingly are engaged in a variety of environment, social, and governance (ESG) activities that will contribute to sustainable increases in our corporate value. In fiscal 2022, we undertook a number of new ESG activities. In the environment area, we launched a project to make our Shinshiro-Minami Plant a carbon-neutral model plant. We also accelerated our research and development of tires using sustainable materials and nature-positive activities epitomized by tree-planting activities at our plants around the world. Social-related initiatives included the formulation of a human rights policy and revising our personnel system, and we strengthened corporate governance by unwinding cross-shareholdings and promoting greater diversity in our management ranks. In fiscal 2023, we plan to further increase and strengthen our ESG activities while also proactively providing fair and transparent information disclosures about those activities. To further strengthen the supervisory function of the Board of Directors, on 30 March 2023 we shifted from a company with an Audit & Supervisory Board to a company with an Audit & Supervisory Committee.
Yokohama Rubber endeavors to achieve continued growth as a company trusted by customers around the world. We look forward to the continued understanding and support of our stakeholders.