Tokyo-The Yokohama Rubber Co., Ltd., today announced net earnings of 11.5 billion yen for the fiscal year ended March 31, 2010. That gain compares with a net loss of 5.7 billion yen in the previous fiscal year, and it reflects a surge in operating profitability. Operating income rose 67.5%, to 21.5 billion yen, on a 9.8% decline in net sales, to 466.4 billion yen.
Underlying Yokohama's surge in operating income were (1) the reversal of the upward trend in raw material costs of recent years and (2) the company's progress in reducing selling expenses and other costs. Net profitability benefited additionally, meanwhile, from a sharp reduction in losses on currency translation adjustments.
Sales declined 8.1% in Yokohama's Tire Group, to 367.5 billion yen, and declined 15.9% in the company's Multiple Business (diversified products) Group, to 98.8 billion yen. A promising development was renewed growth in sales of tires in Japan and overseas in the fiscal fourth quarter (January 1 to March 31, 2010). Undermining sales in the Multiple Business Group were declines in two core product lines, hoses and conveyor belts. Those declines obscured a strong sales performance in golf products.
Operating income in the Tire Group more than doubled, rising 106.9%, to 20.5 billion yen. The downturn in raw material costs and Yokohama's cost-cutting measures more than compensated for the decline in sales. In the Multiple Business Group, operating income declined 74.3%, to 879 million yen, reflecting the overall weak sales performance.
Yokohama projects a 30.4% decline in net income, to 8.0 billion yen in the fiscal year to March 31, 2011. Management expects net sales to rise 11.5%, to 520.0 billion yen, buoyed by growing demand in an improving economic environment. But it expects operating income to decline 16.1%, to 18.0 billion yen, on account of the appreciation of the yen and resurgent raw material costs.