News Release

Sales Up, Earnings Down in First Half at Yokohama Rubber

Tokyo—The Yokohama Rubber Co., Ltd., announced today that its net sales in the interim fiscal period ended September 30 increased 10.5% over the same period of the previous year, to 222.4 billion yen, that operating income declined 31.0%, to 3.3 billion yen, and that net income declined 74.8%, to 3.4 billion yen. Leading the sales growth were strong gains in tire business in North America and in Asian nations besides Japan. Also contributing to the sales growth were increased shipments of tires to automakers in Japan and business gains in Yokohama's Multiple Business (diversified products) Group, led by sales growth in high-pressure hoses, aircraft products, and marine hoses. The decline in operating income resulted from rising prices for raw materials. Yokohama recorded a tax benefit in the first half of the previous fiscal year, and the absence of a corresponding gain in the first half of the present fiscal year amplified the decline in net income. Partially offsetting that decline was a special gain of 4.2 billion yen on sales of investment securities.

By business segment, sales increased 11.5% in Yokohama's Tire Group, to 162.5 billion yen. Operating income in the Tire Group declined 69.7%, to 1.1 billion yen, reflecting the rising prices for natural rubber and other raw materials. Sales increased 7.9% in the Multiple Business Group, to 60.0 billion yen, and operating income increased 2.3-fold, to 2.5 billion yen. The increase in operating profitability resulted from sales growth and from improvements in the structure of earnings in aircraft products and in industrial products.

Management believes that the upward trend in raw material prices is subsiding, and it has therefore raised the full-year projections for sales, operating income, and net income announced by Yokohama on August 9. The revised projections call for net sales to increase 8.6% over the previous year, to 491.0 billion—up 1.2% over the August projections; for operating income to decline 4.3%, to 21.0 billion—up 31.2%; and for net income to decline 46.4%, to 11.5 billion yen—up 64.3%.