Tokyo—The Yokohama Rubber Co., Ltd., today announced a net loss of 5.7 billion yen for the fiscal year ended March 31, 2009. That loss compares with net income of 21.1 billion yen in the previous fiscal year, and it reflects a sharp decline in operating profitability and a reversal of deferred tax assets. Operating income declined 61.3%, to 12.8 billion yen, on a 6.2% decline in net sales, to 517.3 billion yen.
Sales declined in tires and in diversified products. Yokohama's Tire Group posted sales declines in Japan in original equipment tires and in replacement tires, and tire sales were also generally weak in overseas markets, where the appreciation of the yen weighed heavily on the yen-denominated sales totals. In Yokohama's Multiple Business (diversified products) Group, sales declines in hoses, sealants, aerospace products, and golf equipment more than offset gains in laminated bearings for protecting structures from earthquakes.
Yokohama's downturn in profitability resulted from the sales declines and the appreciation of the yen and also from productivity declines in tires and hoses associated with slumping demand and from the continuing upward trend in raw material costs. The adverse effect of the appreciation of the yen on profitability included translation losses on foreign-currency receivables and on overseas subsidiaries' yen-denominated liabilities.
Management has proposed a 3-yen reduction in the year-end dividend, to 4 yen. The interim dividend was the same as in the previous year, at 6 yen, so the proposed reduction would reduce the aggregate dividends for the full year 3 yen, to 10 yen.
By business segment, operating income in Yokohama's Tire Group declined 62.0%, to 9.9 billion yen, on a 4.8% decline in sales, to 399.7 billion yen. The upward trend in raw material costs and the appreciation of the yen aggravated the adverse effect of the sales decline on profitability. Operating income in the Multiple Business Group declined 51.5%, to 3.4 billion yen, on a 10.7% decline in sales, to 117.5 billion yen. As in the Tire Group, operating profitability suffered from the upward trend in raw material costs and from the appreciation of the yen, as well as from the decline in sales.
Management projects improvements in profitability in the fiscal year to March 31, 2010. That projection is despite expectations of a further decline in net sales and is attributable mainly to an expected overall decline in raw material costs compared with the previous year. Yokohama's projections call for a return to after-tax profitability supported by an increase in operating income. Management projects net income of 7.0 billion, an improvement of 12.7 billion yen, on operating income of 17.0 billion yen, up 32.7%. It projects net sales of 490.0 billion yen, down 5.3%. Dampening the outlook for sales are slumping demand, caused by the global economic slowdown, and the appreciation of the yen.