Yokohama revises fiscal 2020 expectations upward

Yokohama Rubber Co. Ltd. has revised upward its sales and earnings projections for fiscal 2020 on the prospect of "stronger-than-expected" recovery in demand in some markets in the quarter ended Sept. 30.

Yokohama did not elaborate in its third-quarter earnings report on which markets are showing signs of recovery, but it raised its earnings and sales forecast for the full year by 43% and 5.4%, respectively, over projections published in August.

The new forecasts — for an operating profit of $265 million and sales of $5.3 billion — will be significantly short of the fiscal 2019 figures, however. The company cautioned that the continuing adverse effects of the COVID-19 pandemic could impact the projections.

For the quarter ended Sept. 30, Yokohama reported operating income of $52.5 million on sales of $1.63 billion, declines of 33.5% and 7.4%, respectively.

YRC's tire business reported a 64.7% drop in quarterly operating income to $14.2 million on 14.4% lower sales of $939.4 million, while the ATG off-road tires business recorded a 24.4% improvement in operating income to $28.2 million on 5.7% higher sales of $163.2 million.

For the January-September period, YRC's operating income was down 74.5% to $79.2 million on 16.2% lower sales of $3.63 billion, lowering the operating ratio six points to 2.2%. Net income was off 84.6% to $40.3 million.

The tire business' operating income was off 96% for the nine months, to $4.8 million on 16.4% lower sales of $2.48 billion.

YRC noted that the sales decline reflects a sharp decline in OE demand during the first two quarters, which offset a modest aftermarket recovery in demand in China, Japan and other selected markets.

The ATG business unit's improvement in the quarter wasn't enough to overcome the heavily impacted first half, and as a result the unit's nine-month operating income and sales were down 17.7% and 11.7%, respectively, to $58 million and $446.5 million.

As in the company's other business segments, declines in OE business demand masked a sales upturn in replacement tires.

Regionally, YRC reported tire division sales in North America during the quarter were nearly on par with 2019, down just 1% to $285.6 million. For the nine months, North American tire unit sales were off 12.3% to $710.7 million.

ATG sales in North America were down 2.8% in the quarter and nine months to $65.1 million and $189 million, respectively.