The Yokohama Rubber Co. Ltd announced a company-wide drop in profit in its half-year financial results, but the company remains profitable as the tire industry continues to face up to the effects of the Covid-19 pandemic.
The fiscal report detailed that Yokohama suffered a 92.5% drop in profits for the first half of 2020 (at ¥1.3bn/US$12.2m), and also declared an 88.3% decline in operating profit (to ¥2.9bn/US$27.2m), an 86.8% decline in business profit (¥2.3bn/US$21.6m) and a 20.6% decline in sales revenue (to ¥247.1bn/US2.3bn).
The decline in business profit reflected a downturn in unit sales volume, an upturn in unit costs associated with reduced production volume, and inventory-disposal costs associated with a product recall in North America in the fiscal first quarter.
Sales revenue declined in original equipment tires in Japan and overseas as the Covid-19 pandemic depressed vehicle demand in Japan and necessitated continuing production adjustments by auto makers worldwide. Sales revenue also declined in replacement tires. Replacement tire demand stagnated worldwide amid the pandemic, according to Yokohama.
Yokohama has revised the full-year fiscal projections for 2020 that it announced in February. The revised projections take into account the effects of the Covid-19 pandemic. Compared with the earlier projections, these projections are 67.1% lower for overall profit, 63.3% lower for operating profit, 61.8% lower for business profit, and 18.8% lower for sales revenue.
The company declared a dividend of ¥32 per share for the first half of 2020, and management plans to propose a year-end dividend of ¥32. That would result in an annual dividend of ¥64 per share, as projected by the company in February.
Resilience in Yokohama’s Multiple Business and ATG (Alliance Tire Group, off-highway tires) segments apparently offset some losses incurred amid the Covid-19 pandemic. The company says it also implemented successful improvements throughout its operations for coping with the pandemic-related business downturn.
Yokohama maintains that it retains net profitability in light of these financial results.