Record sales and earnings in fiscal 2021
Strong tire sales overseas
In fiscal 2021 (Jan-Dec 2021), the Japanese economy was buoyed by increasing exports supported by expanding demand in overseas markets and rebounding domestic personal consumption after lifting of the COVID-related state of emergency at the end of September. Overseas, manufacturing activity in the United States returned to pre-pandemic levels in many industries, including automobiles and aircraft. Manufacturing in China also rebounded. The European economy began to recover, led by the service sector. In this environment, Yokohama Rubber’s fiscal 2021 sales revenue increased 21.7% year on year to ¥670.8 billion. Business profit rose 73.3% to ¥62.2 billion, operating profit expanded 132.4% to ¥83.6 billion, and profit attributable to owners of the parent increased 148.9% to ¥65.5 billion. These results represent all-time highs at each level. Our core tire business achieved sales and profit growth overseas, with contributions coming from product price hikes and a depreciating yen. We distributed a year-end dividend of ¥33 per share as planned, bringing the full-year dividend to ¥65 per share. For fiscal 2022, we are forecasting sales revenue of ¥750.0 billion (+11.8% YoY), a new all-time high. However, expecting rising material and energy prices as well as higher logistics expenses to weigh on profits, our fiscal 2022 forecast is for declines at all profit levels, with business profit at ¥60.0 billion (-3.5% YoY), operating profit at ¥58.5 billion (-30.1% YoY), and net profit at ¥40.0 billion (-38.9% YoY).
Steady progress in increasing sales ratio of high value-added tires
We have been implementing our Yokohama Transformation 2023 (YX2023) three-year medium-term management plan since the start of fiscal 2021. During YX2023, our consumer tire business aims to expand the sales ratio of high value-added tires from 40% in 2019 to more than 50% by increasing sales of our ADVAN, GEOLANDAR, and WINTER tires. Toward that end, we have been making efforts to expand OE use of ADVAN and GEOLANDAR brand tires, strengthen sales in the replacement market, and expand size lineups, including for WINTER tires. Noteworthy results in fiscal 2021 included Mercedes AMG’s adoption of ADVAN as OE on its G63 BRABUS series and Toyota Motor’s selection of GEOLANDAR tires for its Land Cruiser with overseas specs and BluEarth tires for its Lexus NX. The consumer tire business also introduced new winter tires for passenger cars, vans, trucks and buses as part of its “ YOKOHAMA New Winter” sales offensive launched primarily in Japan and Europe. These efforts and the steady expansion of our tire size lineups increased the sales ratio of high value-added tires to 41% in fiscal 2021.
Strengthening sales of summer tires in fiscal 2022
In fiscal 2022, we are further strengthening our efforts to raise the sales ratio of our high value-added tires. Early successes include the adoption of our ADVAN tires by Mercedes AMG for its first electric vehicle, the EQS 53 4MATIC+, and by BMW M GmbH for its M3 Sedan, M4 Coupe, X5 M High-Performance SUV, and X6 High-Performance Sports Activity Coupe. We also have begun supplying GEOLANDAR tires for Toyota Motor’s Lexus LX. In addition, the consumer tire business has launched the “YOKOHAMA New Summer” sales offensive that seeks to expand sales of ADVAN summer tires, especially the ADVAN Sport V107 and ADVAN NEOVA AD09, two new additions to our ADVAN lineup. We have also introduced two new BluEarth tires as part of the effort to expand sales of our summer tires. These efforts are expected to further raise the sales ratio of high-value added tires to 42% or higher.
Commercial tire business aims to expand service-related business
Our commercial tire business is exploring opportunities created by market changes, with a focus on four themes—cost, service, digital transformation (DX), and strengthening its product lineup. The commercial tire business has been supporting transportation-related businesses with its Tire Management System (TMS), and it recently began testing a new business model called TPRS, which remotely monitors passenger car tires’ air pressure. We plan to use the analysis of data collected by these systems to expand services supporting transportation-related businesses. We also are developing a sensor tire and will strengthen our network for providing various services to clients needing tire-related services.
In addition, we plan to expand our OHT (off-highway tire) business, which YX2023 has positioned as a future growth driver for our commercial tire business. Toward that end, on March 25 we announced the acquisition of Trelleborg Wheel Systems Holding AB (TWS), a company engaged in the manufacture and sale of OHTs for agricultural and industrial machinery. We expect the synergies generated by the combined strengths of Yokohama Rubber and TWS in all areas—from the development of new products and services to manufacturing, sales, quality control, and ESG—will contribute to the further growth of our OHT business.
MB segment is strengthening production and accelerating reforms
We are concentrating our MB segment’s resources in its two strongest businesses—hose & couplings and industrial products—as we seek to transform the segment into a generator of stable earnings. Initiatives to strengthen and expand the MB segment’s business in fiscal 2021 included an investment to triple production capacity at a hose & couplings plant in China, and the aggregation of the industrial products group’s production of marine hoses at our Hiratsuka plant in Japan and a plant in Indonesia. In addition, the MB segment’s business restructuring was advanced by the sale and transfer of the Hamatite business in November. In fiscal 2022, the hose & couplings business will expand capacity at its Ibaraki Plant and reorganize its North American production of automotive hoses and couplings. We also aim to expand our industrial products business’ share in Japan’s conveyor belt market and will accelerate structural reform of the MB segment by integrating its aerospace products division into the industrial products division.
Strengthening ESG activities contributes to sustainable increases in our corporate value
Yokohama Rubber regards ESG activities as an important strategy that will contribute to the strengthening of our business and lead to sustainable increases in our corporate value. Our environment-related initiatives are based on a three-pillar strategy focused on achieving carbon neutrality, a circular economy, and coexistence with nature, which will support the achievement of the first two goals. We have established a roadmap for achieving medium-to-long term goals in each of these pillars. For carbon neutrality, our medium-term goal is to reduce CO2 emissions directly generated by our activities by 38% from the 2013 level by 2030 and then continue toward our longer term goal of achieving carbon neutrality by 2050. Our efforts to realize a circular economy will be focused on increasing the ratio of renewable and recyclable materials to more than 30% of total materials used by the Company by 2030. Meanwhile, we continue to believe Yokohama Rubber has an important role to play in activities that promote human rights, diversity, and contributions to our local communities. We are also pleased to report that as of this March we have become fully compliant with Japan’s Corporate Governance Code. Also, this January we declared our support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TFCD), and going forward we will proactively disclose information about our ESG activities.
Yokohama Rubber endeavors to achieve continued growth as a company trusted by customers around the world. We look forward to the continued understanding and support of our shareholders.