Yokohama has revised its annual financial forecast upward

Yokohama Rubber revised up its financial outlook for 2020 on the back of a "stronger-than-expected" recovery in third-quarter demand in some markets.

The Japanese company expects its operating profit to reach 28.5 billion yen (230 million euros), up 42% from forecast in August this year.

Operating profit will reach 30 billion yen for the year, up 42.9% from the earlier forecast. Annual sales will rise 5.4% year-on-year to 565 billion yen.

For the first nine months of this year, Yokohama's operating profit fell 63% to 9.3 billion yen, amid a 16.2% decline in sales to 390 billion yen. Operating income fell 74.5% to 8.5 billion yen.

Revenue from sales of Yokohama's tire business fell 16% to 266 billion yen, while operating profit fell 95% to 511 million yen.

In the OE segment, sales fell sharply due to a significant drop in demand in the first two quarters of the year, which was partially offset by a “moderate recovery” in demand in Japan, China and elsewhere.

Revenue from tire replacement in the replacement market also declined in the first half of the year, reflecting the overall situation in the global market. In Japan, sales of Yokohama winter tires declined due to the warm winter, and the Covid-19 pandemic continued to weigh on consumer spending in the country in the third quarter, the company said. Replacement tire sales in overseas markets also declined despite recovery in demand in China and several other markets.

The decrease in sales was recorded in the ATG division, which produces tires for agricultural and industrial equipment. The division's operating profit fell 17.6% in the three quarters to Y6.2 billion, amid an 11% decline in sales. At the same time, in the third quarter of the year there was an increase in sales of replacement tires, which, however, could not fully compensate for the decrease in the first two quarters.

The Covid-19 coronavirus pandemic also had a negative effect on Yokohama Rubber's diversified business, where sales fell 18% in three quarters and business profits fell 54%.