Financial overview

(in millions of JPY)

	FY2007	FY2006	Rate of change (%)	Factor
Overall
Sales	551,431	497,396	10.9	The Company launched highly sophisticated products, strengthened its sales structure in and outside Japan, and enhanced its production capacity in response to active demand for tires in and outside Japan. As a result, sales increased year-on-year.
Operating income	33,118	21,069	57.2	Income increased year-on-year as a result of the Company's efforts to enhance its operating base by drastically reducing costs and also recovering costs against material price hikes.
Ordinary income	25,164	20,084	25.3
Current net income	21,060	16,363	28.7
Tire Operations
Sales	419,916	372,793	12.6	Sales increased year-on-year due to increased production volume in its plants in Asia and to significant sales growth generated outside Japan.
Operating income	26,049	14,670	77.6	Operating income increased year-on-year due to earnings recovery at its subsidiaries in North America and Asia.

Contracts

-Daimler

The Company's  flagship tire, the  "ADVAN Sport", is being equipped as an original equipment tire on the top three AMG models of Mercedes Benz: the, "CL 63 AMG", "CL 65 AMG", and "ML 63 AMG". The size of the front tire for the "CL 63 AMG",  and "CL 65 AMG" was 255/35ZR20 XL, and that of the rear tire was 275/35ZR20 XL. The size of the front and rear tires for the "ML 63 AMG" was 295/40ZR20 106Y. (From a press release dated August 2, 2007)

-Smart Brabus

The Company has announced that its S.Drive sport tires, for the European market, have been approved by smart-BRABUS GmbH as original equipment tires for the new "smart fortwo BRABUS." The sizes of the S.Drive are 175/50R16 77T for the front and 225/35R17 for the rear. (From an article in the Nikkan Jidosha Shimbun on Sep. 13, 2007)

-Audi

The Company announced that ADVAN tires, its high-performance flagship winter-tire series for the European market, have been selected by Audi as original equipment winter tires for the Audi S6 and S8 models. Tire sizes supplied under the contract are 265/35R19 98V XL (Extra Load) for the S6 and 265/35R20 99V XL for the S8. Both sizes are for both front & rear. (From a press release on Oct. 24, 2007)

-Chrysler

The Company has started providing Chrysler with its tires in four variants. Those have been selected as original equipment tires for the 2008 Chrysler Town & Country and the 2008 Dodge Grand Caravan mini-vans which are available in the North American market, as well as for the Chrysler Grand Voyager models sold in other markets around the world. This is the first time for the Company to be awarded a contract from Chrysler as original equipment tire supplier. Tire sizes approved for all-season use in North America are 225/65R16 100S S33B and C33B. In addition, 225/65R16 100H and 225/65R17 102H A349A summer tires are fitted on export models. All tires supplied under the contract will be manufactured at Yokohama Tire Philippines, INC. (YTPI), a production and distribution hub for the passenger car tires to be exported, then shipped to Yokohama Tire Corporation (YTC), a subsidiary in the United States, before being finally delivered to the designated Chrysler facilities. (From a press release on Oct. 24, 2007)


Enhancing its production structure

-Japan

The Company tripled production capacity at Shinshiro Minami Plant in Shinshiro city, Aichi prefecture. It planned to start expansion construction in the summer of 2007 and start production in August 2008. 

>>> See Investment for further details

-Outside Japan

The Company increased production capacity of tires for passenger cars and light trucks in Thailand. The total investment was 7 billion yen. Construction was planned to start in the summer of 2007 to start production in August 2008.

The Company held an opening ceremony at a new plant of its subsidiary Yokohama Tyre Vietnam Inc. in the suburbs of Ho Chi Minh City, Binh Duong Province, Vietnam in February 2008.  

>>> See Investment for further details

R&D Structure

-Research facilities

RADIC, a research and development center at the Hiratsuka factory, is the main facility. The Company is working on developing new technology through using equipment such as supercomputers, electronic microscopes, ESCA (surface analysis device for materials) and centrifugal separators.

The Company conducted tests using real vehicles at its integrated tire testing facility D-PARC and another tire testing facility for the winter T*MARY.

The Company will construct a large-scale proving ground in Rayong Province, Thailand. It cited the reason for this new project as ways of upgrading its tire performance evaluation capability and improving the quality of tires it offers for passenger cars, trucks and buses. The Company has secured a 1.69-million square meter site for the proving ground which is due to be completed by the end of FY2008 with a total investment of 2.5 billion yen. It will construct a high-speed circuit with the total road length of 4.1kms as well as various test courses for evaluating driving stability, fuel efficiency, durability, noise, vibration and driving comfort.(From a press release on Aug. 22, 2007)

The Company signed a contract with IDIADA Automotive Technology SA, a Spanish automotive engineering company, to allow it to preferentially use IDIADA's new test track for 15 years. The test truck is under construction in southern Spain with a schedule to start operation in Apr. 2008. The tire supplier aims to enhance tire development for European markets at this location with a mild winter. IDIADA's Technical Center, to which the new test track will be added, is located 70 Km southwest of Barcelona and provides 11 different test tracks and facilities for high-speed, fatigue, braking, handling, and off-road driving. The contract signed by the Company covers the preferential usage of a 1,760-meter wet handling track with partial straight and circling tracks for hydroplaning tests. It plans to use this mainly for the evaluation of tire compounds and tread patterns. (From an article in the Nikkan Jidosha Shimbun on Jan. 19, 2008)


-R&D Profile

Research headquarters: Mainly develops new materials, simulation technology, analysis technology, technology to respond to environmental issues, and technology for IT applications.

In the tire business, the Company is working to achieve the target it set, which is for all of its products to be environmentally friendly by FY2017, which will end in March 2018.

R&D Expenditure

(in millions of JPY)

		FY2007	FY2006	FY2005
Overall		15,289	14,649	14,557
By segments	Research Headquarters	1,936	1,390	1,359
	Tire Operations	8,993	8,932	9,120

Technology Licensing Contracts Involving Tire Operations (As of Mar. 2008)

Counter party (Location)	Details	Effective from:	Will expire in:
Continental AG (Germany)	Licensing of patents and production technologies regarding tires for trucks and buses	May 21, 1990	Dec. 31, 2012
Toyo Tire & Rubber Co., Ltd. (Japan)	Licensing of patents and production technologies regarding tires for trucks and buses	Aug. 2, 1990	Dec. 31, 2012
Continental AG (Germany)	Licensing of patents and technology information regarding vehicle tires	Apr, 1, 2002	Mar. 31, 2012

Licensing Agreements Involving Tire Operations (As of Mar. 2008)

Counter party (Location)	Details	Effective from:	Will expire in:
Continental AG (Germany)	Licensing of patents and production technologies regarding tires for trucks and buses	May 21, 1990	Dec. 31, 2012
Toyo Tire & Rubber Co., Ltd. (Japan)	Licensing of patents and production technologies regarding tires for trucks and buses	Aug. 2, 1990	Dec. 31, 2012
Continental AG (Germany)	Licensing of patents and technology information regarding vehicle tires	Apr, 1, 2002	Mar. 31, 2012

Strategy