The Yokohama Rubber Co., Ltd. Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 * Rate of
Sales 559,700 465,133 20.3 -
Operating income 49,696 26,290 89.0 -
Ordinary income 52,365 20,717 152.8 -
Net income 32,611 11,618 180.7 -
Tire Operations
Sales 444,592 379,220 17.2 -The Company enjoyed strong sales of OEM tires in Japan. Demand for its tires grew due to various size options in the product lineup and increased sales of environmentally friendly vehicles and SUVs, on which the Company’s tires are fitted.

-Sales of OEM tires for vehicles sold outside Japan were also favorable.
Operating income 43,369 23,365 85.6 -
*FY ended Dec.31, 2011 covers the period for nine months from April 1 through December 31, 2011, because the Company changed the month for ending the business year from March to December.


Moving hose assembly functions from its Hiratsuka-East Plant to its Nagano Plant to consolidate operations
-The Company is moving hose assembly functions from its Hiratsuka-East Plant to its Nagano Plant to consolidate operations. The Company will acquire a new site close to its Nagano Plant by the end of 2012 and build a branch by FY2013. Transfer of equipment from the Hiratsuka-East Plant to the new plant is scheduled to be completed by FY2014 with an investment of about 800 million yen (approximately $10.2 million), including in land purchase and building construction. How to use the Hiratsuka-East Plant after the assembly equipment has been removed has yet to be decided. (From an article in the Nikkan Jidosha Shimbun on Oct. 2, 2012)

Dissolution of a JV in Vitenam and integrate its operations to the Company's local subsidiaries
-In Sep. 2012, the Company announced that it will dissolve its joint venture "Yokohama Tire Vietnam Company (YTVC)" and consolidate tire production and sales operations into Yokohama Tire Vietnam Inc. (YTVI), its existing wholly owned subsidiary. The Company and two other investors in YTVC have formally agreed to proceed with the liquidation.
  • YTVC was formed in November 1997 through a joint investment by Yokohama Rubber, Southern Rubber Industry Company (CASUMINA), a major local tire supplier, and Mitsubishi Corporation. The joint venture facility has been producing mainly bias tires for motorcycles and light-duty trucks.
  • A wholly-owned subsidiary, YTVI, on the other hand, was established in June 2006 to meet expanding demand for tires in the country. The subsidiary has a seamless production structure in Binh Duong Province near the city of Ho Chi Minh, which includes mixing to forming and vulcanizing processes. It has been manufacturing and selling bias tires for motorcycles, light-duty trucks and industrial vehicles, as well as mini-spare tires since February 2008.


Products Model Tire size
"ADVAN Sport V105 MO" tires for high-powered cars Mercedes-Benz "CLS Shooting Brake" 255/40R18 99Y, 285/35R18 97Y
Mercedes-Benz "A-Class", "B-Class" 255/45R17 91W
Mercedes-Benz "SL-Class" 255/40R18 95Y for the front, 285/35R18 97Y for the rear
Mercedes-Benz "SLK-Class" -
SUV tires "ADVAN S.T. MO" Mercedes-Benz "G 63 AMG", "G 65 AMG" 275/50R20 113W
"ADVAN Sport V103" tires for high-powered cars Audi "S8", "A7", "Q7" -
Porsche "911 Carrera 4" -
Bentley "Continental" -
On-road SUV tires "GEOLANDAR H/T G038" Mercedes-Benz "G-Class" (Standard model) 265/60R18 110V
Fuel efficient tire “BluEarth E70” Subaru "XV" 225/55R17 97V

Business Plan

Raise local sourcing ratio of materials for passenger car tires at its plant in Russia
-The Company will substantially raise local sourcing ratio of materials for passenger car tires at L.L.C. Yokohama R.P.Z., its plant in Russia. Diversion of sourcing from Asia to Russia and the Commonwealth of Independent States is an attempt to improve a competitive edge in cost. The Russian plant, commenced a trial production in December 2011, slated to go into full operation in June 2012. Some of raw materials for tires, like steel cord, synthetic rubber and carbon, are now procured in Europe, including Russia, but 60 percent of them are supplied from Asia. The local subsidiary plans to increase purchasing from local suppliers focused on Russia by visiting them, collecting samples, testing their products, and positively adopting materials like nylon fibers that meet quality standards of the Company. (From an article in the Nikkan Jidosha Shimbun on Jun. 4, 2012)

Global sales of fuel-efficient tires
-The Company announced that it is going to release in the European market its BluEarth AE-01 tire, a standard type under its fuel-efficient BluEarth brand for passenger vehicles, as well as the Geolandar SUV tire, a next-generation fuel-efficient tire for SUVs. Following sales of these two new tires in Europe, the Company is going to put them on other foreign markets as well, based on its strategy to introduce its advanced fuel-saving tire technology to the global market. (From an article in the Nikkan Jidosha Shimbun on February 22, 2012)

Fundamental cost reduction activities
-The Company is launching fundamental cost reduction activities. The Company's sales of new car tires are on track thanks to steady growth of new car production in and out of Japan. Its performance is also excellent supported by falling costs of raw materials. Declining costs of raw materials are, however, expected to lower sales prices of products, as well. Competition in price with overseas tire suppliers, especially in China and Korea, is likely to become more and more stringent. Faced with such situations, the Company is poised to undertake the company-wide aggressive activities toward cost reduction in an attempt to build a strong corporate structure and enhance a competitive edge in the global market. Major fundamental cost reduction activities are as follows:
  • Special projects to address important issues like a complete checkup of materials sourcing practices.
  • Appropriate placement of human resources and how to do work

Outlook for FY ending Dec. 31, 2013

(in billions of JPY)
  FY ending Dec. 31, 2013
FY ended Dec. 31, 2012
(Actual Results)
Rate of
Sales 630 559.7 12.6
Operating income 59 49.7 18.7
Ordinary income 56 52.4 6.9
Net income 36 32.6 10.4
*Exchange rates: JPY90 to the USD, JPY120 to the EUR
Price of natural rubber: JPY320/1 kg

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

Mid-term Management Plan

Grand Design 100 (GD100) Mid-term Management Plan (year ending March 2006 through year ending December 2017)
-In the medium term business plan, the Company is aiming to achieve JPY1 trillion in sales, JPY100 billion in operating profit, and 10 percent in operating margin ratio. In the Phase lll of the plan, which started in December 2012, the Company is on target for achieving the following goals in three years. 
  • Sales: 1,800 billion yen
  • Operating income: 150 billion yen
  • Operating margin: 8.3%
Growth strategy of tire business
1) Boosting supply capacity: the Company aims to increase its tire production capacity to 66.74 million units by FY2014.
- Production capacity in the Philippines, which now stands at 7 million units (2012), will be raised to 12.5 million units by 2015.
  • FY2012: Yokohama Tire Philippines, Inc. launched the first phase of the expansion plan
  • FY2013- : The second phase of the expansion plan started with a targeted production capacity of 10 million units.
-In Russia, where production is in full scale with a yearly volume of 700,000 tires, the Company is going to increase its capacity to 1.6 million tires by 2014.
-In India, the Company will break ground at its new plant site, planning operation launch in 2014.

<Tire Production Capacity (Number of tires)> (unit: ten thousand tires)
  FY2012 FY2013 FY2014
Mie (Truck & Bus, Light Truck) 590 590 590
Mishima (Passenger) 1,390 1,390 1,390
Shinshiro (Passenger) 1,410 1,410 1,410
Shinshiro Minami (Passenger) 280 280 280
Japan Total 3,670 3,670 3,670
U.S.A (Passenger) 620 620 620
U.S.A (Truck & Bus) 58 60 60
Philippines (Passenger) 700 800 1,000
China (Passenger) 510 510 650
China (Truck & Bus) 34 34 34
Thailand (Passenger, Light Truck) 400 400 400
Thailand (Truck & Bus) 35 35 40
Russia (Passenger) 70 140 160
India (Passenger) - - 40
Overseas Total 2,427 2,599 3,004
Total 6,097 6,269 6,674

2) Global sales strategy for high value-added products
-In 2012, the Company released the ADVAN SPORT V105 tires and ECOS ES31 tires. These products are increasingly used on global premium class vehicles such as Mercedes-Benz vehicles.
-In China, the Company agreed that it would provide a local tire supplier with technical support related to radial tires for construction vehicles. The Company will also off-take a fixed quantity of radial tires made by the supplier.
-In 2013, the Company is going to release its ultra low-profile tires for trucks and buses in North America.
-The Company will turn Yokohama Europe into a holding company for tire sales business in Europe. 


R&D Expenditure

(in millions of JPY)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Mar. 31, 2011
Overall 12,824 9,307  12,747
Tire Operations 7,792 5,909  7,946
Research Headquarters 1,610 948  1,316

R&D Structure

-Research and development of basic technology will be conducted by the Research Division, while that of new products will be carried out at the Tire Division, the Industrial Products Division and the Technical Division.

<Tire Operations>
facility Location
RADIC (Research & Development Integrated Center) Kanagawa, Japan
D-PARC (Daigo Proving-Ground and Research Center) Ibaraki, Japan
T*MARY (Takasu Motoring and Researching Yard) Hokkaido, Japan
Tire Test Center of Asia Rayong, Thailand

-In 2012, the Company announced establishment of a testing and evaluation center "Yokohama China Technical Center" for raw materials inside the premises of the tire plant of Hangzhou Yokohama Tire Co., Ltd. in the Zhejiang Province, China. This is the Company's first overseas base for testing and evaluating raw materials. By establishment of this local base, the Company aims to reduce the lead-time for the procurement of less expensive raw materials fully available in China, where it is expanding its tire business. The Company has invested a total of 250 million yen in this Yokohama China Technical Center to prepare a building, evaluation/analysis machines and analytical instrument. The center has started with 14 researchers, which will be increased to 23 in the next fiscal year.

Product Development

New tire design technology that lowers aerodynamic drag
-The Company announced that it has developed a new tire design technology that lowers aerodynamic drag. The new technology takes the environmental contribution made by reducing rolling resistance a step further by improving the flow of air around the tires while a vehicle is in motion in order to raise fuel efficiency. The aerodynamic simulations and wind tunnel tests resulted in a tire design that reduces the aerodynamic drag on a vehicle. An analysis was made of a tire (fin tire) with fin-shaped protuberances on the side facing inwards when mounted. The results showed that while drag on the tire itself was worse than on a normal tire, drag on the vehicle as a whole was considerably reduced. (From a press release on December 19, 2012)

Studless tires for passenger vehicles
-The Company developed the "ice Guard 5" studless tires for passenger vehicles. The new, fuel-saving tires offering superior driving performances on icy roads will be available from September 2012. 
  • Icy road performance: the Company developed the super water-absorbing rubber using the new micro water-absorbing balloon and water-absorbing white gel. It has also adopted an asymmetric tread pattern to improve driving performance on icy roads. Introduction of these technologies led to an 8 percent increase in driving performance compared with the Company's existing technologies.
  • Fuel saving performance: the new tires achieve a 5 percent reduction in rolling resistance.
Standard fuel saving tires
-The Company developed the "ECOS ES31" a standard fuel saving tires for passenger vehicles, planning to release the new product in March 2013. The tires featuring the BluEarth fuel saving tire technologies for passenger vehicles and nano blend rubber compounding technology achieve an 11.5 percent reduction in rolling resistance, a 14.1 percent improvement in wet grip performance, and a 3.6 percent enhancement in dry grip performance. The new tires also offer improved noise reduction properties and abrasion resistance characteristics.

<Industrial products>
Silicone sealant for LED
-The Company has developed silicone sealant for LED (light emitting diode) applications, the YSH-700 series with excellent moisture resistance. The new product gives superb performance to be highly ranked in the MSL (Moisture Sensitivity Level) standards set by JEDEC (Join Electron Device Engineering Council), providing the highest level of quality among silicon seal materials currently available on the market. The Company will market its product at home and abroad for various LED products, including automotive instrument panels and brake lamps as well as liquid crystal display backlight units. (From an article in the Nikkan Jidosha Shimbun on Dec. 1, 2012)

Adhesive agent for lithium-ion battery packs
-The Company has developed the Flash One/FE1-120 elastic adhesive agent for lithium-ion battery packs. Because it can be widely used on products with flame retardant properties, the new adhesive is expected for applications on batteries for mobile phones, vehicles and household equipment. For the following properties, the adhesive can be applied to various parts, enhancing assembly efficiency of lithium-on battery products.
  • Introducing the Company's own compounding technology into the original resin material containing silyl group allowed the adhesive to be applied near the arc that is susceptible to fire.
  • Since the agent does not contain siloxane, it can also be used on difficult-to-bond areas.
  • Less gas-generation contributes to upgrading the durability of the heat-shrinkable tube covering the battery cell.
Ultraviolet curable hard-coating materials for display film applications
-The Company has developed the HR series ultraviolet curable hard-coating materials for display film applications. Since usage of electronic devices with a touch screen display is growing significantly, requirements for high quality, anti-fingerprint and stain-resistant solutions are rising. The HR technology offers a superior film adhesion property, a high level of scratch-resistance, a smooth surface for easy operation, a fingerprint- and oil-free attributes, and an easy-to-clean surface. The materials designed for internal films are highly adhesive to transparent electrodes, while having recoating characteristics. The new technology can be applied to general polyethylene terephthalate films, as well as cycloolefin polymer films with a high degree of transparency and hygroscopicity. (From an article in the Nikkan Jidosha Shimbun on July 7, 2012)

Investment Activities

Capital Investment

(in millions of JPY)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Mar. 31, 2011
Overall 28,100 22,400  24,900
Tire Operations 25,000 19,500  22,200

<Tire Operations>

-The Company invested 9.9 billion yen in upgrading its domestic production facilities, improving productivity, and raise its quality levels, as it releases new products, including large and high-performance tires.

<Foreign subsidiaries>
-The Company invested 9.1 billion yen in constructing new plants and installing new equipment at its passenger vehicle tire plants overseas. Major investment projects included expansion of the Yokohama Tire Philippines, Inc.

Investments Outside Japan

-In May 2012, Yokohama R.P.Z., a joint venture between the Company and Itochu Corporation, invested approximately 4.8 billion rubles (about 14.4 billion yen) to build a new plant at the Lipetsk Special Economic Zone, about 500 kilometers south of Moscow. The facility will supply passenger vehicle tires to the Russian market where automobile sales are steadily recovering. The plant with a land area of 200,000 square meters already started production in December 2011. It has the capacity to manufacture 1.4 million tires a year. The Lipetsk facility will initially supply its products exclusively for the Russian market, while planning to export about 10 percent of its products to the European market in the future. The Company is mulling the possibility of expanding the new facility to meet further growing demand in the market.

-In 2012, the Company announced construction of a new plant for production of passenger car tires in the state of Haryana, India. Yokohama India Pvt. Ltd. a wholly-owned subsidiary established in 2007, is now engaged in sales of service tires for passenger cars. Expecting a surge in automobile sales in India as its economy grows, the Japanese tire maker has decided to build a new plant in the Industrial Bahadurgarh Estate close to Delhi with an investment of around 4.4 billion yen. The new plant with an annual production capacity of 700,000 tires is slated to go into operation in July 2014.

Planned Capital Investments (Tire business)

(As of Dec. 31, 2012)
Business Expected Investment (millions of yen) Start Planned completion Increased
capacity after completion
Hiratsuka Plant
(Kanagawa Pref., Japan)
Manufacturing 3,585 Jan.
Mie Plant
(Mie Pref., Japan)
Manufacturing 4,769 Jan.
Mishima Plant
(Shizuoka Pref., Japan)
Manufacturing 4,712 Jan.
Shinshiro Plant
(Aichi Pref., Japan)
Manufacturing 9,484 Jan.
Onomichi Plant
(Hiroshima Pref., Japan)
Manufacturing 2,282 Jan.
L.L.C. Yokohama R.P.Z.
Headquarters and Plant
(Lipetsk, Russia)
Manufacturing and other business 13,650 Jul.
1.4 million passenger car tires
Yokohama Tire Philippines, Inc.
(Clark Special Economic Zone, Philippines)
Manufacturing and other business 19,700 Feb.
3.0 million passenger car tires