The Yokohama Rubber Co., Ltd. Business Report FY ended Dec. 2014

Business Highlights

Financial Overview

(in million JPY)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 Rate of
Sales 625,245 601,629 3.9 -
Operating income 59,066 56,647 4.3 -
Ordinary income 55,803 59,503 (6.2) -
Net income 40,502 35,007 15.7 -
Tire Operations
Sales 497,572 479,522 3.8 -Tire sales to automakers increased in Japan. Demand for fuel-efficient tires grew thanks to their wider use on premium cars and green vehicles, which resulted from the Company’s sales promotion activities.
-Revenues and unit sales at the replacement tire business in Japan remained at the same level as in 2013.
Operating income 48,577 46,021 5.6 -


-The Company announced that it will assume full ownership of Fuji Seiko Co., Ltd.'s subsidiary that manufactures tire beads in Kameyama, Mie Prefecture, Japan. The Company currently purchases tire beads from the Kameyama Plant. Fuji Seiko, based in Gifu Prefecture, plans to spin off the subsidiary in October 2014 and transfer it to the Company in January 2015. By procuring the parts from a new wholly-owned subsidiary, the Company aims to save tire production costs. (From an article in the Nikkan Jidosha Shimbun on August 9, 2014) 


-The Company announced that it merged its two U.S. subsidiaries, YH America Inc. and SAS Rubber Company, into a new company, Yokohama Industries Americas Inc., effective April 1, 2014. YH America had been engaged in manufacturing, assembling, and selling automotive hoses, automotive windshield sealants, and other industrial products. SAS Rubber Company had been engaged in producing and selling automotive hoses and other industrial rubber products. Total sales at the two companies for fiscal year 2013 reached approximately JPY 22 billion (USD 214.9 million). The number of employees of the companies was about 1,200. The new company is headquartered in the state of Kentucky, USA and has production sites in Kentucky, South Carolina, and Ohio. (From a press release on April 18, 2014)


-Major original equipment contracts in 2014:

Products Models Tire size
GEOLANDAR G98 Subaru "Legacy Outback" 225/65R17 102H
BluEarth E52 Toyota "Esquire" 195/65R15 91S
BluEarth E51, GEOLANDAR G91 Toyota "Lexus NX" BluEarth E51 (225/60R18 100H), GEOLANDAR G91 (225/65R17 102H)
BluEarth E70, S73 BluEarth Toyota "Vitz" BluEarth E70 (175/70R14 84S), S73 BluEarth (165/70R14 81S)
BluEarth E52, dB E70 Toyota "Voxy/Noah" BluEarth E52 (195/65R15 91S), dB E70 (205/60R16 92H)
BluEarth-A Mazda "Demio" 185/65R15 88S
C.drive2 Daimler Mercedes-Benz "GLA-Class" -
Geolandar SUV Chrysler "Jeep Cherokee Trailhawk" 245/65R17 107H
Geolandar G91 Nissan "X-Trail" 225/65R17102H
ADVAN Sport V105 N-0 Porsche "Panamera" -

Outlook for FY ending Dec. 31, 2015

(in billion of JPY)
  FY ending Dec. 31, 2015
FY ended Dec. 31, 2014
(Actual Results)
Rate of
Sales 673.0 625.2 7.6
Operating profit 64.0 59.0 8.4
Ordinary income 54.5 55.8 (2.3)
Net income 36.0 40.5 (11.1)

*Exchange rates: JPY 115 to the USD, JPY 130 to the EUR
Price of natural rubber: JPY 198/1 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 aims to achieve JPY 1 trillion in sales, JPY 100 billion in operating profit and 10% in operating margin. For the Phase lll of the plan, which started in the fiscal year ended on December 31, 2012, the chief quantitative targets were to achieve aggregate three-year net sales of JPY 1.8 trillion, aggregate three-year operating income of JPY 150 billion and operating margin of 8.3%. As of December 2014, aggregate three-year net sales reached JPY 1.79 trillion, aggregate three-year operating income reached JPY 165.4 billion, and operating margin reached 9.3%. Although sales slightly fell below the target, both operating income and operating margin exceeded the target levels.

Growth strategy of tire business
1) Focusing on original equipment tire business
-The Company aims to increase unit sales of original equipment tires by leveraging its fuel-efficient tire technology. It plans to expand sales in the overseas market, expecting to double the percentage of sales outside Japan by 2020.

2) Further expanding presence in large markets
-In Phase IV, the Company will expand local production and sales in North America, a particularly large market, and also in the Russian market, where it already has a strong presence. The Company aims to increase its sales capabilities in these markets by establishing an extensive supply and distribution network.
-Strengthening branding in the global market and nurturing Yokohama-brand fans.
-The Company will expand its tire production capacity prior to launching the next business plan after the Grand Design (GD) 100. It plans to invest JPY 120 billion to boost its annual global tire production capacity to 74 million units by 2017, and 89 million units by 2020 from 68 million units in 2014. Plans under consideration include new plant constructions and facility expansions in North America, Russia, Europe, and China. 

3) Expanding commercial tire business
-The Company established the Commercial Tire Division in order to facilitate decision making and enhance and expand its business operations in the area.
-The Company's new truck and bus tire plant in North America will begin operations in the second half of 2015, which is expected to improve the Company's capability to supply its products locally. The Company will step up its activities to develop and sell large radial tires (49-inch tires or larger tires) for mining and construction vehicles in order to meet growing demand for these products.

Growth strategy of Multiple Business
1) Expansion of global auto parts business
-The Company produces automotive hoses in 6 countries, while producing adhesive for automotive glass in 4 countries. It aims to expand its manufacturing and supply operations for these products in order to meet the needs of global automakers.

R&D Expenditure

(in million of JPY)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 13,438 12,632 12,824
-Tire Operations 8,985 8,007 7,792
-Research Headquarters 1,349 1,471 1,610

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

-The Company announced that it will obtain a new site on which to construct a test track for its winter tires in Asahikawa, Hokkaido, Japan. The new test track, which will have test courses for passenger car, truck, and bus tires, is scheduled to become operational by the end of 2015. The new facility will be engaged in testing winter tires and certain summer tires. The Company is currently testing its winter tires at its T*MARY test course in Kamikawa, Hokkaido. The new site covers approximately 86 hectares, four times the size of T*MARY, which will be closed when the new test track is completed. (From a press release on November 13, 2014)

Joint Development

-The Company announced that on May 31 it signed a cooperative research and development agreement as well as a license and technology exchange agreement with South Korea's Kumho Tire Co., Inc. Under this new agreement, the Company and Kumho Tire will begin joint research and development on the tire-related technologies of the future. The two companies will continue talks over a possible capital alliance. (From an article in the Nikkan Jidosha Shimbun on June 3, 2014)

New R&D Centers

-The Company will establish tire development centers in both Thailand and the U.S. These facilities will be the company's first of its kind outside Japan. The tire supplier hopes to better meet the needs of its customers by developing and designing tires locally in each market, as it expands production and sales globally. Development tasks and responsibilities will be delegated from the Company's development bases in Japan in steps. (From an article in the Nikkan Jidosha Shimbun on April 28, 2014)

New Technologies

New Tire Simulation Technology
-The Company's researchers, together with a team of researchers led by Professor Kozo Fujii at the Institute of Space and Astronautical Science (ISAS), the research arm of the Japan Aerospace Exploration Agency (JAXA), succeeded in the world's first simulation of near real-scale flow structures (turbulence) around a tire rolling on a road surface and the acoustic waves (noise) generated from these structures. The Company received the Innovation Award at REIFEN 2014, one of the world's largest and most well-attended tire trade fairs. REIFEN 2014 was held in Essen, Germany in May 2014.

High-strength adhesive for automotive glass
-The Company improved the physical properties and the strength level of rubber-based adhesive. The enhancement makes the window glass that is directly attached to the car body carry the load, and thereby improves the overall rigidity of the vehicle.

Capital Investment

(in million of JPY)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 55,300 33,500 28,100
-Tire Operations 50,500 29,300 25,000

Investments Outside Japan

-The Company held an opening ceremony for a new passenger car tire plant completed in the Bahadurgarh Industrial Estate in the state of Haryana, India. The new plant was constructed as the production site for the Ciompany's wholly owned local subsidiary, Yokohama India Pvt. Ltd., which was established in 2007. It was constructed on a 100,000 square-meter site with a total investment of JPY 4.4 billion. The plant began operations in July 2014 with a workforce of 350. It will operate at an annual production capacity of 700,000 tires in 2015. The plant produces passenger car tires for sale as replacement tires in the Indian market. (From an article in the Nikkan Jidosha Shimbun on November 8, 2014)

-Yokohama Tire Manufacturing (Thailand) Co., Ltd., the Thai subsidiary of the Company, will boost production of tires for the OEM market. Up until now, the Thai plant has been focusing on aftermarket tires, which make up about 70% of all tires it produces. Because vehicle production is expected to increase significantly in the country, the Thai unit plans to raise the percentage of tires for the OEM market to over 50% by the end of 2015. Its production capacity may be expanded further depending on the demand levels. In the fast growing Thai market, the Company extended its proving ground in late 2013. In addition, it plans to establish a local development center in order to design new tires jointly with automakers and thereby seize new business opportunities. (From an article in the Nikkan Jidosha Shimbun on May 27, 2014)

-The Company will expand production capacity of passenger car tires in China. The Company's subsidiary, Suzhou Yokohama Tire Co., Ltd. will build a new passenger car tire plant on a site adjacent to the existing tire plant. The new plant is scheduled to start operations in April 2014, and its annual production capacity will be expanded to 6 million tires by the end of 2017. The total investment will amount to JPY 26.5 billion. Suzhou Yokohama Tire was established in April 2006 as a manufacturing and sales subsidiary specializing in truck and bus tires. Its current production capacity is 340,000 tires per year. The Company's another subsidiary, Hangzhou Yokohama Tire Co., Ltd. was established in 2001 and has produced passenger car tires in China. The Hangzhou subsidiary went through four expansion works which ended in 2011 and increased its annual passenger car tire production capacity to 5.1 million units. (From an article in the Nikkan Jidosha Shimbun on January 24, 2014)

Planned Capital Investments (Tire business)

(As of Dec. 31, 2014)
Business Expected Investment (in million JPY) Start Planned completion Increased
capacity after completion
Hiratsuka Plant
(Kanagawa Pref., Japan)
Manufacturing 8,618 Jan.
Mie Plant
(Mie Pref., Japan)
Manufacturing 5,125 Jan.
Mishima Plant
(Shizuoka Pref., Japan)
Manufacturing 3,071 Jan.
Shinshiro Plant
(Aichi Pref., Japan)
Manufacturing 6,206 Jan.
Onomichi Plant
(Hiroshima Pref., Japan)
Manufacturing 1,718 Jan.
Suzhou Yokohama Tire Co., Ltd.
(Jiangsu, China)
Manufacturing and other business 26,500 Jul.
6.0 million passenger car tires
Yokohama Tire Philippines, Inc.
(Clark Special Economic Zone, Philippines)
Manufacturing and other business 11,000 May
2.5 million passenger car tires
Yokohama Tire Manufacturing Mississippi, LLC's (YTMM)
(Mississippi, U.S.)
Manufacturing and other business 31,376 Nov.
1.0 million truck and buss tires