The Yokohama Rubber Co., Ltd. Business Report FY ended Dec. 2015

Financial Overview

(in million JPY)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 Rate of
Sales 629,856 625,245 0.7 -
Operating income 54,536 59,066 (7.7) -
Ordinary income 49,334 55,803 (11.6) -
Net income 36,307 40,502 (10.4) -
Tire Operations
Sales 500,623 497,572 0.6 -Both sales and unit-production volumes of OE tires in Japan were lower y/y due to a decrease in the number of new vehicles built in Japan.
-Both sales and unit-production volumes of after-market tires in Japan decreased y/y due to severe price competition and lower sales of winter tires due to a relatively mild winter.
-Sales of after-market tires outside Japan: Even though the Company faced severe price competition, sales in North America and China continued to be strong. As a result, sales were higher y/y.
Operating income 43,037 48,577 (11.4) -


-In Jul. 2016, the Company announced that it has completed its acquisition of a 100% stake in the Dutch Alliance Tire Group B.V. (ATG). Yokohama Rubber's consolidated financial statements will include ATG's accounts for the period July - September 2016. In March, the Company announced that it would acquire ATG, a manufacturer of tires for forestry, construction, and agricultural machinery. It's expected to boost sales at the Japanese tire supplier's commercial vehicle tire division by 60%. The Company also anticipates creating synergies worth USD 15 million (approximately JPY 1.7 billion) in operating profit by 2019 through production streamlining and joint purchasing. ATG offers tires under three brands: Alliance, Galaxy, and Primex. It has a significant presence especially in the agricultural equipment tire market, with its share in the two major markets of the U.S. and Europe reaching approximately 10%.

-In Jan. 2015, the Company announced that it has acquired 100% of equity shares in a tire bead wire supplier that had been spun off by Fuji Seiko Co., Ltd. (Hashima, Gifu Pref.). The Company has not disclosed how much it paid for this deal. The acquisition is expected to improve the tire supplier’s bead production technology, which will help it produce products with higher quality and better performances at low cost. (From an article in the Nikkan Jidosha Shimbun on January 8, 2015)

Dissolution of Joint Venture

-In Mar. 2016, the Company and Continental AG announced that they have agreed to dissolve their Japanese joint venture, Yokohama Continental Tire Co., Ltd. (YCC), by the end of March 2016. YCC was established in 2002 to help Japanese and Korean automakers procure tires on a global basis. For 14 years, Yokohama Rubber and Continental have been expanding their global production networks and have made solid progress. The two companies will now separately focus on further expanding their respective businesses. (From a press release on March 8, 2016)

Possible Production Partnership

-In May 2015, the Company and Kumho Tire Co., Inc. of Korea are discussing collaboration on tire production in China. The plan is to manufacture Yokohama-brand tires at Kumho Tire's China plants. The two tire suppliers already have a technical alliance to collaborate on tire development, but this is the first time that they consider a production partnership. According to the public relations of Yokohama Rubber, they have not decided any details such as what kind of tires (passenger car tires, commercial vehicle tires, etc.) Kumho will produce for Yokohama or when to begin production. (From an article in the Nikkan Jidosha Shimbun on May 20, 2015)

Established Procurement Hub in Singapore

-In Apr. 2015, the Company announced that it established Yokohama Rubber Singapore Pte. The decision to establish a local subsidiary is in line with the Yokohama Group’s plan to raise the efficiency of its raw material procurement function on a global basis. The new subsidiary initially will be engaged in procuring natural rubber for Yokohama Rubber's Japan plants, but the plan is to expand its natural rubber procurement business to also cover the needs of the Yokohama Rubber Group's overseas plants. In the future, operations will be expanded to include the procurement of raw materials other than natural rubber. The new subsidiary also plans to strengthen raw material inventory controls as part of its efforts to establish a more stable and efficient global procurement structure. (From a press release on May 14, 2016)


-Major original equipment contracts in 2015:

Products Models
Original equipment (OE) tires
Fuel efficient tire
BluEarth E51
Toyota "Alphard", "Vellfire"
Fuel efficient tire
BluEarth AE01
Suzuki "Solio", "Solio Bandit", Daihatsu "Tanto", "Mira e:S"
All terrain tire
Geolandar G033
Mitsubishi "Outlander PHEV"
All terrain tire, Fuel efficient tire
Geolander G91, BluEarth E75 (Produced in Russia)

Nissan "X-Trail", "Teana"

ADVAN A10 Daihatsu "Cast Sport"
ADVAN A13 Mitsubishi "Lancer Evolution Final Edition"
ADVAN Sport V105 Mazda "Roadster"
ADVAN dB, ADVAN A460, YOKOHAMA S70 Toyota "Auris"
ADVAN NEOVA AD08R Honda "S660"
All season tire for North America
Mazda "CX-3" North America Model
YOKOHAMA db E70 Toyota "Sienta"
MB (Industrial products)
Oil feed hose for diesel turbo engines New Toyota "Hilux" equipped with the GD engine

Mid-term Management Plan

Mid-term Management Plan "GD100 Phase IV (2015~2017)"
-The Company announced Phase IV of its Grand Design 100 midterm management plan covering from 2015 through 2017. The Company aims to increase the share of its overseas sales of original equipment tires from current 35% to 70% by 2020. Through a total capital investment of JPY 120 billion during this phase, the Company plans to boost its tire production capacity by 21 million units to 89 million units per year by 2020. The Company intends to enhance its competitiveness in the global market, aiming to boost its sales and profitability. In the final year of the plan, the Company aims to achieve sales of JPY 770 billion, up 23.3% from the 2014 level, operating income of JPY 80 billion, up 35.4% from the 2014 level, and operating profit margin of 10.4%, up 1.0 percentage point from the 2014 level. (From an article in the Nikkan Jidosha Shimbun on February 14, 2015)

Growth Strategy for Tire Operations

Allocate more resources to winning business with automakers
  1. The Company will deploy world-class fuel-saving technology to serve the automakers' needs and to thes win more technological approvals from global automakers. By the fiscal year that ends in Dec. 2020, the Company plans to expand the original equipment (OE) tires content rate outside Japan by four times of what it was in the fiscal year that ended in Dec. 2014.

    -The Company will increase its production capacity of original equipment (OE) tires by 85% to 37 million units per year by 2020 from the 2014 level. It also plans to raise the ratio of OE tires in its entire tire production to 42% from 29% in 2014. Sales of OE tires often give direct impact on sales of replacement tires in many markets outside Japan. Facing tougher environmental regulations, the Company plans to actively propose its OE tires to Japanese manufacturers as well as to non-Japanese automakers by stressing its tires' technological advantage on reduced rolling resistance. By winning new orders for OE tires, the Company intends to expand its entire sales. (From an article in the Nikkan Jidosha Shimbun on May 13, 2015)
Strengthen presence in principal markets
  1. In phase IV, the Company will rely increasingly on local production to strengthen its presence in the world's largest markets - China, Europe, and North America- and in markets where it has an especially strong position, such as Japan and Russia. The Company has earmarked JPY 120 billion for investment in expanding tire production capacity during the phase IV. That investment will increase its annual production capacity to 89 million tires in 2020, from the 74 million planned for 2017 and the 68 million at 2014 year-end.

    -The Company has started considering establishment of its first tire plant within the European Union (EU) by 2020. The tire manufacturer has not specified the size and location of the plant. By 2017, the Company will determine whether the facility will be newly built or acquired through a merger or an acquisition of another tire maker based in Europe. The Company currently manufactures tires in Japan, U.S., China, Russia, Thailand, the Philippines, Vietnam and India, and supplies them to Europe from Russia or the Philippines. To achieve its goal to expand its tire production capacity by 21 million units from the 2014 level to 89 million in 2020, the Company must boost sales in the large European market. Strengthening business in Europe is one of the Company's pressing issues, because the Company currently does not supply its tires to Volkswagen which is increasing its global market share. (From an article in the Nikkan Jidosha Shimbun on April 3, 2015)

  2. Pursuing high-level of technical expertise in field of motor sports
    -Increasing production at Shinshiro Plant (Aichi Pref., Japan) of tires that are 18 inches or more.
Expand business in commercial tires
  1. In 2015, the Company established the Commercial Tire Division.

  2. The completion of the Company's truck and bus tire plant in Mississippi in the latter half of 2015 further localizes its production in a principal market. In off-the-road tires, the Company is asserting a high-value-added presence in radial tires at the large end of the size spectrum, and it's developing tires 49 - inch and larger.

    -The Company announced that its U.S. tire manufacturing subsidiary, Yokohama Tire Manufacturing Mississippi, LLC (YTMM), has held an opening ceremony for a new truck/bus tire plant. With an investment of USD 300 million, the new plant has a production capacity of 1 million tires per year. Depending on demand in the U.S., the Company plans to expand the facility, which was constructed on a 500-acre site. (From a press release on October 6, 2015)

Growth Strategy for MB (Industrial products) Operations

Expand business globally in automotive components
  1. As of 2015, 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.

  2. The Company successfully developed an automotive air-conditioning rubber hose that is compatible with next-generation refrigerants, and which will have less impact on the environment in terms of global warming. Air-conditioning systems equipped with these hoses are being factory installed on models for the European market.

    -The Company announced that it has developed a new hose called AC6B 11 for car air-conditioning units. The new hose is compatible with air conditioners that use the next-generation refrigerant HFO-1234yf, the adoption of which is currently increasing in Europe. The Company has already started supplying several air-conditioning system manufacturers with the new hose, which is installed in air-conditioning systems of vehicles for the European market. HFO-1234yf decomposes gradually over a long period of use and generates acid that corrodes the resin in conventional hoses. By mixing acid acceptor with polyamide resin, the new hose enables the acid runoff to be captured and held, preventing corrosion of the polyamide resin and leakage of the refrigerant. The Company has already received a patent for this technology. The Company aims to expand its sale activities for the new hose not only in Europe but also in the U.S. (From a press release on April 30, 2015)

  3. Yokohama Industries Americas Mexico launched operations and began delivering products to local OEMs.

    -The Company held an opening ceremony for its new automotive hose assembly plant in Aguascalientes, Mexico. The new plant is the first Mexican production base of the Yokohama Rubber Group. It began operations in January 2015 as the Aguascalientes Plant of Yokohama Industries Americas Inc., which is Yokohama Rubber's wholly owned subsidiary. The plant assembles automotive hoses, including air-conditioner hoses and hoses for transmission oil coolers. Its output is sold to car manufacturers in Mexico. (From an article in the Nikkan Jidosha Shimbun on June 2, 2015)

  4. Yokohama Rubber (Thailand) Co., Ltd. began delivering hose used to supply diesel-turbo-oil; to local OEMs.

    -The Company announced that its oil feed hose for diesel turbo engines has been adopted for some of the new "Hilux" equipped with the GD engine developed by Toyota Motor Corporation. The oil feed hose uses flexible Teflon hoses, which allows for a dramatic increase in installation flexibility.The Company has developed the hose by using its special techniques for assembling hoses and fittings. While the installation space for diesel turbo engine oil piping has become narrower due to compact engine layouts, the Company's hose will contribute to a reduction in installation man-hours. The Company has also shortened the time required for completing products by developing jigs for simplifying product tests. The Company started producing the hose at its Nagano Plant in February 2015, and transferred production to Yokohama Rubber (Thailand) Co., Ltd. in 2016 for mass production. (From an article in the Nikkan Jidosha Shimbun on August 31, 2016)

Outlook for FY ending Dec. 31, 2016

(in billion of JPY)
FY ending Dec. 31, 2016
FY ended Dec. 31, 2015
(Actual Results)
Rate of
Sales 600,000 629,856 (4.7)
Operating profit 38,000 54,536 (30.3)
Ordinary income 31,000 49,334 (37.2)
Net income attributable to owners of the parent 20,000 36,307 (44.9)

-On 10 Aug. 2016, the Company announced that it has revised its consolidated financial projection for the fiscal year ending in December 2016 downward. The Company reduced its projected net sales by JPY 52 billion to JPY 600 billion; operating income by JPY 17 billion to JPY 38 billion; and net profit by JPY 14 billion to JPY 20 billion. This revision is due to the strong yen, and lower-than-expected sales of the Company's main tire business in Russia; and North, Central, and South America. It also reflects stagnant demand for the Company's Multiple Business, and amortization of goodwill and other expenses related to the acquisition of the Dutch Alliance Tire Group B.V., which was completed in July. (From an article in the Nikkan Jidosha Shimbun on August 12, 2016)

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

R&D Expenditure

(in million of JPY)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 FY ended Dec. 31, 2013
Overall 14,221 13,438 12,632
-Tire Operations 9,996 8,985 8,007
-MB (Industrial products) Operations 2,666 2,180 2,169
-Research Headquarters 1,250 1,349 1,471

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 MB (Industrial products) Division and the Technical Division.

Tire Operations

facility Location
RADIC (Research & Development Integrated Center) Hiratsuka, Kanagawa,
D-PARC (Daigo Proving-Ground and Research Center) Kuji, Ibaraki,
Tire Test Center of Hokkaido Asahikawa, Hokkaido,
Tire Test Center of Asia Rayong, Thailand

-The Company announced that it has held an opening ceremony for a new testing facility for its winter tires in Asahikawa, Hokkaido, Japan. The new facility called Tire Test Center of Hokkaido (TTCH) covers a land area of 906,462 square meters. It has a one-kilometer-long straight snow track, a flat ice track, a hill track, a snow and ice circle, and a handling track. The new test track will allow the company to conduct tests with passenger cars at a speed of over 100km/h as well as braking, starting and acceleration tests with truck and buses on various road conditions such as winding and sloping roads. (From a press release on January 26, 2016)

-The Company announced on August 31 that it will establish a tire research & development center in North Carolina, U.S., and start R&D activities there this September. With the establishment of the new center, the Company will double the current size of its North American R&D staff and accelerate the development of new tire products suitable for the North American market. The Company presently conducts R&D on tires for the North American market in several U.S. states and Japan, but it will consolidate these activities at the new center to strengthen its R&D framework. The new center will initially engage in the design of new tires for consumer applications, and gradually expand its activities to include design, testing, and evaluation of tires for industrial and construction machinery, as well as technical service and quality assurance. The Company will consider additional investment in its facilities in line with the expansion of the breadth of its R&D activities. (From an article in the Nikkan Jidosha Shimbun on September 1, 2016)

Joint Development

New tire simulation technology for multi-objective design exploration of rubber materials
-The Company announced that it has developed a new tire simulation technology for multi-objective design exploration of rubber materials. The conventional simulation methods use existing rubber materials. By utilizing a new computational scheme for large-scale viscoelastic simulations jointly developed with a French research institution, Yokohama Rubber developed the new technology that allows the Company to control the morphology of rubber material models that are based on virtual morphologies. With this innovative technology, Yokohama Rubber aims to develop high-performance tires by improving fuel consumption, safety, rigidity, and other factors, which are normally difficult to achieve simultaneously. (From an article in the Nikkan Jidosha Shimbun on December 4, 2015)

Synthesizing isoprene from biomass (biotic resources)
-The Company, the National Research and Development Agency RIKEN, and Zeon Corporation have succeeded in synthesizing isoprene from biomass (biotic resources). Isoprene is a raw material and is used to produce synthetic rubber (polyisoprene rubber) for vehicle tires. Industrial isoprene is currently produced as a byproduct of the naphtha cracking process. Yokohama Rubber, RIKEN, and Zeon have been engaged in producing synthetic rubbers from biomass since 2013. They aim to commercialize this technology by the early 2020s. (From a press release on September 3, 2015)

Synthesizing butadiene from biomass (biotic resources)
-The Company and Tokyo Institute of Technology have jointly developed a new technology to synthesize butadiene, a raw material for synthetic rubber, from biomass (living resources). They will continue the development for mass production, aiming to commercialize the new technology in the early 2020s. The new technology will reduce dependence on oil and fossil fuels, thus contributing to the reduction of loads on the environment. The tire manufacturer and the institute successfully developed a catalyst which enables butadiene to be directly synthesized from cellulose. Cellulose is a polysaccharide and the main constituent of plant cell walls. Butadiene is currently produced as a by‐product of oil refining and is used to produce synthetic rubber (butadiene rubber) for automobile tires. Butadiene is the second most used synthetic rubber after styrene-butadiene rubber. (From an article in the Nikkan Jidosha Shimbun on July 31, 2015)

R&D Activities

Aeroacoustic 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. In Oct. 2016, this aeroacoustic simulation technology received HPCI (High Performance Computing Infrastructure) Excellent achievement research project award.

New aerodynamic technology for tire
-In Oct. 2015, the Company announced that it has developed a new tire design technology that lowers aerodynamic drag and reduces the vehicle's lift. The new design that features fin-shaped protuberances on the tire's outer sidewall is expected to reduce aerodynamic drag by 3%. The Company will accelerate the development of this fuel-efficient tire technology to put it into practical use as early as possible. (From an article in the Nikkan Jidosha Shimbun on October 16, 2015)

New Products

Tire Operations
-The Company will use common tread patterns to original equipment tires and aftermarket tires for European and Chinese markets. The Company will change its tire development approach so that the tread pattern of original equipment tires is developed in advance, and use the same tread pattern to aftermarket tires. Conventionally, original equipment tires are developed to meet the target performance of new vehicles, and original equipment tires and aftermarket tires even under the same name have different tread patterns. The Company is aiming to expand its aftermarket tire sales by unifying tread patterns in European and Chinese markets, where the need for original equipment tires in the aftermarket is high. (From an article in the Nikkan Jidosha Shimbun on April 28, 2016)

Capital Investment

(in million of JPY)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 FY ended Dec. 31, 2013
Overall 50,900 55,300 33,500
-Tire Operations 45,400 50,500 29,300
-MB (Industrial products) Operation 4,200 3,500 3,000

Breakdown of capital investments in the fiscal year that ended in Dec. 2015:

  • Tire business at plants in Japan: In responding to changes in demand, the Company spent JPY 14.0 billion in capital investments to maximize its production capacity to the fullest, strengthen its logistics functions, and improve product quality.
  • Tire business in plants outside Japan: The Company spent JPY 14.8 billion, mainly in North America, to install new equipment for manufacturing truck and bus tires, and at its plants in the Philippines and China to increase production facilities as a means to increase production capacity.
  • MB (Industrial products) business: The Company invested JPY 4.2 billion to boost its production capacity for hoses and improve product quality.

Investments in Japan

Tire Operations
-The Company announced that it will increase production capacity for large passenger-car tires at its plant in Shinshiro City, Aichi Prefecture by about 20% from the current level. The total investment will be JPY 3.7 billion. The Company plans to start up a new line at the plant in June 2017 and bring it to full operation by April 2018. The capacity expansion is for high-performance tires (18-inch diameter and larger). The Company is increasing its deliveries of large tires fitted as original equipment on Mercedes-Benz and Audi cars, and this has led to the need for boosted production. Global demand for large tires is projected to increase thanks to the popularity of SUVs and growing demand for larger original equipment tires. Large tires are highly profitable, and since their prices rarely drop, the Company will increase its supply capacity for these tires in an effort to improve profitability. (From an article in the Nikkan Jidosha Shimbun on February 16, 2016)

MB (Industrial products) Operations
-The Company announced that it has held a groundbreaking ceremony for a new factory at its Toyooka Plant in Nagano Prefecture, Japan, as part of its project to integrate its two plants in the prefecture and strengthen its hose and coupling business. In Nagano Prefecture, the Company currently manufactures metal couplings at the Takamori Plant and assembles hoses and metal couplings at the Toyooka Plant. The new factory is scheduled to be completed by November 2016. The Company plans to transfer production equipment from the Takamori Plant to the new factory and complete the consolidation of the Takamori Plant and the Toyooka Plant by February 2017. JPY 2 billion (approximately USD 16 million) will be invested in this project which includes purchasing land and constructing the new building. (From a press release on November 2, 2015)

Investments Outside Japan

Tire Operations

-The Company has started to plan building a new plant of passenger car tires in North America. Yokohama Rubber intends to build the new plant at the site of its truck and bus tire plant in Mississippi, the U.S. which started operations in 2015. In North America where demand for automobiles is strong, the Company produces passenger car tires at its Salem, Virginia plant, and also supplies them from its plants in the Philippines and other countries outside North America. Demand for automotive tires in North America is expected to increase even further. Thus, the Company will build the new plant to expand its local supply capacity, and aims to increase sales in its largest market, North America. (From an article in the Nikkan Jidosha Shimbun on October 15, 2015)

-The Company will raise the local content ratio of raw materials excluding natural rubber for its tire production in Russia, from current 50% to 70% by 2017. The Company will recruit new local suppliers to raise the local content. The Russian currency has been weakening due to the country's worsening economic situation. The Company will maintain the competitiveness of its Russian plant by enhancing local procurement of the raw materials that the plant currently imports from other countries, and hopes to expand sales. (From an article in the Nikkan Jidosha Shimbun on June 18, 2015)

-The Company announced that its Russian passenger car tire plant began production of original-equipment tires for the first time. The Russian plant produces the Geolandar G91 tires for the Nissan "X-Trail" sports utility vehicles (SUVs) and the BluEarth E75 tires for the Nissan "Teana" mid-size sedans. These tires are supplied to Nissan Motor Corporation's local car assembly plant. (From an article in the Nikkan Jidosha Shimbun on January 19, 2015)

MB (Industrial products) Operations

-Kentucky Governor Matt Bevin announced that Yokohama Industries Americas Inc. plans to invest USD 5.2 million in new equipment at its plant in Versailles, Kentucky. The project will add two new production lines at Yokohama's Hose Division plant which produces hose assemblies for vehicle air conditioning, power steering and transmission oil cooler systems. (Kentucky Cabinet for Economic Development release from September 29, 2016)

Planned Capital Investments (Tire business)

(As of Dec. 31, 2015)
Products Facility Expected Investment (in million JPY) Start Planned completion Increased
capacity after completion
Hiratsuka Plant
(Kanagawa Pref., Japan)
Tire Manufacturing 5,406 Jan.
Mie Plant
(Mie Pref., Japan)
Tire Manufacturing 4,992 Jan.
Mishima Plant
(Shizuoka Pref., Japan)
Tire Manufacturing 3,226 Jan.
Shinshiro Plant
(Aichi Pref., Japan)
Tire Manufacturing 12,639 Jan.
20% increase of current capacity
Onomichi Plant
(Hiroshima Pref., Japan)
Tire Manufacturing 1,345 Jan.
Hiratsuka Plant
(Kanagawa Pref., Japan)
MB (Industrial products) Manufacturing 4,424 Jan.
Nagano Plant
(Nagano Pref., Japan)
MB (Industrial products) Manufacturing 2,372 Jan.
Suzhou Yokohama Tire Co., Ltd.
(Jiangsu, China)
Tire Manufacturing and other business 26,500 Jul.
Capacity of 6.0 million passenger car tires / year
Yokohama Tire Philippines, Inc.
(Clark Special Economic Zone, Philippines)
Tire Manufacturing and other business 11,000 May
25% increase of current capacity