The Yokohama Rubber Company (5101) Q3 2024 earnings summary

Executive summary

• Achieved record sales revenue and business profit in FY2024 3Q, with strong tire sales in Europe and Asia and increased replacement (REP) sales offsetting weaker original equipment (OE) demand in OHT business.

• Sales revenue for the nine months ended September 30, 2024, rose 13.1% year-over-year to ¥782,906 million, with business profit up 69.6% and operating profit up 63.8%.

• Profit attributable to owners of the parent increased 36.5% year-over-year to ¥60,841 million.

• Tire segment accounted for 89.6% of sales, with strong growth in both original equipment and replacement tires, aided by easing production cuts and positive forex effects.

• Strategic initiatives included new plants in Mexico and China, Goodyear OTR business acquisition, and sale of cross-shareholdings.

Financial highlights

• 3Q sales revenue: ¥257.6B (+3.3% YoY); business profit: ¥28.8B (+22.1% YoY); operating profit: ¥29.5B (+22.1% YoY); profit attributable to owners: ¥14.3B (-15.6% YoY).

• 1-3Q sales revenue: ¥782.9B (+13.1% YoY); business profit: ¥83.4B (+69.6% YoY); operating profit: ¥85.8B (+63.8% YoY); profit attributable to owners: ¥60.8B (+36.5% YoY).

• Business profit margin for 3Q: 11.2% (+1.7pp YoY); for 1-3Q: 10.7% (+3.6pp YoY).

• Basic EPS for nine months: ¥379.42 (up from ¥278.05 YoY).

• Total assets increased to ¥1,619,718 million; total equity rose to ¥815,112 million.

Outlook and guidance

• FY2024 full-year forecast unchanged: sales revenue ¥1,105B (+12.1% YoY), business profit ¥128.5B (+29.6% YoY), operating profit ¥116B (+15.6% YoY), profit attributable to owners ¥78.5B (+16.8% YoY), ROE 10.0%.

• Dividend forecast for FY2024 is ¥98.00 per share (interim ¥46.00, year-end ¥52.00).

• Demand for OE tires on agricultural machinery expected to remain weak; REP sales to drive OHT growth.