The Yokohama Rubber Co., Ltd.
Summary of FY2025 Results Briefing Q&A Session with Analysts
Tire Business
Q: Please tell us if you think you have room to further expand your market share in the tire business and your thinking about business profit margin in 2026 and subsequent years. You evidently are targeting a profit margin of more than 17%, but that looks to me to be approaching the peak level. A: First of all, we think we still have room to expand our share. The tire markets in Japan, Europe, North America, China and other regions are changing. Consolidation caused by restructuring among independent tire dealers is leading to wholesalers playing a greater role, which I think fits well with our Best Alternative (full-line supplier) strategy and is creating an environment more advantageous for us. Also, we have just begun to approach and develop customers for the G-OTR business that we added last February, and we will be increasing this effort in the months and years ahead. I also think we have some room for increasing market share as we update some outdated sales systems still being used to sell consumer tires. We also think the low-cost supply structure we are creating by developing low-cost production plants in China and Mexico and expanding production at the Vizag Plant in India will contribute to sales growth. As for our business profit margin in 2026 and later years, the increase in the sales ratio of our AGW tires being driven by our "Lead by Premium OE fitments" policy is boosting our average unit sales price, and I expect to see the unit price continue to rise as we expand the AGW ratio to 50%. Q: What factors contributed to the increase in your tire sales North America in 4Q 2025?A: In North America, we were able to achieve a 14% YoY increase in sales of replacement tires by covering a decline in transactions with a major tire dealer with increased sales to alternative dealers and developing new relations with other dealers.
Q: How do you think other companies' efforts to strengthen their business in the "Global South" affects your competitiveness? Is the increase in your fixed costs influenced by these efforts by other companies?A: In India, we are posting double-digit growth every year thanks to local management's expertise, and I expect our sales in India will continue to grow faster than that at other companies. In China also, our management system focusing on our local director is generating growth comparable to that of other companies. Competition is not inhibiting our sales growth. In South America, including Brazil, we are gradually expanding our business with sales agents, and there is no major impact from competitors.
Q: Why is your sales plan for China limited to 2% growth despite your plan to add 3 million tires to local production capacity?A:The new plant (annual capacity 9 million tires) will have a lower production cost than the old plant which has a capacity of only 6 million tires. This gives us the advantage of increasing profit without chasing an excessive increase in sales volume. In addition, we plan to increase sales by introducing new tires while
maintaining prices, but the current plan does not take into account the likely impact of these new tires on sales growth. We of course will be aiming for greater increases in the plant's sales volume.
Q:Please tell us about the state of production cutbacks at the Salem plant in the U.S. and the progress of your consideration for the plant's closure, and how much this will improve profits in FY2026.A: We are currently in discussions with the plant's union and cannot provide any further details at this time.
OHT Business
Q:The OHT business introduced more than 600 new tires/sizes in 2025. How much of a landmark is that when compared with other companies?A: Most of our competitors introduce only 30-50 new products each year, so 600 is a rather extraordinary number. Our development of many new products every year to meet the needs of small customers and niche areas that other companies are not able to service adequately is driving our growth. In addition, we launched two new product lines in the US last year, where bias tires still account for about half of the AG market and other companies still sell old products from 30 to 40 years ago. We are introducing the newest products there, which is helping us increase our market share.
Q:How are the OHT business' cost-saving synergies factored into your analysis of its increase in business profit? Also, what synergies are being provided by G-OTR's sales force?A: Nearly half of the cost synergies is coming from the shared purchase of raw materials, and most of that is benefitting Yokohama Rubber's tire business. Our M&A of G-OTR was a carve-out and included its sales force as well as production facilities, and we would have had to establish new sales companies in each region to accommodate G-OTR's sales force if it were not for existing Y-TWS entities in each region, which we were able to use and therefore avoid the cost of establishing and operating new companies.
Q:What are the contents and concepts behind your plan to increase OHT business profit to ¥70 billion by 2029?A:The OHT Business has three parts. We expect Y-ATG to grow steadily as its focus on the aftermarket makes it less vulnerable to conditions in the OE market. Y-TWS, however, has a high OE sales ratio, and we expect the structural reforms we are now making will boost its profit margin when the market recovers. We also expect G-OTR's profit margin to be improved by significant cost reductions as relocation of Goodyear plants progresses in 2027~2029.