Yokohama Rubber forecasts higher 2017 op profit despite soaring rubber prices

Sumitomo Rubber Industries

20/02/2017 10:11

TOKYO, Feb 20 (Reuters) - Yokohama Rubber Co Ltd  5101.T , 
Japan's third-biggest tyre maker, on Monday forecast a 12 
percent increase in 2017 operating profit despite soaring prices 
of natural rubber and other raw materials. 
    Asia benchmark rubber futures  JRUc6  on the Tokyo Commodity 
Exchange (TOCOM) hit their highest in more than five years late 
last month, boosted by Chinese speculators.  urn:newsml:reuters.com:*:nL4N1FM1PQ 
    The world's eighth-biggest tyre maker predicts operating 
profit will grow by 12 percent in 2017 to 47.5 billion yen 
($419.87 million).  
    Still, "higher prices of natural rubber and other raw 
materials will reduce our operating profit by 24 billion yen 
($212 million) in 2017," said Gota Matsuo, general manager at 
Yokohama Rubber, told a news conference. 
     To minimize the impact, the firm plans to pass on the 
higher material costs to its customers by raising product prices 
and raising sales of tyres used in agricultural machines and 
industrial vehicles. 
    The company plans to increase tyre prices by up to 7 percent 
from April in the U.S. market. 
    Asked whether it will also raise prices in Japan, Matsuo 
said: "We'll carefully make decisions while observing how our 
competitors react." 
    The 2017 profit guideline was in line with a consensus 
estimate of 47.54 billion yen from five analysts polled by 
Thomson Reuters I/B/E/S.  
    The company assumes an average price of the near-month 
futures contract for Technically Specified Rubber No. 20 (TSR20) 
on the Singapore Commodity Exchange, a benchmark for rubber 
formed into blocks, at 210 U.S. cents per kg, against 138 cents 
a year earlier. 
     For 2016, Yokohama Rubber booked a 22 percent drop in 
operating profit, hurt by lower product prices and a higher yen 
against the U.S. dollar. 
     Yokohama's bigger peers Bridgestone Corp  5108.T  last week 
forecast operating profit for 2017 will inch up 0.5 percent 
while Sumitomo Rubber Industries Ltd  5110.T  predicted a more 
than 30 percent fall in operating profit. 
 urn:newsml:reuters.com:*:nL4N1G22VR urn:newsml:reuters.com:*:nL4N1FZ3PZ 
     
($1 = 113.1500 yen) 
 
 (Reporting by Yuka Obayashi; Editing by Christian Schmollinger) 
 ((Yuka.Obayashi@thomsonreuters.com; +813-6441-1798; Reuters 
Messaging: yuka.obayashi.thomsonreuters.com@reuters.net)) 
 
Keywords: YOKOHAMA RUBBER RUBBER/