TOKYO Feb 20 Yokohama Rubber Co Ltd,
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 on the Tokyo Commodity
Exchange (TOCOM) hit their highest in more than five years late
last month, boosted by Chinese speculators.
The world's eighth-biggest tyre maker predicts operating
profit will grow by 12 percent in 2017 to 47.5 billion yen
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
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
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 last week
forecast operating profit for 2017 will inch up 0.5 percent
while Sumitomo Rubber Industries Ltd predicted a more
than 30 percent fall in operating profit.
($1 = 113.1500 yen)
(Reporting by Yuka Obayashi; Editing by Christian Schmollinger)