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Raising the Annual Dividends to ¥20 per Share
The business environment remained challenging in fiscal 2012 (January 1 to December 31). Global economic growth slowed, and the Japanese economy remained sluggish. In that environment, we posted record sales and earnings, with net sales of ¥559.7 billion, operating income of ¥49.7 billion, and net income of ¥32.6 billion. Note that 2012 was our first 12-month fiscal period since we shifted to calendar-year accounting in 2011, from April-to-March accounting, and that year-on-year comparisons are therefore unavailable.
Our performance in 2012 reflected strong growth in sales to automakers in Japan in our tire operations and sales gains in automotive hoses and marine hoses in our Multiple Business (diversified products) operations. We paid an interim dividend of ¥8 per share and have declared a year-end dividend of ¥12 per share, which will bring the annual dividend to ¥20 per share.
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Our fiscal projections for 2013 call for another year of record sales and earnings, with net sales of ¥630.0 billion, operating income of ¥59.0 billion, and net income of ¥36.0 billion. We plan to accompany that performance with a ¥2 increase in the annual dividend, to ¥22-an interim dividend of ¥10 and a year-end dividend of ¥12. We repurchased 11,800,000 shares for ¥6.5 billion in November 2012 to improve our balance sheet responsiveness to changes in the business environment.
Working to Achieve the Goals of Grand Design 100 Phase III
Our company has been tackling the Grand Design 100 medium-term management plan since April 2006. That plan provides for achieving annual net sales of ¥1 trillion and annual operating income of ¥100 billion by 2017, our corporate centennial year. It comprises four phases of three years each, and 2012 was the first year of Phase III. Our theme for Phase III is "robust and responsive growth." We are aiming for aggregate net sales of ¥1.8 trillion and aggregate operating income of ¥150 billion in the three years to 2014, and we are undertaking diverse strategies in our different operations in pursuit of those targets.
Expanding Tire Production Capacity Globally
Growth strategy in our tire operations centers on expanding production capacity. We plan to expand our annual production capacity by 7.35 million tires during the three years of Grand Design 100 Phase III. Achieving that goal will include raising the overseas percentage of our tire production capacity to 45%.
We plan to expand the annual production capacity at Yokohama Tire Philippines, Inc., to 17 million tires by 2017, from 7 million presently. The first phase of that expansion is under way and is on pace to increase the annual production capacity there to 10 million tires by the end of this year. This May, the second phase of expansion will get under way and is scheduled to increase the annual production capacity to 12.5 million tires by 2015.
Our Russian plant will begin operating this summer at its full capacity of 1.4 million tires a year, and we plan to expand that plant's annual capacity to 1.6 million tires by autumn 2014. We began work in October 2012 on a tire plant in India and plan to inaugurate production there in 2014.
We are moving ahead vigorously with product launches under strong global brands. New products launched in 2012 include the BluEarth-A, for passenger cars; the GEOLANDAR SUV, for sport-utility vehicles; and the iceGuard 5 studless snow tire for passenger cars; and we launched the ADVAN Sport V105 this February. We began marketing ultra wide base truck tires in North America this March. In addition, we have concluded an offtake agreement to obtain off-the-road radial tires from a Chinese manufacturer, and we will begin marketing those tires globally in the latter half of this year.
Strengthening Operations Worldwide in Diversified Products
We are working in our Multiple Business operations to strengthen our marketing for growth-market products in Japan and worldwide. A product launch of special note in 2012 was a sealant for light-emitting diodes used in electronic and electrical products. We are fortifying our international competitiveness in high-pressure hoses by building a plant in China and by restructuring our production network in Japan. This April, we will establish a sales company in Singapore for industrial products, and we are counting on that company to strengthen our marketing in the fast-growing economies of the Association of Southeast Asian Nations. We plan to increase the overseas percentage of sales in our Multiple Business operations to 50% by 2017, from 33% presently.
In golf equipment, we bolstered our product lineup with the September 2012 launch of iD nabla club series. And we will augment that series this April with high-end RED clubs for "executive-set" golfers
Reinforcing Our Corporate Foundation and Fulfilling our Corporate Social Responsibility
Highlighting our measures reinforcing our corporate foundation is the Mudadori program of activities for tapping employee initiative in cutting costs. That program, inaugurated in 2006, has yielded ¥61.0 billion in cumulative cost savings.
Measures for fulfilling our corporate social responsibility include participating in the Forests that Protect Lives initiative. That initiative provides for creating sylvan breakwaters on rubble left by the Great East Japan Earthquake. We have committed to conducting annual tree planting in the earthquake-ravaged town of Otsuchi-cho in Iwate Prefecture. Our first planting took place in April 2012, and we will conduct a second round this May.
We continue to mobilize our operations worldwide in pursuit of our Phase III targets in Grand Design 100. And we are grateful to you, our shareholders, for your understanding and support.
March 2013
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Tadanobu Nagumo
Chairman and Chief Executive Officer |
Hikomitsu Noji
President |
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