Yokohama Rubber Announces Rise in First-Quarter Sales

Tokyo, Japan, Aug. 09, 2006 - (JCN Newswire) - The Yokohama Rubber Co.,
Ltd. , posted an 11.0% increase in net sales, to 106.8
billion yen, in the three months ended June 30 - the first quarter of
fiscal 2007, April 1, 2006, to March 31, 2007. That increase is over the
first quarter of the previous year, and it resulted primarily from
robust growth in overseas tire business. 

Supplementing the sales gains in tires was sales growth in Yokohama's
Multiple Business Group (diversified products), notably in high-pressure
hoses and in aircraft products. Net income declined 16.2%, to 1.2
billion yen, on a 34.2% decline in operating income, to 1.8 billion yen.
High and rising prices for raw materials and an increase in selling,
general and administrative expenses were the chief reasons for the
decline in profitability. 

By business segment, sales increased 11.8% over the same period of the
previous year in Yokohama's Tire Group, to 78.2 billion yen, and
increased 8.9% in the Multiple Business Group (diversified products), to
28.6 billion yen. Leading the sales growth in tires were strong gains in
North America, in Southeast Asia, and in China. Tire sales also
benefited from increased shipments to automakers in Japan. The rising
prices for raw materials offset the sales growth in the Tire Group, and
operating income in the group declined 64.6%, to 1.0 billion yen. 

In the Multiple Business Group, sales gains in high-pressure hoses,
marine hoses, and aircraft products more than offset a sales decline in
golf products. Sales growth, cost-cutting measures, and progress in
improving the product mix restored the Multiple Business Group to
profitability. The group converted a 32 million yen operating loss in
the same period of the previous year into operating income of 1.0
billion yen. 

The increases in raw material prices have been larger than management at
Yokohama expected, and that has prompted management to lower the
full-year earnings projections it announced on May 11. Management now
expects operating income to decline 27.1% in fiscal 2007, to 16.0
billion yen, compared with the earlier projection of a 23.8% decline, to
21.0 billion yen. 

Net income benefited in fiscal 2006 from a tax benefit associated with
earlier write-downs of equity in a U.S. subsidiary. Absent that benefit,
management expects net income to decline 67.4%, to 7.0 billion yen,
compared with the earlier projection of a 33.3% decline, to 10.5 billion
yen. Management abides by its earlier projection of a 7.3% increase in
net sales, to 485.0 billion yen.


About Yokohama Rubber Co., Ltd.

Yokohama Rubber Company, Ltd., was established in 1917 and is the second
largest producer of automobile tires in Japan and a leading company in
the Japanese aircraft components industry. It manufactures and markets
tires and tubes for passenger cars, trucks, buses,etc. as well as water
tanks and lavatory modules, and a variety of other aircraft components
made with rubber, metal or composite materials. For more information,
please visit www.yrc.co.jp.