Toyo suffers drops in sales, earnings

Hyogo, Japan – Toyo Tire & Rubber Co. Ltd. reported drops in earnings and sales for the first nine months of fiscal 2018 as the firm's automotive parts business suffered an operating loss on lower sales.

In addition, Toyo — which only recently announced a global business partnership with Japan's Mitsubishi Corp. — lowered its sales and earnings outlook for the full fiscal year by a few percentage points from previous forecasts.

The revised figures, sales of $3.55 billion (€3.14 billion) and operating income of $382 million, will fall short of the fiscal 2017 results as well.

On a consolidated basis, Toyo reported a 7.8% drop in operating income to $279.4 million on 3.5% lower sales of $2.59 billion, resulting in a slightly lower operating ratio of 10.8%.

For the nine-month period, Toyo's tire business unit posted 3.8- and 1.4% improvements in tire business unit sales and earnings to $2.24 billion and $307.8 million, respectively. Toyo attributed the unit's sales improvement to increased replacement market sales outside of Japan, most notably in Europe and North America, where tire units sold were up 5 and 4%, respectively.

From a regional perspective, Toyo said sales in North America rose 5.1% during the period under review to $1.33 billion, whereas sales in Japan fell 18.7%. North America now accounts for more than half of Toyo's global sales.

Operating income in North America, on the other hand, fell nearly 20%.

Toyo continues to deal with the fallout of its non-compliant earthquake-proof seismic isolation rubber bearings controversy, which led to the firm's posting an extraordinary loss of $112 million in the third quarter.

Toyo cautioned shareholders it may have to take additional, similar provisions depending on how the matter is handled moving forward; at present, however, the company said it is difficult to reasonably estimate the amount.