Toyo upgrades fiscal 2020 outlook on Q3 'rebound'

Hyogo, Japan – Toyo Tire Corp. reported a double-digit improvement in operating income in the third quarter on 2.9% lower sales, prompting management to revise upward slightly its earnings expectations for the full fiscal year.

For the quarter, Toyo reported operating income of $133 million (€112 million), up 26.9%, on sales of $907 million. Net income was up 15-fold to $52.5 million.

The Tire Division reported a 19.1% improvement in operating income, to $134.7 million, or 2.2% lower sales of $813 million, yielding a three-point gain in the operating ratio to 16.6%.

Toyo's business in North America improved 5.4% in the quarter to $531 million, while operating income in the region jumped 62.1% to nearly $49 million. The firm's unit sales during the period were up 4% over the comparable 2019 quarter but they still lag the 2019 totals for the year-to-date.

For the nine-month period, Toyo's corporate operating income fell 16.7% to $205 million on 11.1% lower sales of $2.3 billion. Net income fell 29.8% to $92.9 million.

The Tire Division's operating income for the January-September period was off 14.5% to $223.5 million on 9.5% lower sales of $2.05 billion.

Business in North America was off 5.8% to $1.28 billion.

Toyo's figures also showed the considerable impact of the Covid-19 pandemic on production. In North America, for example, production in tonnage went from 18,300 tonnes in the first quarter to 8,000 tonnes in the second quarter and back to 18,300 tonnes in the third quarter.

Due to the "rebound" in sales to near parity with fiscal 2019, Toyo management upgraded the firm's outlook for fiscal 2020, raising earnings and sales expectations 10% and 3%, respectively, over the mid-year forecast.

The revised profit projections will still fall short of the fiscal 2019 performance by nearly 12%, Toyo reported, with sales down about 10%.

Toyo's Tire Division will fare marginally better — sales down 8.7% versus 2019 — while business in North America will outperform Toyo's other regions, finishing the year 6.7% behind 2019 at roughly $1.7 billion.