Toyo cuts profit outlook as weak tire markets, tariffs hit earnings

Hyogo, Japan – Toyo Tire Corp. has cut its full-year operating income forecast after weak markets, higher costs and the impact of US tariffs weighed on its tire business in the first half of 2026.

For the six months ended 30 June, Toyo reported sales of Yen284.2 billion (€1.5 billion), up 0.3% year-on-year, while operating income fell 22.2% to Yen37.5 billion, the Japanese group reported 7 Aug.

For the second quarter alone, consolidated sales rose 3.6% year-on-year to Yen153.2 billion, while operating income fell 34.5% to Yen16.9 billion.

For the full year, Toyo has lowered its operating income forecast to Yen90 billion, from Yen94 billion previously announced, while maintaining sales forecast at Yen638.0 billion, up 7.2% year-on-year.

On the first-half earnings development, Toyo noted a Yen5.5 billion decline in “sales factors”, including Yen2.3 billion in lost sales opportunities related to its computer system issue in Japan.

Production costs had a further Yen1.4 billion negative impact, while higher selling, general and administrative expenses reduced earnings by Yen1.5 billion.

These effects were partly offset by a Yen3.7 billion positive contribution from raw materials and Yen3.9 billion from foreign exchange.

Freight costs had a Yen1.3 billion negative impact, while tariffs reduced operating income by Yen8.5 billion.

Elaborating on the “computer system issue,” the group said the problem began in January following the migration to a new system in Japan, disrupting shipments to the domestic market.

The resulting inventory build-up at domestic warehouses forced Japanese plants to adjust production during the first quarter, resulting in Yen1.9 billion of higher production costs, in addition to the Yen2.3 billion impact from lost sales opportunities.

Toyo said the shipment disruptions were resolved by the end of June, with efforts under way to clear remaining backorders.

The group said it would now work to catch up on production and bolster sales in the second half of 2026 and beyond.

Breaking down first half performance by segments, Toyo said its Tire business recorded sales of Yen260 billion, down 0.1% year-on-year, while operating income fell 22.6% to Yen36.4 billion.

The decline in tire earnings came despite strong wide light truck tires sales, as overall tire unit sales were affected by weak demand in the US and other markets.

The Automotive Parts business performed better on sales, with revenue in the first six months of the year up 4.9% year-on-year to Yen24.1 billion. Operating income, however, edged down 0.6% to Yen1.1 billion.

By region, Japan sales during the first half fell 9.1% year-on-year to Yen50.4 billion, while operating income declined 10.3% to Yen26.9 billion.

North American sales for the period increased 4.9% to Yen201.4 billion during the quarter, but operating income plunged 66.3% to Yen3.5 billion.

Sales in other regions declined 10.2% to Yen32.4 billion, although operating income increased 2.0% to Yen9.1 billion.