Hyogo, Japan – Toyo Tire Corp. posted 48.3% lower operating income for the six months ended June 30 on 15.7% lower sales, prompting management to project double-digit declines in sales and earnings for the full fiscal year.
Operating income for the period fell to Yen7.9 billion (€63 million) on sales of Yen150 billion, cutting the operating ratio to 5.3% from 8.6%. Net earnings fell 93.1% to Yen520 million.
Toyo cited the negative effects of lower sales and higher production costs related to the reduced volumes for the earnings decline.
Toyo's tire segment reported a 39.6% drop in operating income for the period to Yen9.7 billion on 13.6% lower sales of Yen134 billion.
Toyo said aftermarket tire demand, after hitting bottom in April, has begun to recover in some regions, including North America.
The company also noted that the size of the demand drop in the OE sector has been shrinking as well, as vehicle makers have resumed production.
In addition, Toyo said "a souring US-China relationship" has increased the likelihood of anti-dumping duties being imposed.
The automotive parts business unit posted a 30% decline in net sales to Yen16.1 billion and an operating loss of Yen1.8 billion
For the full fiscal year, Toyo estimates sales to be off 12.6% at Yen330 billion, and operating income to drop 22% to Yen30 billion.
Toyo noted that its projects are premised on the assumption that economic activities will start to recover gradually from the third quarter of the fiscal year ending 31 Dec.
Should the Covid-19 pandemic further spread or become prolonged — which would inevitably lead to continued restrictions by governments around the globe and to consumer behaviour and economic activities by private enterprises likely remaining sluggish — the group's business performance would be affected, Toyo cautioned.