TOKYO (Aug. 17, 2015) — Toyo Tire & Rubber Co. Ltd reported a strong first half, with operating income up double digits on 3.8-percent higher sales, although the firm fell $34.6 million into the red on a net basis due to extraordinary losses.
Operating income jumped 35.5 percent to $242.3 million on sales of $1.62 billion.
The net loss is the result of Toyo's ongoing product liability compensation program tied to faulty earthquake bearings sold in Japan. The company took a $253 million loss in the half-year to cover its liability payouts.
Toyo's tire business unit reported 33.7-percent higher operating income for the half year of $221.4 million on 4.7-percent higher sales of $1.28 billion.
Toyo attributed tire business growth and earnings improvement mostly to its activities in North America, where “healthy sales” in the high value-added SUV product category helped push sales revenue up 21 percent despite unit sales unchanged from a year earlier.
Sales in North America jumped to $775 million. The revenue gain didn't translate to earnings improvement though. Operating income in North America fell 26.7 percent to $33.1 million.
Based on the half-year results and liability issues, Toyo revised its full-year forecast for fiscal 2015.
For the year, Toyo expects operating income to be 12-percent higher than earlier forecasts and nearly 16-percent better than the fiscal 2014 operating earnings. Toyo cited lower raw materials costs and a devaluing yen for its improved earnings outlook.
The Tokyo-based tire maker revised its sales forecast downward by 2.4 percent. The net income expectation was lowered by nearly 39 percent.