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 $73.4 million on sales of $1.39 billion, cutting the operating ratio to 5.3% from 8.6%. Net earnings fell 93.1% to $4.8 million.
Toyo cited the negative effects of lower sales and higher production costs related to the reduced sales for the earnings decline.
Toyo's tire segment reported a 39.6% drop in operating income for the period to $90.1 million on 13.6% lower sales of $1.24 billion.
Toyo said aftermarket tire demand, after hitting bottom in April, has begun to recover in some regions, including North America, and 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 U.S.-China relationship" has increased the likelihood of anti-dumping duties being imposed.
Toyo reported its second quarter results were measurably worse than in the first quarter.
Overall, operating income in the second quarter fell 80.8% to $9.2 million on 22.5% lower sales of $634.2 million, while tire division income dropped 58.1% to $21.6 million on 19.2% lower sales of $575 million.
Business in North America fell 15% in the second quarter to $368.5 million and 12.3% in the six months to $754.5 million, Toyo reported. Operating income attributed to North American operations increased in the quarter nearly six-fold to $24.5 million and 44.4% in the first half to $38.4 million.
For the full fiscal year, Toyo is projecting sales in North America will be off by about 11% versus fiscal 2019, indicating a slight rebound from the first half.
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 Dec. 31, 2020.
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 behavior and economic activities by private enterprises likely remaining sluggish — the group's business performance would be affected, Toyo cautioned.