HYOGO, Japan — Toyo Tire Corp. suffered a 17% drop in fiscal year operating income despite 26.3% higher sales,
Fiscal 2022 operating income fell to $335.5 million on sales of $3.79 billion, yielding an operating ratio of 8.9%, down four-plus points from fiscal 2021. The major reasons for the decline were higher raw materials and freight costs, which more than offset the positive effects of higher sales.
For the current fiscal year, Toyo is forecasting improvements in operating income and sales of 14% and 8.7%, respectively, although Toyo did not elaborate on its reasons for the forecast.
At the same time, Toyo posted an extraordinary loss of $3.5 million covering the company's ongoing product liability issues related to subpar seismic isolation rubber products delivered to Japanese customers prior to fiscal 2015.
Toyo's tire business unit reported a 15.3% drop in operating income, to $355.2 million, on 28.5% higher revenue of $3.47 billion, dropping the operating ratio five points to 10.2%.
Revenue grew by double-digits despite unit volume growth of only about 1%, Toyo said in its earnings report.
Toyo's North American business unit outpaced Toyo's other geographical regions, posting revenue growth of 39.6% to $2.44 billion, and now accounts for 64% of Toyo's global business. Toyo expects a more modest 9% growth in North America in fiscal 2023.
Operating income in North America grew 15.8% to $150.5 million. The firm's other regions suffered earnings declines.
Capital expenditures in 2022 increased 27% to $366 million.
Among projects funded during the year was Toyo's new plant in Serbia, which came on stream in August. That plant will supply tires to North America as it ramps up production.