HYOGO, Japan — Toyo Tire Corp. reported a 9.9% drop in operating income for the quarter ended March 31 despite 26.9% higher sales.
Toyo attributed the earnings decline to the negative effects of higher raw-materials, manufacturing and plant start-up costs, which more than offset gains related to sales and foreign-exchange rate changes.
Operating income fell to $110.2 million on sales revenue of $976.3 million, dropping the operating ratio four and half points to 11.3%. Net income fell 72.3% to $65 million.
Toyo is forecasting a rebound in earnings in the second half, which should yield a gain 13.5% over the fiscal 2022 level; the sales improvement will level off, however, leaving the firm's fiscal 2023 revenue up 8.6% over 2022.
Toyo's Tire Business Unit — which represents 91% of the company's overall business — reported a 12.3% drop in operating income to $110.5 million on 28.8% higher revenue of $891.6 million.
The company reported sales revenue in North America of $619.3 million, an 18.9% gain over the comparable 2022 quarter. Operating income from business in North America was down 8.9% to $36.8 million, or 5.9% of sales.
The plant start-up costs refer to Toyo's newest factory, the car and light truck tire plant in Indjija, Serbia, which started trial production in July and was ceremoniously opened in December. Toyo budgeted $450 million for the plant.
Toyo has earmarked a portion of the factory's 5 million unit/year capacity for export to the U.S. Toyo projects the plant's production will exceed 10,000 metric ton this year.
