HYOGO, Japan — Toyo Tire Corp. has revised downward its full year operating income forecast following a sharp drop in earnings in the third quarter and first nine months of 2022.
Operating income for the quarter ended Sept. 30 plunged 57.3% to $39.3 million on 31.5% higher sales of $918.6 million, cutting the operating ratio nine points to 4.2%. Net income rose 67.7% to $99.6 million.
For the nine-month period, Toyo's operating income was off 20.9% to $245.2 million on 23.9% higher sales of $2.73 billion. The operating ratio dropped five points to 9%. Net earnings were up 55.1% to nearly $350 million.
Toyo attributed the lower earnings in the third quarter to "lower utilization" at its U.S. plant in White, Ga., and a worsening of region/product mixes.
For the full year, Toyo reduced its earnings forecast 20% from that issued earlier in the year to roughly $315 million, or about 8% of sales. This compares with the 13.5% ration recorded in fiscal 2021 and 10% in the earlier forecast.
Toyo's tire business also suffered an operating income decline in the quarter, down 52.5% to $46 million on 32.8% higher sales of $842 million, yielding an operating ratio of 5.5%, down from 15% a year ago.
For the year to date through September, the tire business' operating income was down 18% to $321.5 million on 26% higher sales of $2.5 billion.
Sales in North America grew nearly 35% in the quarter to $584 million and 34.8% for the January-September period to $1.78 billion. The company's business activities in North America were profitable in both the quarter and nine-month periods.
At the same time, Toyo disclosed it is set to inaugurate commercial-scale production in December at its tire plant in Indija City, Serbia, before ramping up to the factory's full production capacity over the coming three quarters.
Toyo said the plant will "preferentially supply the U.S. market" until year-end to meet robust demand. Bringing on stream additional production equipment at the plant will lead to the factory's reaching an annualized production capacity of 5 million tires by the third quarter of 2023, Toyo said.