OSAKA, Japan—Toyo Tire & Rubber Co. Ltd. continues to grow in North America and around the world.
The Japan-based tire manufacturer posted strong sales and earnings for fiscal 2014. Sales grew 6.4 percent to about $3.3 billion, and net income more than doubled to about $261.9 million from about $97 million in 2013.
Tire sales accounted for 80 percent of the total at about $2.62 billion. North America experienced the biggest growth of any region—increasing about 15 percent to about $1.34 billion, representing 41 percent of sales and exceeding the firm's 2014 outlook by 3.2 percent.
The North America unit is nearly on par with its domestic unit, as Toyo reported sales of about $1.37 billion in Japan, a decline of 1.2 percent.
Toyo forecasts more growth of about 18.4 percent in North America this year, which would mean the continent would surpass Japan as its largest region and add about $250 million in sales for 2015.
“It's no secret that our growth is more globally rather than Japan,” said James Hawk, chairman of Toyo Tire Holdings of Americas Inc.—Toyo's North American holding company—and senior corporate officer of Toyo Tire.
“Japan as an economy is not growing very well. Really, the only growth in car sales are exports, so original equipment business has a little bit of an uptick. Replacement sales in Japan really haven't changed a lot.”
Two sides to growth
Toyo focuses on the replacement tire business, with Hawk citing strong new car sales and lower gas prices as factors aiding the firm's growth in the region. People are not as hesitant to spend money on sport-utility vehicles or light trucks anymore, both of which are major focuses for the North American market.
The firm's Toyo and Nitto brands both have a place in aiding the growth effort. Hawk said Nitto primarily caters to the sport truck and high performance markets, while Toyo is a broad line supplier. Each brand has separate dealers and are not in direct competition for shelf space, Hawk said.
Toyo said it sold more than 10 million replacement tires in North America in 2014 and projects replacement sales to rise about 11.5 percent in 2015.
The firm is prepared to accommodate future growth. Hawk said the current expansion to its only North American manufacturing facility in White, Ga., is on schedule.
The 1 million-sq.-ft. addition is complete and being populated with equipment. Hawk said the facility will be in production with the initial equipment in about another month, with production scaling up each month for the next 18 months.
When complete, tire production is projected to exceed 8 million units per year by 2017.
“It's a massive project,” Hawk said. “We're increasing production by 3.7 million tires per year. It's a $370 million expansion, so it's going to take another 18 months beyond finishing the building. But it's right on track and going very well.”
Toyo also is expanding overseas. It opened a new factory in Malaysia two years ago, and Hawk said an ongoing expansion there will increase production to about 4 million tires per year by the end of 2015. The factory will produce products for Asia, Europe and North America, which still imports replacement passenger tires from Japan and Malaysia.
Toyo's sales in its other regions of the world totaled about $573.8 million for 2014, an increase of 7.3 percent.
Hawk has relinquished his title of president, Toyo Tire North American Manufacturing Inc., to Don Bunn, who now will oversee day-to-day operations of the White facility.
The move will allow Hawk to move into a more strategic role, overseeing the ongoing expansion effort at the facility as well as continue to serve as chairman of the North American holding company.
“Some of this is just natural succession. It was a matter of making sure we're responsible in lining up the correct succession of management and give some of these younger guys the opportunity to grow. He's been with us for a long time and deserves the opportunity,” Hawk said.
“The factory is going to get a lot bigger, so things are going to change a lot. We have to make sure we have some really, really qualified people that will grow into new jobs here.”
Hawk said he has no plans of retiring in the immediate future.
“I wouldn't say I'm fading off into the sunset because I'm still pretty active and have a pretty cool job,” Hawk said.