TOKYO (Nov. 11, 2008) – Toyo Tire & Rubber Co. Ltd. said it expects to end fiscal 2009 in the red after posting a loss in the second quarter and first half, ended Sept. 20.
For the full year, Toyo's now forecasting a net loss of nearly $25 million (based on the Sept. 30 yen/dollar exchange rate), a 92.4-percent drop in operating income and 2.3 percent lower sales.
The Japanese tire maker said its six-month net loss reached $20.9 million and operating income plunged 83.4 percent to $11.1 million as increased raw materials costs offset sales gains and other positive factors. Sales edged up 1.8 percent to $1.63 billion. For the half year, Toyo's raw materials costs were up nearly $100 million over the same period in 2007, while exchange rate changes and higher operating expenses also produced negative effects, Toyo said.
Raw materials costs over those incurred last year are expected to exceed $200 million.
The new forecast is a marked change from Toyo's most recent projections three months ago, when the firm said it expected fiscal 2009 net income to be about $13 million. Toyo's net income for the fiscal year ended March 31 was $53.7 million, or 1.7 percent of sales.
The new sales forecast, for $3.3 billion, is nearly 6 percent lower than that projected in mid-August.
Toyo's tire business segment sales rose 2.1 percent in the first half to $1.16 billion, but operating income fell 83.8 percent to $10.7 million.
Toyo's business in North America slipped 8 percent during the six months to $495 million, with all of the decline occurring in the second quarter. Full-year North American sales are expected to fall 14.5 percent short of last year, Toyo said.
The tire maker said it anticipates obtaining $110 million in annual cost savings from its recently concluded business alliance with Bridgestone Corp.