OSAKA, Japan (Aug. 8, 2011)—Toyo Tire & Rubber Co. Ltd. reported double-digit operating and net income increases for its first quarter ended June 30, but sales fell 2.5 percent as the firm dealt with the after effects of the March 11 earthquake and tsunami that devastated northern Japan and an unsteady currency exchange rate.
Operating and net income jumped 20.8 and 14.8 percent, respectively, to $39 million and $10.6 million, as Toyo focused on the production of higher value-added products to compensate for lost production in the weeks following the quake.
Sales fell to $870.7 million, dragged down by a nearly 15-percent drop in non-tire products business during the period. Tire unit sales increased 1.3 percent on the strength of overseas markets, Toyo said.
Toyo's Tire Business Staff Reported 45.5-percent higher operating income of $35.9 million in the quarter on sales of $715.2 million. Higher sales and earnings in North America and Europe offset lower sales and earnings in Japan and other international markets.
The company classified the business environment in the quarter as “severe,” based on a drastic appreciation of the yen and the steep increase in costs of raw materials, particularly natural rubber. In Japan, the interruption of operations by new car manufacturers due to the earthquake also had a negative impact.
In overseas markets, Toyo expanded the sales of high value-added products and implemented price increases. As a result, the company said sales revenue rose despite lower sales volumes.
Toyo's forecast for the fiscal year remains unchanged because of continuing market uncertainties, such as the fluctuations in the price of raw materials and in the currency that could potentially affect future business performance.