OSAKA, Japan (Feb. 7, 2012)—Toyo Tire & Rubber Co. Ltd. reported improved operating income but lower net profits on higher sales for the nine months ended Dec. 31, and revised upward its financial forecast for the full year.
Net income slipped 19.8 percent to $52 million, while operating income rose 10.4 percent during the period to $146.7 million, Toyo said. Sales increased 6.7 percent to $3.06 billion.
Toyo said its operating earnings and sales improvements came amidst a “severe” business environment punctuated by steep increases in crude oil costs, the European debt crisis, a stagnation in consumer spending and the after-effects of the March 11 earthquake in Japan.
Toyo management is predicting double-digit improvements in fiscal-year operating and net income over the firm's Nov. 8 forecast based in large part on lower-than-expected raw materials price increases and internal cost-cutting measures, especially in selling, general and administrative expenses.
Despite the anticipated improvements, fiscal year 2011 operating income will still fall short of the fiscal 2010 level, resulting in a near one-point drop in the operating ratio to 3.3 percent.
For the nine months, Toyo's tire business unit reported operating income of $126.9 million on sales of $2.33 billion, increases of 26.2 and 10.5 percent, respectively. Business improved in North America and Asia/Pacific but declined in Japan and Europe, Toyo said. Sales rose in North America due to “aggressive” promotion activities and price increases.
Sales in Japan fell nearly 10 percent in Japan, where the OE business suffered from the drop in vehicle production following the March earthquake.
Overall sales in North America, comprising both tire and non-tire businesses, rose 11.4 percent to $1 billion.