OSAKA, Japan—Toyo Tire & Rubber Co. Ltd. reported a strong first half, with operating income up double digits on 3.8 percent higher sales, although the firm fell $34.6 million into the red on a net basis due to extraordinary losses.
The net loss is the result of Toyo's ongoing product liability compensation program tied to faulty earthquake bearings sold in Japan. The company took a $253 million loss in the first half to cover its liability payouts.
Operating income jumped 35.5 percent to $242.3 million on sales of $1.62 billion.
Toyo's tire business unit reported 33.7 percent higher operating income for the half year of $221.4 million on 4.7 percent higher sales of $1.28 billion.
Toyo attributed tire business growth and earnings improvement mostly to its activities in North America, where healthy sales in the high value added SUV product category helped push sales revenue up 21 percent despite unit sales unchanged from a year earlier.
Sales in North America jumped to $775 million. The revenue gain didn't translate to earnings improvement though. Operating income in North America fell 26.7 percent to $33.1 million.
Based on the half-year results and liability issues, Toyo revised its full-year forecast for fiscal 2015.
For the year, Toyo expects operating income to be 12 percent higher than earlier forecasts and nearly 16 percent better than the fiscal 2014 operating earnings. Toyo cited lower raw materials costs and a devaluing yen for its improved earnings outlook.
The Osaka-based tire maker revised its sales forecast downward by 2.4 percent. The net income expectation was lowered by nearly 39 percent.