OSAKA, Japan—Toyo Tire & Rubber Co. Ltd.'s operating income fell 5.1 percent in the quarter ended March 31, prompting the Osaka-based company to revise its half- and full-year forecasts for fiscal 2016 downward.
Operating income for the first quarter fell to $106.5 million on 0.6-percent lower revenue of $848.1 million. The company reversed a first quarter loss a year ago, posting a net profit of $542,705 on operations, while at the same time posting an extraordinary loss of $82 million to cover costs associated with the ongoing efforts to rectify a product liability case involving seismic building bearings in Japan.
Toyo cited the negative effects of foreign exchange changes and higher administrative costs for the operating loss. The company downgraded its fiscal 2016 operating earnings outlook by nearly 11 percent, dropping the projected earnings ratio slightly to 12.8 percent. By comparison, the 2015 ratio was 15.5 percent.
The tire business unit reported 4.5 percent lower operating profits of $99.5 million on 0.4 percent higher revenue of $677.8 million.
Unit sales were up about 14 percent worldwide, Toyo reported, including in all the tire business's geographic regions except Southeast Asia. The sales revenue didn't keep pace due to the currency translations issues.
In North America, replacement sales were up about 6 percent as the gradual economic recovery continues.
Toyo said OE sales worldwide in the quarter exceeded those of a year ago as deliveries to car makers domestically and overseas were up on higher vehicle production and the acquisition of new business, especially for the higher value-added Proxes performance and NanoEnergy fuel-efficient tire series products.
Revenue and operating income in North America—covering both the tire and non-tire businesses—fell 1.2 and 9.9 percent to $389.2 million and $16 million, reducing the operating ratio to 4.1 percent from 5.7 percent.
The ongoing controversy surrounding non-compliant earthquake-proof seismic isolation rubber bearings sold in Japan prompted the resignation, retirement or demotion of nine key executives last year.