HYOGO, Japan—Toyo Tire Corp. suffered a 6.4 percent drop in fiscal 2018 operating income on 2.9 percent lower sales.
Toyo attributed the earnings drop, to $384.3 million, to higher operating expenses and unfavorable foreign exchange rates throughout the year, costs that offset gains in the tire sales arena. Net income fell 31.4 percent to $101.3 million on sales of $3.57 billion.
For fiscal 2019, Toyo executives are forecasting a slight rebound (1.7 percent) in sales but a third straight year of lower operating income due to high operating and manufacturing expenses and an unfavorable foreign exchange rate.
Toyo's tire business posted a 1.8 percent improvement in operating income, to $425 million, on 4.5 percent higher sales of $3.1 billion, yielding a slightly lower operating ratio of 13.7 percent. Toyo did not elaborate on the reasons for the improvements.
Geographically, operating income in North America fell 3.1 percent, to $76 million, on 6.3 percent higher sales of $1.8 billion, dropping the operating ratio slightly to 4.2 percent.
Toyo noted that replacement market revenue in North America was up 6 percent over 2017, but it's expecting that to plateau throughout 2019. Globally, OE sales were up marginally last year but are expected to jump 11 percent in 2019 over 2018, Toyo said.
Toyo is projecting a 91 percent leap in capital investment in 2019 versus 2018, to $485 million, but it did not elaborate on its plans. The company did, however, disclose in November nearly $500 million in projected capital investment spending as part of the strategic partnership with Mitsubishi Corp.
Among new concrete initiatives Toyo outlined for the capital infusion are $62 million earmarked to expand truck and bus tire capacities at plants in China and Malaysia; $53 million and $89 million to support ongoing expansions at plants in White, Ga., and Perak, Malaysia, respectively; and $293 million for new production facilities at sites yet to be disclosed covering up to 4 million tires a year.