HYOGO, Japan—Toyo Tire Corp. is eyeing a double-digit improvement in its consolidated operating income within the next five years, through a mix of investments in new products, manufacturing and market development.
According to the company's mid-term business plan, covering 2021-25, Toyo's goal is to improve its operating income by 65 percent by 2025 over fiscal 2020 to nearly $555 million, while generating sales growth of over 10 percent a year versus 2020.
Over the period, Toyo plans to make capital investments of roughly $1.75 billion in growth and equipment, according to Toyo President Takashi Shimizui, who presented the business plan to the shareholders and the investment community recently.
Toyo published the business plan shortly after reporting its fiscal 2020 results, which revealed an operating income drop of 5.5 percent, to $343.7 million, on 8.9 percent lower sales of $3.22 billion.
As part of the strategy, Toyo said it will target North America as a key market where it expects to generate 58 percent of total global sales by 2025, up from 57 percent currently. Over the same time period, production in the U.S. will grow to 41 percent of Toyo's global total from 38 percent in 2020.
In a Feb. 25 presentation, Toyo said it intended to improve its ranking in North America from seventh last year to fifth by 2025 by expanding production capacity in the U.S. and increasing exports from factories in Japan and the plant under construction in Serbia.
Under the plan, Toyo will shift production at its Japanese factories to "high-value-added products" as the key production base of the group with the aim to increase supply to the North American market. This strategy includes increased production of truck/bus tires at Toyo's plant in Kuwana, Japan, for export to the U.S.
Toyo is projecting that its plant in Serbia—due to open in April 2022—will be its most cost-competitive production center, with manufacturing costs up to 30 percent lower than its factory in Sendai, Japan. As such, Toyo anticipates exporting 2 million tires a year from that facility to North America, while supplying 3 million units to European markets.
Toyo's plan also includes exports to North America from Malaysia, where it's closing one of its two factories and consolidating much of the capacity at the remaining plant.