Toyo stays course with five-year growth path

TOKYO—Toyo Tire Corp. has progressed its five-year growth strategy "Mid-Term '21 plan" despite the headwinds posed by Russia's war on Ukraine and supply disruptions.

In its 2021 annual report, published Sept. 30, the Tokyo-based group said it was on track with the plan, having posted a consolidated operating margin of 13.5 percent and consolidated operating income of about $361 million.

The results, said Toyo, are the group's second highest on record.

Over the five-year period, Toyo aims to increase operating margin to 14 percent and operating income to $409 million.

Throughout 2021, Toyo said it prioritized the supply of large-diameter tires, a priority product in the key North American market, and managed to transfer the impact of soaring raw materials prices to product prices.

This, it said, enabled the group to exceed the prior year's performance in the region.

Toyo said that it aims to increase the ratio of "priority products," such as large-diameter tires, from 53 percent of the mix in 2021 to 55 percent by 2025.

In North America, the mix ratio reached 60 percent for 2021, exceeding the region's target of 58 percent over the five years.

Toyo said this was achieved by prioritizing the supply of the products to meet strong demand in the region.

On the group's outlook over the five years, Toyo said demand had recovered sharply post-COVID-19 pandemic.

However, it noted that the war in Ukraine posed geopolitical risks while costs for raw materials and ocean freight rates are likely to remain high.

"Despite these circumstances, we will achieve the goals set forth in the mid-term plan," said Toyo.

Toyo said it plans to achieve this by ramping up its recently opened plant in Serbia to full capacity, in addition to other measures to further improve efficiency.

The measures include upgrading systems to increase production capacity at its manufacturing facility in Bartow County, Georgia, and closing the aging Silverstone Berhad in Malaysia.

Furthermore, Toyo said it aimed to invest a total of $1.3 billion in capital expenditure over the five years of the plan.

The investments will go toward the maintenance and renewal of property, plant and equipment as well as growth, Toyo said.

"We plan to steadily implement forward-looking investments in areas such as digital transformation (DX) to strengthen infrastructure, improve operational efficiency, and enable data driven management, as well as renovate our aging plants in Japan," the group concluded.