Toyo Q2 earnings rebound, but half-year results down

Hyogo, Japan — Toyo Tire & Rubber Co. Ltd.'s operating income rebounded in the quarter ended June 30, but sales fell for the second straight quarter.

After falling 12.5% in the first quarter, operating income was up 4.9% in the second period to $191.4 million. Sales fell 2.1% to $846.3 million.

Operating earnings for the half year, though, were off 4.7% to $191.4 million as Toyo continues to struggle with the burden of settling claims related to sub-par seismic isolation rubber products sold in the previous years.

Half-year sales were off 3.3% to $1.71 billion.

Toyo's Tire Business unit, by contrast, posted improved earnings and sales for both the quarter and six months, the Hyogo-based company reported.

Operating income for the quarter advanced 15.3% to $102.8 million and 5.6% for the half-year to $204.9 million. Tire Business sales increased 5.3% in the quarter to $729.3 million and 3.9% in the half to $1.47 billion.

As a result, the operating ratio for the Tire Business improved slightly to 14.2%.

Toyo's business in North America increased 3.7% for the half year to $852.6 million, but operating income attributable to North American operations fell 31% to $31.2 million.

Toyo said its replacement market unit sales in North America increased 4% in the six-month period.

At the same time, Toyo posted an extraordinary loss of $99.8 million to cover product compensation response measure expenses and a provision of reserves for future expenses related to the seismic isolation rubber products affair.

For the full year, Toyo has revised downward its forecast from that it issued earlier this year. Operating income is forecast to come in on par with fiscal 2017, though this is 4.2% below the earlier forecast.

Sales should be about 1.3% shy of the forecast, and roughly 2.5% below the 2017 figure, the company statement added.