Toyo revises outlook after losses in Q3

ERJ staff report (TB)

Tokyo -- Toyo Tire & Rubber Co. Ltd. fell into the red on an ordinary and net basis for the three- and nine-month periods ended Dec. 31, prompting management to revise downward the firm's sales and earnings outlook for fiscal 2009 and initiate a series of cost-savings measures.

Toyo blamed the earnings drop on higher raw material costs, a sharp appreciation of the yen and extraordinary one-time charges. Sales for the quarter fell 5.6 percent to $932.7 million and 1 percent for the nine months to $2.6 billion.

The nine-month performance and worsening global economic outlook prompted management to nearly quintuple the net loss estimate, to $123 million, and acknowledge the operating peformance also will be negative for the year ending March 31. The sales forecast was revised downward by 4.9 percent, to $3.2 billion.

For the period through Dec. 31, Toyo said its DiverTech non-tyre products division suffered far worse than the tyre unit, reporting an operating loss of $5.4 million on 7.6-percent lower sales.

The tyre segment showed a 1.7-percent increase in sales, to $1.9 billion, but operating income fell 90.5 percent to $11.4 million, although Toyo said unit sales fell markedly in Japan and North America. Toyo chalked up the revenue increase to higher selling prices and volume increases in Europe, Southeast Asia and the Middle East.

For the full year, Toyo is forecasting for the tyre segment an operating loss of about $8 million on 3.7-percent lower sales of $2.35 billion.

Sales in North America are expected to drop more than 16 percent to $937 million. Operations in North America are still expected to be in the black, though, at about $24 million.

From Tire Business (A Crain publication)