Toyo Tire earnings fall despite strong showing in North America

Hyogo, Japan –  Toyo Tire Corp. has reported a 17.0% year-on-year decline in operating income for 2022, to Yen44,046 million (€309 million), despite sales coming in 26.3% higher at Yen497,213 million.

The reduced profitability was particularly marked at Toyo’s Tire Business Unit, which posted 15.3% dip in operating income to Yen46,636 million on net sales of Yen455,796 million, 28.5% above the prior-year level.

At the Automotive Parts business unit, net sales rose by 6.1% year-on-year to Yen41,346 million, while an operating loss of Yen2,591 million, represented a decrease of Yen582 million from fiscal 2021.

“Net sales showed an increase over the previous fiscal year, primarily owing to the strong tire demand in the North American market and the yen’s depreciation, explained Toyo’s 14 Feb review.

However, it added, “operating income recorded a year-on-year decrease chiefly due to rising raw materials prices and hikes in freight rates on account of container shortages.” 

North America was by far the main driver for the revenue increase, with sales there rising by 39.6% to Yen320,230 million. 

This compared to rises of 5.5% and 11.5% in Japan and ‘other regions’ to Yen109,892 million and Yen67,090 million respectively.

Similarly, a 15.8% rise in operating income in North America, to Yen19,760 million, contrasted with declines of 19.6%, to Yen23,273 million, and 44.5%, to Yen2,729 million, in Japan and ‘other regions’ respectively. 

For 2023, Toyo forecast net sales and operating income to increase, with net sales of Yen540.0 billion and operating income of Yen50.0 billion.

Toyo’s also commented on its provision of reserves for product warranties and allowance for product repairs relating to issues around its supply of inaccurately certified seismic isolation rubber in 2015.

For fiscal 2022, the company posted an extraordinary loss of Yen456 million in product compensation-measure expenses.

Future costs could arise relating to this issue, said Toyo, adding that “at the present time, however, it is difficult to make a reasonable estimation of the corresponding amount.”