FY2010 sales stable, profits down at Toyo

Despite a slight increase in net sales and a significant jump in operating income, during the financial year ending March 31, 2011 Toyo Tire & Rubber reported a net income significantly lower than in the previous 12-month period; its net income of 521 million yen (£3.9 million) was 2,436 million yen or 82.4 per cent lower than a year earlier. During the year net sales increased 2.2 per cent to 294,092 million yen (£2.2 billion) and operating income was up 40.6 per cent to 12,182 million yen (£92.4 million). Annual ordinary income amounted to 9,193 million yen (£69.7 million) and was 2.4 per cent higher than in the previous year.

Toyo’s Tire business unit posted net sales of 216,596 million yen (£1.64 billion), 73.6 per cent of the company total, while operating income for the unit was 8,863 million yen (£67.2 million). The first half of the year brought strong original equipment sales in the Japanese domestic market due to last-minute demand generated by the phase-out of an incentive programme for purchases of eco-friendly vehicles plus a rise in number of vehicles exported from Japan. The end of incentives plus the earthquake and tsunami in March helped put the brakes on new vehicle production during the second half of the financial year, yet Toyo says that even though sales volume fell below that of the preceding period, increased sales of high added-value products meant that total sales far surpassed that of the first half. Sales volumes for replacement market tyres in Japan surpassed that of the previous year, however Toyo comments that net sales remained at about the same level due to the growing popularity of less expensive passenger car tyres.

Although variances were observed among each of the markets within Europe, the sales volume for replacement market tyres in general surpassed that of the previous 12-month period due to an upturn in tyre demand. However, total sales remained the same as last year. In North America, unit sales of replacement market tyres declined year-on-year, a phenomenon Toyo attributes to the tariffs on Chinese-produced tyres. Net sales exceeded those of a year earlier, however. due to increased sales of high value-added products and ultra high performance tyres. Overall, both the number of unit sales and net sales of replacement tyres in Toyo’s overseas markets remained at about the same level as the previous year.

For the current financial year ending March 31, 2012, Toyo projects net sales of 322,000 million yen, 9.5 per cent higher than in the recently completed year. And while the company anticipates a lower operating and ordinary income of 7,700 million yen and 5,000 million yen respectively, it foresees net income increasing 284 per cent to 2,000 million yen. Supply in its Tire business unit is expected to be enhanced by increasing production volumes; this will be achieved through the completion of its third-phase capacity expansion project in the US, the completion of new a plant in China and the integration of Silverstone into the Toyo group. An emphasis will be placed on growing sales of high value-added products. Another priority this year and in the coming years is to grow the Nitto brand in global markets; in 2010 Nitto accounted for 9.0 per cent of Toyo’s worldwide sales and the goal is to increase this to 15 per cent by 2015. At this time the Toyo brand is expected to account for 80 per cent of global sales, down from 91 per cent in 2010, while other brands (including Silverstone) will make up the remaining five per cent.