Toyo Suffers Another Extraordinary Loss in 3Q
Toyo Tire & Rubber Co. Ltd. posted a net loss of 4.3 billion yen on net sales of 301 billion yen for third quarter ended Sept. 30, 2015. That compares to net income of 23.5 billion yen on sales of 287.2 billion yen for the same period last year.
Based on the exchange rate on Sept. 30, 2015, Toyo recorded a net loss of $36 million on net sales of $2.5 billion for its 3Q 2015. Operating income increased 40%, from 34 billion yen to 47.6 billion yen.
Toyo explained the "extraordinary loss" this way:
"Some products shipped by the company did not conform to certification performance standards of the Ministry of Land, Infrastructure, Transport and Tourism, and when applying for ministry certification for anti-vibration rubber for construction, in some cases the certification was based on applications lacking technical grounds. In light of this matter, the company posted a provision of reserve for product warranties and allowance for product reparations as an extraordinary loss."
Toyo's Tire Business Unit posted net sales of 240 billion yen, a 5.8% increase over 3Q 2014. Operating was 43.7 billion yen, a 37.7% comparative increase.
1. Original equipment tires. "While domestic sales were sluggish due to a decline in the number of automobiles produced in Japan caused by the sudden drop in demand following the consumption tax increase, overseas sales expanded steadily from new customer business," said Toyo. "As a result, unit sales and net sales are ahead of the same period last year."
2. Replacement tires, Japanese market. "Due to the consumption tax increase and other factors, both unit sales and net sales declined compared with the same period last year."
3. Replacement tires, overseas markets. "In North America, unit sales remain unchanged compared with the same period a year ago, but as a result of healthy sales in the high -value-added SUV product category, net sales increased. In Europe, unit sales and net sales declined from the same period last year due to a weakening economy. Net sales for the overseas markets as a whole increased due to results in North America."
Toyo has revised its fourth-quarter and full-year projections. Due to additional posting of extraordinary losses in the third quarter for provision of reserve for product warranties and losses related to Antitrust Act matters, the previously announced forecast for 4Q net income has been revised downward, from 12 billion yen to 5 billion yen.
Fulll-year net sales also was revised downward, from 415 billion yen to 410 billion yen.
As a result of better-than-expected market conditions and lower-than-expected raw material costs, the previously announced forecast for full-year operating income was revised upward, from 55 billion yen to 59 billion yen.
For more information on Toyo's 2015 fiscal year financials, check out this link: