Despite an extraordinary loss of $38.9 million related to its almost two-year-old seismic isolation rubber issue, Toyo Tire & Rubber Co. Ltd. was able to post a healthy profit of $103.7 million for the third quarter ended Sept. 30, 2017.
Toyo posted net income of 11.7 billion yen on net sales of 295.2 billion yen for its 2017 fiscal third quarter. That compares to income of 7.6 billion yen on sales of 278.9 billion yen for the same period in 2016.
Based on the exchange rate on Sept. 30, 2017, Toyo recorded net income of $103.7 million on net sales of $2.6 billion for its 2017 fiscal 3Q. It's income-to-sales ratio was 3.9%
Operating income for the quarter was down 4.5%, from 34.9 billion yen to 33.3 billion yen.
The company's tire business unit, which represents 80% of its sales, posted net sales of 237.6 billion yen ($2.1 billion), 7.2% higher than in 3Q '16. Operating income was up 3.7%, to nearly 33.5 billion yen (an increase of 1,192 million yen or 3.7% from the same period for FY2016).
Status of provision of reserves for product warranties and allowance for product repairs pertaining to the company's seismic isolation rubber issue
"In the fiscal year ended December 2015, some products shipped by the company did not conform to certification performance standards of Japan’s Ministry of Land, Infrastructure, Transport and Tourism. When applying for ministry certification for seismic isolation rubber for construction, in some cases the certification was based on applications lacking technical grounds.
For the third quarter of the fiscal year, the company posted an extraordinary loss of nearly 4.4 billion yen ($38.9 million), which represents not only product compensation response measure expenses of 2,278 million yen, but also a provision of reserve for product compensation of 2,108 million yen.
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