Toyo Tire & Rubber Co., Ltd. Business Report FY ended Dec. 2015

Financial Overview

(in millions of JPY)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 Rate of Change
Sales 407,789 393,782 3.6 -
Operating income 63,381 47,510 33.4 -
Ordinary income 56,814 46,543 22.1 -
Current net income 1,674 31,240 (94.6) -The Company recorded an extraordinary loss for product compensation payments, reserves for product compensation payments, and losses attributed to anti-trust laws.
Tire Business
Sales 325,536 312,205 4.3 1)
Operating income 58,004 45,318 28.0 -
DiverTech Business
Sales 82,030 81,501 0.6 2)
Operating income 3,955 2,068 91.2 -

1) Tire Business
-OE tire business: OE tire business: Sales of new-car tires both in and outside Japan were higher y/y in terms of both units sold and monetary amounts.

-Replacement tire business (Japan): Sales of replacement tires in Japan were lower y/y in terms of both units sold and monetary amounts due to stagnant sales because of the consumption-tax increase, the tax increase on minicars, and stagnant sales of studless tires caused by the relatively warm winter.

-Replacement tire business (outside Japan): The number of units sold were lower y/y; however, the sales amount in monetary terms was higher y/y/.

  • The number of units sold in the North American market were about the same as those in the previous year. Nevertheless sales rose overall y/y because of strong sales of high, value-added tires and next-generation tires.
  • In Europe, sales in terms of units sold were about the same as those of the previous year as a result of new-product launches. However, sales overall were lower y/y because of the worsening market situation.

2) DiverTech Business

-Anti-vibration rubber and seat cushions for the automotive market:

  • In Japan, sales were lower y/y due to a decrease in new-car production volumes that resulted because of a drop in new-car demand that occurred right after the last-minute-buying rush was over, which happened before the consumption tax was increased.
  • Outside Japan, sales were higher y/y because of strong sales of anti-vibration rubber.

Changing Chinese corporate name

-The Company announced that it has changed how it writes its Toyo Tires brand name in Chinese characters, from "東洋輪胎" to "通伊欧輪胎." This was done in order to make the pronunciation of the brand name in Chinese similar to that in Japanese. (From a press release on January 28, 2015)

New Product Launch

-The Company announced that it will start sales of "Open Country R/T," a tire designed specifically for mini vehicles, on October 1. The Company developed the tire for cross-country (sports and crossover utility) vehicles because of increasing number of mini vehicle users who enjoy off-road driving. The Company has achieved both off-road traction performance and paved road performance like wear resistance and traveling stability. The Open Country will be offered in two sizes (15 and 16 inches) exclusively for mini vehicles. The company is also planning to introduce the Open Country series' other tires for SUVs and pickup trucks sold in North America to the Japanese market. (From an article in the Nikkan Jidosha Shimbun on September 15, 2016)

-The Company has doubled the number of sizes of its "Open Country R/T" aftermarket tires for sports utility vehicles (SUVs) and pickup trucks in the U.S. aftermarket. The Open Country R/T tires were originally released in eight sizes in September 2014. With the addition of seven sizes, the tire is now available in 15 sizes ranging from 16 to 22-inches. By expanding its tire lineup for SUVs, which are sold well in the U.S., the Company intends to capture a larger share in the aftermarket. (From an article in the Nikkan Jidosha Shimbun on February 7, 2015)

-In 2015, the Company launched sales of its new "Open-country A/T plus" tires, in response to demand for SUVs and AWD vehicles.


-Major contacts received in FY ended Dec. 2015

Brand Products Car model
TOYO TIRES Studless tire
Audi "A3"
TOYO TIRES European Premium Sport tire
Audi "Q7"
TOYO TIRES TRANPATH R30 Toyota "Alphard", "Vellfire"
TOYO TIRES Next generation fuel efficient tire
Daihatsu "Move", "Move Custom"
TOYO TIRES TOYO A23 Fiat-Chrysler "Dodge Journey"

Mid-term Management Plan

-The Company announced its management plan, called Vision 20, setting 2020 as the final year to achieve the objectives set forth under the plan. Vision 20 has set a target of JPY 600 billion for operating revenue and a 10% profit margin for operating profit.

- Mid-term Plan '14 has the following measures in place in order to achieve its objectives by Dec.2016. The objective are as follows: JPY 470 billion in operating revenue, JPY 52 billion in operating profit, 11.1% in operating profit margin and ROA 10% and more.

-Measures to achieve the target:
Tire Business

  • Establishing a strong brand presence in the light truck and SUV tire market, the Company's area of expertise. (Targets for 2016: increase unit sales by 45% from the 2013 level; expand share in the North American market to 6.0% from 4.6% in 2014)
  • Ensuring top-level product competitiveness by differentiating its products. (Developing high-performance and high-quality product by using "Nano Balance Technology")
  • Improving product development capability in the area of truck and bus tires

DiverTech Business

  • Expanding business in Mexico and ASEAN countries
  • Increasing percentage of sales generated outside Japan to 45% by 2016 from 38% in 2013.

Outlook for FY ending Dec. 31, 2016

(in million JPY)
FY ended Dec. 31, 2016
FY ended Dec. 31, 2015
(Actual Result)
Rate of Change
Sales 395,000 407,789 (3.1)
Operating income 52,000 63,381 (18.0)
Ordinary income 45,500 56,814 (19.9)
Net income attributable to owners of the parent 18,000 1,674 975.3

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income, etc.)

R&D Expenditure

(in millions of JPY)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 FY ended Dec. 31, 2013
Overall 10,199 10,152 8,488
-Tire Business 6,663 6,310 5,742
-DiverTech Business 2,351 2,494 1,773
-In common 1,184 1,346 972

R&D Facilities

Facility Location
Corporate Technology Center Kawanishi, Hyogo Pref., Japan
Tire Technical Center Itami, Hyogo Pref., Japan
Automotive Parts Technical Center Miyoshi City,Aichi Pref., Japan
Miyazaki Tire Proving Ground Koyu, Miyazaki Pref., Japan
Saroma Tire Proving Ground Saroma, Hokkaido, Japan

R&D Activities

Nano Balance Technology
-"Nano Balance Technology" enables rubber materials designing based on nanotechnology. Integrating four nano-level elements of research, analysis, design and production into a technology development process will allow the Company to produce products with optimal performances that meat the required levels.

"T-Mode" Design Platform Technology
-"T-Mode" simulation technology can dramatically improve tire development efficiency and reduce development lead-time. Simulating tire behavior, construction and car movement enables the Company to develop optimum tire designs for specific car types and use.

"e-balance" Environmentally friendly Truck & Bus Tire Technology Platform
-"e-balance" is a new environmentally friendly truck & bus tire technology platform to achieve "e" effect of ecology, energy, economy and endurance.

A.T.O.M. (Advanced Tire Operation Module)
-"A.T.O.M." is a highly scalable, proprietary system that can flexibly respond to changes in production plans in accordance with the demand levels. It features high-quality, multi-product small-lot production, a space-saving system, and a high level of automation.

Capital Expenditure

(in millions of JPY)
FY ended Dec. 31, 2016
FY ended Dec. 31, 2015
(Actual Result)
FY ended Dec. 31, 2014
(Actual Result)
FY ended Dec. 31, 2013
(Actual Result)
Overall 34,628 48,338 40,711 28,999
-Tire Business 27,523 41,642 35,129 23,813
-DiverTech Business 5,660 3,486 3,305 2,831
-Others 1,443 3,209 2,276 2,354

Tire Business
-For FY ended Dec. 2015, the Company invested mainly to streamline production and improve product quality, and to enhance production facilities at Toyo Tire North America Manufacturing Inc. and Toyo Tyre Malaysia Sdn. Bhd.

DiverTech Business
-For FY ended Dec. 2015, the Company invested mainly to streamline production and improve product quality.

Investments Outside Japan

-The Company will invest about JPY 13 billion to increase the annual production capacity at its U.S. tire plant in Georgia by approx. 30% to 11.5 million units. This will make it the Company's largest plant. Growing sales of value-added products like SUV tires in North America has been the driving force of a substantial profit increase. Boosting capacity and strengthening business in North America are expected to lead to further increases in earnings. The Georgia plant, which started operations in 2006, has increased capacity in accordance with the growth of tire sales in North America. Construction to expand the plant buildings by 1.5 times has been proceeding since 2014 and annual production has risen from 2 million units at the time the plant was inaugurated, to 9 million at the end of 2015. (From an article in the Nikkan Jidosha Shimbun on February 16, 2016)

Capital Expenditure Plan (3 years plan)

(Unit: hundred million yen)
FY ended Dec. 2014 -
FY ending Dec. 2016
(3 years) Plan
FY ended Dec. 2011 -
FY ended Dec. 2013
(3 years) Result
Rate of change
Overall 1,300 810 60.5
-Tire Business 1,050 690 52.2
-DiverTech Business 150 90 66.7
-Others 100 30 233.3

Planned Capital Investments

(As of Mar. 31, 2015)
Planned amount of investment
(in million JPY)
Objective of the investment
Total 34,628 -
-Tire Business 27,523 Streamlining production and improving product quality; enabling operations to respond to the Company's global supply structure
-DiverTech Business 5,660 Improving product quality
-In common 1,443 Strengthening research on fundamental technology