Toyo Tire & Rubber Co., Ltd. Business Report FY ended Dec. 2016
|(in millions of JPY)|
|FY ended Dec. 31, 2016||FY ended Dec. 31, 2015||Rate of Change
|Current net income||(12,260)||1,674||-||
-An extraordinary loss was reported to cover product compensation expenses and set up reserves to cover future product-compensation expenses.
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.
-In the Japanese consumer market, sales volumes of summer and winter tires were higher, but actual sales in monetary terms remained around the same level of those during the previous year.
-In consumer markets outside Japan, sales volumes rose year-on-year (y/y), but actual sales in monetary terms fell due to the effect of negative currency translation because of the strong Japanese yen and other negative factors.
- North American Market: Sales volumes of major brands and new products were strong, surpassing sales volumes of the previous year.
- European Market: Sales volumes increased in Europe as a result of the Company’s reorganizing its distribution channels and conducting successful sales activities.
2) DiverTech Business
-Even though the Company had strong orders for new automotive seat cushions, overall sales were lower y/y because sales of models, on which the Company’s antivibration rubber was being installed, decreased and because of the impact that negative currency translation from the strong yen had on sales, starting from the middle of the year.
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 has developed an airless concept tire with the brand name noair. The tire does not require maintenance for refilling air, and eliminates the risk of a flat tire. Vehicles with a weight comparable to that of mini vehicles (engine displacements under 660 cc) can run on the new noair tires at speeds of up to 150 km per hour. The company is aiming for early commercialization of the tire to meet market needs. Toyo Tire & Rubber used rubber only for the tread areas contacting the road surface. For the internal parts, a plastic spoke with a unique structure and carbon fiber reinforced plastics were used in order to implement airless tires for actual driving. (From an article in the Nikkan Jidosha Shimbun on September 9, 2017)
-The Company announced that it has developed the "Proxes Sport" tire, which offers highly improved fuel efficiency and wet grip performance. The company developed the new tire through the advancement of its unique core development technology for rubber material called "Nano Balance Technology," and application of other new technologies. Toyo Tire & Rubber has advanced its nano-level research and analysis technologies to realize the production of high-performance, high-quality tires. The Nano Balance Technology is the company's core rubber material technology. It integrates the four nano-level elements of "research," "analysis," "design," and "production". The company has developed new technologies, including precise structure simulation models and three-dimensional filler structure observation technology. It has also developed the industry's first technology for the quantitative assessment of simulation models, and a technology to obtain X-ray filler structure information in dynamic environments. (From an article in the Nikkan Jidosha Shimbun on November 18, 2016)
-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. 2016
|TOYO TIRES||PROXES R46||Mazda "CX-5"|
|TOYO TIRES||OPEN COUNTRY A26||Nissan "TITAN"|
|NANOENERGY J59||Toyota "Prius" (For Japanese market)|
|NANOENERGY A92||Toyota "Prius" (For U.S. market)|
|NANOENERGY J61||Toyota "Prius" (For European market)|
|NANOENERGY R41||Toyota "Prius" (For Japanese and European market)|
Mid-term Management Plan
-The Company announced its business plan that covers the four years until December 2020. The company is aiming to achieve annual sales of JPY 480 billion, which will be a 25.7% increase on a year-over-year basis (y/y), and operating profit of JPY 60 billion, a 21.7% rise y/y, on a consolidated basis. In addition to expanding the sales of major businesses like its SUV and pickup truck tire division, the company will accelerate auto parts development at its DiverTech Division, which makes rubber products other than tires. The company's president Takashi Shimizu commented, "We will focus our resources in terms of assets, personnel, and technologies on mobility fields, primarily on tires". (From an article in the Nikkan Jidosha Shimbun on March 11, 2017)
-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.
-Objectives for 2020 under the New Mid-term Management Plan 17*:
Sales: JPY 480 billion
Operating profit: JPY 60 billion
Operating profit margin: 12.5%
*2020 is the final year of the plan
-Measures to achieve the target:
- Strengthen and advance proprietary, fundamental technology on tire design, i.e., Nano Balance Technology; computer-based simulation technology; and measuring and evaluating technology.
- Innovate elemental technology to create commercially viable new products, such as aggressive design technology; as well as technology to improve wet-road driving performance and technology to extend product life.
- Enhance product-development capabilities to create tires for pickup trucks, passenger cars, trucks, and buses.
- Create synergy effects within the tire business (among sales, rubber technology, etc.)
- Sustain its position as a global supplier based on working in close collaboration with OEMs.
-The Company announced that it will sell off some of its business divisions that are not related to tires. Divisions for products like industrial rubber and railcar products will be transferred to Nitta Corporation (Nitta), and the hard urethane division to Sekisui Chemical Co., Ltd. (Sekisui Chemical). Toyo Tire & Rubber will consolidate its managerial resources to its mobility business, which deals with products like tires and automotive rubber products. Toyo Tire & Rubber will transfer chemical and industrial product business division excluding the construction anti-vibration rubber division to a new company that will be established by its subsidiary, Toyo Chemical Industrial Products Co., Ltd. Nitta will then acquire all of the new company's issued shares for about JPY 3.7 billion. The hard urethane business produces and sells products like undiluted hard urethane that are used in the field of freezing, refrigeration, building, and construction. Toyo Tire & Rubber will transfer the hard urethane business to its subsidiary, SoflanWiz Co., Ltd., and Sekisui Chemical will acquire all of the subsidiary's issued shares. (From an article in the Nikkan Jidosha Shimbun on August 1, 2017)
Outlook for FY ending Dec. 31, 2017
|(in million JPY)|
|FY ending Dec. 31, 2017
|FY ended Dec. 31, 2016
|Rate of Change
|Net income attributable to owners of the parent||26,900||(12,260)||-|
|(in millions of JPY)|
|FY ended Dec. 31, 2016||FY ended Dec. 31, 2015||FY ended Dec. 31, 2014|
|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|
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.
-The Company announced on January 11 that it will increase research and development department staff at its tire plant in Georgia, U.S. and add product development capabilities to it by the end of 2017. The expansion project involves increasing the number of R&D staff by 1.5 times and introducing new equipment to evaluate tires. By doing so, the company will be able to respond to the needs of the U.S. market speedily. (From an article in the Nikkan Jidosha Shimbun on January 13, 2017)
|(in millions of JPY)|
|FY ending Dec. 31, 2017
|FY ended Dec. 31, 2016
|FY ended Dec. 31, 2015
|FY ended Dec. 31, 2014
-For FY ended Dec. 2016, 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.
-For FY ended Dec. 2016, 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 (4 years plan)
|(Unit: hundred million yen)|
|FY ended Dec. 2017 -
FY ending Dec. 2020
(4 years) Plan
|FY ended Dec. 2013 -
FY ended Dec. 2016
(4 years) Result
|Rate of change
|-DiverTech Business, others||160||198||(19.2)|
Planned Capital Investments
|(As of Dec. 31, 2016)|
|Planned amount of investment
(in million JPY)
|Objective of the investment|
|-Tire Business||24,638||Streamlining production and improving product quality; enabling operations to respond to the Company's global supply structure|
|-DiverTech Business||3,748||Improving product quality|
|-In common||1,559||Strengthening research on fundamental technology|