Toyo Tire slashes profit forecast as weak markets and US tariffs batter earnings

Toyo Tire Corp. has downgraded its full-year operating income forecast after weak tire markets, higher costs, and the impact of US tariffs crippled its first-half performance in 2026. For the six months ended 30 June 2026, the Japanese tire giant reported consolidated sales of Yen284.2 billion (€1.5 billion), up just 0.3% year-on-year, while operating income plummeted 22.2% to Yen37.5 billion. In the second quarter alone, sales rose 3.6% to Yen153.2 billion, but operating income crashed 34.5% to Yen16.9 billion. The group now expects full-year operating income of Yen90 billion, down from its previous forecast of Yen94 billion, while maintaining its sales target at Yen638.0 billion, a 7.2% increase on 2025. The first-half earnings took a beating from multiple fronts: a Yen5.5 billion hit from “sales factors,” including Yen2.3 billion in lost sales due to a computer system disruption in Japan that began in January after migrating to a new platform. Production costs surged by Yen1.4 billion, while selling, general, and administrative expenses drained another Yen1.5 billion. Freight costs added a further Yen1.3 billion drag, and US tariffs sliced Yen8.5 billion off operating income. Offsetting some of these losses, raw material costs contributed a Yen3.7 billion positive swing, and foreign exchange movements added Yen3.9 billion. The computer system meltdown disrupted domestic shipments, forcing Japanese plants to adjust production in Q1 and racking up Yen1.9 billion in extra costs, on top of the Yen2.3 billion lost sales impact. Toyo said shipments were restored by the end of June, with efforts underway to clear backorders. The group now aims to ramp up production and boost sales in the second half of 2026. Breaking down the first-half performance by segment, Toyo’s Tire business generated Yen260 billion in sales, down 0.1% year-on-year, with operating income falling 22.6% to Yen36.4 billion. Despite strong sales of wide light truck tires, overall unit sales suffered from weak demand in the US and other markets. The Automotive Parts division fared better on the revenue front, with sales up 4.9% to Yen24.1 billion, though operating income dipped 0.6% to Yen1.1 billion. Regionally, Japan’s sales dropped 9.1% to Yen50.4 billion, with operating income down 10.3% to Yen26.9 billion. North America saw sales rise 4.9% to Yen201.4 billion, but operating income crashed 66.3% to Yen3.5 billion. Other regions posted a 10.2% sales decline to Yen32.4 billion, though operating income edged up 2.0% to Yen9.1 billion.