Toyo Tire : Consolidated Business Performance for the Second Quarter of the Fiscal Year Ending December 31, 2020

Consolidated Business Performance for the Second Quarter of the Fiscal Year Ending December 31, 2020

7 Aug, 2020

Major Topics

Consolidated Business Results for the Second Quarter of the Fiscal Year Ending December 31, 2020 (FY2020)

Consolidated Business Outlook for the Fiscal Year Ending December 31, 2020 (FY2020)

Combatting the Novel Coronavirus Disease (COVID-19)

The forward-looking statements contained in these business outlooks and plans are based on information available at the current time and contain potential risks and uncertainties. Therefore, please keep in mind that actual results may, due to a variety of factors, differ from those expressed in the forward-looking statements.

Consolidated Business Results for the Second Quarter of FY2020

				Year-on-
(Unit: millions of	FY2020 2Q	FY2019 2Q	Year-on-	Year
yen）	Results	Results	Year Change	Change
				％
Net Sales	150,586	178,558	(27,971)	(15.7％)
Operating	7,928	15,344
Income	(7,415)	(48.3％)
5.3％	8.6％
Profit Ratio
Ordinary	4,379	13,852	(9,473)	(68.4％)
Income
Profit	520	7,521
Attributable to	(7,001)	(93.1％)
Owners of Parent
Dividends	20 Yen	20 Yen	0 Yen	ー
per Share

＊Profit Attributable to Owners of Parent: Profit attributable to parent company shareholders

Forex	USD	109 Yen	110 Yen	(1 Yen)
Rate	EUR	120 Yen	125 Yen	(5 Yen)

FY2020	Year-on-	FY2020	Year-on-
Jan-Mar	Year	Apr-Jun	Year
Results	Change	Results	Change
82,094	(8,049)	68,492	(19,922)
6,936	(3,238)	992	(4,177)
8.4％	1.4％
3,737	(5,669)	642	(3,803)
2,141	(3,494)	(1,621)	(3,506)

Forex Rate Sensibility 2020

USD 0.55 Billion Yen/Year

EUR 0.10 Billion Yen/Year

Impact of 1 yen fluctuation on operating income

3

Consolidated Business Results for the Second Quarter of FY2020

Factors Contributing to Changes in Operating Income

	FY2019 2Q		Changes		FY2020 2Q
	Results			Results
	15.3		(7.4)		7.9
	(12.5)	＋6.1	(1.0)

（billions of yen）

Decreasing factor	Increasing factor	Decreasing factor
（Tires）	（Tires）	（Others）

Sales

Production

Forex

SGA

Raw

Change in

Tires

Automotive

Depreciation

Other

Total

Factors

Cost

Rate

Expenses

Materials

Subtotal

Parts

Method

Jan-Mar	(4.2)	(0.8)	(0.1)	(0.6)	＋1.8	＋0.7	(3.1)	(0.1)	(0.0)	(3.2)
Apr-Jun	(2.5)	(4.1)	(0.8)	＋1.6	＋1.3	＋1.3	(3.3)	(0.9)	(0.0)	(4.2)

Tires (6.4)

Others

(1.0)

4

Impact of Seismic Isolation Rubber Measures on Performance in the Second Quarter of FY2020

(Unit:	1Q	2Q	Total
millions of yen)	(A)	(B)	(A+B)
For 55	buildings	―	―	―
For 99	buildings	―	―	―
Charges	590	630	1,220
Compensation	466	64	530
costs, etc.
Total	1,056	695	1,751

(For Reference)

FY2015	FY2016	FY2017	FY2018	FY2019
Full-Year	Full-Year	Full-Year	Full-Year	Full-Year
Results	Results	Results	Results	Results
23,063	17,034	608	8,794	ー
7,386	35,068	12,281	2,360	ー
12,104	10,418	3,156	4,858	3,365
4,119	4,260	2,590	1,516	645
46,674	66,781	18,637	17,529	4,010

*55 buildings : disclosed on March 13, 2015, 99 buildings : disclosed on April 21, 2015

Breakdown of Calculation

	The company did not post seismic isolation product costs or renovation/construction costs for changes to
1Q of FY2020	the 55 buildings and 99 buildings.
（A）	The company posted approx. 500 million yen in compensation costs and approx.
	600 million yen in charges (primarily, in payroll for the seismic isolation rubber task force, etc.).
	The company did not post seismic isolation product costs or renovation/construction costs for changes to
2Q of FY2020	the 55 buildings and 99 buildings.
（B）	The company posted approx. 100 million yen in compensation costs and approx.
	600 million yen in charges (primarily, in payroll for the seismic isolation rubber task force, etc.).
From 3Q of	As at the present time it is difficult to reasonably estimate the amount, in the event that costs arise in the
FY2020 onward	future, an additional reserve for product warranties may be posted depending upon the progress of measures.

5

Consolidated Business Results by Business Segment for the Second Quarter of FY2020

●Net Sales

	(Unit: millions of	FY2020 2Q	FY2019 2Q	Year-on-Year	Year-on-		FY2020	Year-on-	FY2020	Year-on-
	Year		Jan-Mar	Year	Apr-Jun	Year
	yen)	Results	Results	Change
	Change ％		Results	Change	Results	Change
	Tires	134,430	155,634	(21,204)	(13.6%)		72,297	(6,461)	62,133	(14,742)
	Automotive Parts	16,130	22,888	(6,758)	(29.5%)		9,782	(1,586)	6,347	(5,172)
	Other	65	75	(10)	(13.3%)		35	(2)	29	(8)
	Adjustments	(39)	(40)	＋1	―		(21)	＋2	(18)	―
	Total	150,586	178,558	(27,971)	(15.7%)		82,094	(8,049)	68,492	(19,922)
				* Net sales include intersegment internal net sales or transfers
●Operating Income
	(Unit: millions of	FY2020 2Q	FY2019 2Q	Year-on-Year	Year-on-	FY2020	Year-on-	FY2020	Year-on-
	Year	Jan-Mar	Year	Apr-Jun	Year
	yen)	Results	Results	Change
	Change ％	Results	Change	Results	Change
	Tires	9,733	16,114	(6,381)	(39.6％)		7,399	(3,143)	2,333	(3,238)
	Profit Ratio	7.2％	10.4％		10.2％	3.8％
	Automotive Parts	(1,805)	(756)	(1,049)	－		(474)	(92)	(1,330)	(957)
	Profit Ratio	（11.2％）	（3.3％）		(4.8％)	(20.1％)
	Other	20	5	＋15	400.0％		22	(3)	(1)	＋19
	Adjustments	(20)	(19)	0	－		(11)	0	(9)	(2)
	Total	7,928	15,344	(7,415)	(48.3％)		6,936	(3,238)	992	(4,177)
				* Segment profit adjustment amounts include intersegment eliminations

6

Consolidated Business Results by Geographic Area Segment for the Second Quarter of FY2020

●Net Sales

		FY2020 2Q	FY2019 2Q	Year-on-Year	Year-on-		FY2020	Year-on-	FY2020		Year-on-
	(Unit: millions of yen)	Year		Jan-Mar	Year	Apr-Jun		Year
	Results	Results	Change
		Change ％		Results	Change	Results		Change
	Japan	42,730	51,857	(9,127)	(17.6％)		23,908	(1,875)	18,822		(7,251)
	North America	81,493	92,910	(11,416)	(12.3％)		41,685	(4,392)	39,807		(7,024)
	Other	26,362	33,790	(7,427)	(22.0％)		16,500	(1,781)	9,862		(5,646)
	Eliminations or	―	―	―	―		ー	ー	ー		―
	Corporate
	Total	150,586	178,558	(27,971)	(15.7％)	82,094	(8,049)	68,492		(19,922)
●Operating Income		* Net sales do not include intersegment internal net sales or transfers
					Year-on-		FY2020	Year-on-	FY2020		Year-on-
	(Unit: millions of	FY2020 2Q	FY2019 2Q	Year-on-Year
	Year		Jan-Mar	Year	Apr-Jun		Year
	yen)	Results	Results	Change
	Change ％		Results	Change	Results		Change
	Japan	2,449	12,630	(10,181)	(80.6％)		5,871	(1,243)	(3,421)		(8,937)
	North America	4,143	2,869	＋1,274	＋44.4％		1,500	(985)	2,643		＋2,259
	Other	803	2,316	(1,512)	(65.3％)		803	(674)	0		(837)
	Eliminations or	532	(2,471)	＋3,004	－		(1,238)	(334)	1,770		＋3,338
	Corporate
	Total	7,928	15,344	(7,415)	(48.3％)		6,936	(3,238)	992		(4,177)

7

Revised Outline of Consolidated Business Outlook for the Full FY2020

	Revised Full-	Full-Year		Year-on-
(Unit: millions of	Year Outlook	Year-on-	Year
Results for
yen）	for	Year Change	Change
FY2019
	FY2020		％
Net Sales	330,000	377,457	(47,457)	(12.6％)
Operating	30,000	38,447
Income	(8,447)	(22.0％)
9.1％	10.2％
Profit Ratio
Ordinary	25,400	36,645	(11,245)	(30.7％)
Income
Profit	14,000	24,482
Attributable to	(10,482)	(42.8％)
Owners of Parent
Dividends	45 Yen	45 Yen	0 Yen	ー
per Share

＊Profit Attributable to Owners of Parent: Profit attributable to parent company shareholders

Forex	USD	107 Yen	109 Yen	(2 Yen)
Rate	EUR	120 Yen	123 Yen	(3 Yen)

FY2020 2Q	Year-on-	Revised	Year-on-
Year	Outlook for	Year
Results
Change	FY2020 2H	Change
150,586	(27,971)	179,413	(19,485)
7,928	(7,415)	22,071	(1,032)
5.3％	12.3％
4,379	(9,473)	21,020	(1,772)
520	(7,001)	13,479	(3,481)

Forex Rate Sensibility 2020

USD 0.55 Billion Yen/Year

EUR 0.10 Billion Yen/Year

Impact of 1 yen fluctuation on operating income

8

Revised Outlook for the Full FY2020

Factors Contributing to Changes in Operating Income

FY2019

Full-Year Results

38.4

（billions of yen）

Changes	FY2020
Full-Year Outlook

(8.4)

30.0

(24.0)

＋15.6

(0.0)

Decreasing factor

Increasing factor

Decreasing factor

（Tires）

（Tires）

（Others）

Sales

Production

Forex

SGA

Raw

Change in

Tires

Automotive

Depreciation

Other

Total

Factors

Cost

Rate

Expenses

Materials

Subtotal

Parts

Method

2Q

(6.7)

(4.9)

(0.9)

＋1.0

＋3.1

＋2.0

(6.4)

(1.0)

(0.0)

(7.4)

Results

2H

(10.2)

＋0.2

(1.5)

＋1.8

＋4.9

＋2.7

(2.0)

＋1.0

＋0.0

(1.0)

Outlook

						Others
Tires
(8.4)						(0.0)

9

Revised Consolidated Business Outlook by Business Segment for the Full FY2020

●Net Sales

	Revised Full-	Full-Year		Year-on-			Year-on-	Revised	Year-on-
(Unit: millions of	Year Outlook	Year-on-Year	Year		FY2020 2Q
Results for		Year	Outlook for	Year
yen)	for	Change	Change		Results
FY2019		Change	FY2020 2H	Change
	FY2020		％
Tires	295,000	332,838	(37,838)	(11.4％)		134,430	(21,204)	160,569	(16,634)
Automotive Parts	34,900	44,551	(9,651)	(21.7％)		16,130	(6,758)	18,770	(2,893)
Other	100	146	(46)	ー		65	(10)	35	(36)
Adjustments	0	(79)	＋79	―		(39)	＋1	39	＋78
Total	330,000	377,457	(47,457)	(12.6％)		150,586	(27,971)	179,413	(19,485)

●Operating Income

* Net sales include intersegment internal net sales or transfers

		Revised Full-	Full-Year		Year-on-		Year-on-	Revised	Year-on-
(Unit: millions of	Year Outlook	Year-on-Year	Year	FY2020 2Q
Results for	Year	Outlook for	Year
yen)	for	Change	Change	Results
FY2019	Change	FY2020 2H	Change
		FY2020		％

Tires	33,000	41,393	(8,393)	(20.3％)		9,733	(6,381)	23,266	(2,012)
Profit Ratio	11.2％	12.4％		7.2％	13.9％
Automotive Parts	(3,000)	(2,919)	(80)	－		(1,805)	(1,049)	(1,194)	＋969
Profit Ratio	（8.6％）	（6.6％）		(11.2％)	（6.4％）
Other	0	14	(14)	－		20	＋15	(20)	(29)
Adjustments	0	(39)	＋39	－		(20)	0	20	＋39
Total	30,000	38,447	(8,447)	(22.0％)		7,928	(7,415)	22,071	(1,032)

* Segment profit adjustment amounts include intersegment eliminations 10

Revised Consolidated Business Outlook by Geographic Area Segment for the Full FY2020

●Net Sales

	Revised Full-	Full-Year		Year-on-			Year-on-	Revised	Year-on-
	Year Outlook	Year-on-Year	Year		FY2020 2Q
(Unit: millions of yen)	Results for		Year	Outlook for	Year
for	Change	Change		Results
	FY2019		Change	FY2020 2H	Change
	FY2020		％
Japan	99,100	113,473	(14,373)	(12.7％)		42,730	(9,127)	56,369	(5,246)
North America	176,100	197,698	(21,598)	(10.9％)		81,493	(11,416)	94,606	(10,182)
Other	54,800	66,286	(11,486)	(17.3％)		26,362	(7,427)	28,437	(4,059)
Eliminations or	―	―	―	―		―	―	―	―
Corporate
Total	330,000	377,457	(47,457)	(12.6％)	150,586	(27,971)	179,413	(19,486)
●Operating Income			* Net sales include intersegment internal net sales or transfers
	Revised Full-	Full-Year		Year-on-		Year-on-	Revised	Year-on-
	Year Outlook	Year-on-Year	Year	FY2020 2Q
(Unit: millions of yen)	Results for	Year	Outlook for	Year
for	Change	Change	Results
	FY2019	Change	FY2020 2H	Change
	FY2020		％
Japan	20,500	27,039	(6,539)	(24.2％)		2,449	(10,181)	18,051	＋3,642
North America	9,400	8,378	＋1,022	＋12.2％		4,143	＋1,274	5,257	(252)
Other	1,900	3,610	(1,710)	(47.4％)		803	(1,512)	1,096	(197)
Eliminations or	(1,800)	(580)	(1,220)	－		532	＋3,004	(2,332)	(4,223)
Corporate
Total	30,000	38,447	(8,447)	(22.0％)		7,928	(7,415)	22,071	(1,032)

11

Combatting the Novel Coronavirus Disease (COVID-19)

Changes in our key markets

• After hitting bottom in April, tire demand in the replacement market has begun to recover in some regions, including North America. As auto manufacturers have resumed production, the size of the demand decline for tires for new vehicles has been shrinking.
• In anticipation of life "with corona," various structural changes are taking place here and there: resumption of economic activities while the end of COVID-19 is still not in sight; "work from home" and new work styles emerging; commuters' shift from public transportation to private cars.
• Souring U.S.-China relationship has increased likelihood of anti-dumping duties being imposed.

Preparations to outperform the market in the demand recovery phase

• All tire and auto components production bases across the world back to normal operation.
• Building a supply structure with an appropriate level of inventory in mind to ensure timely supply that matches demand and capture sales opportunities without fail.
• Steadily expanding sales of new products launched on key markets and boosting their demand, in addition to returning to the previous sales volumes in each market.

Efforts to ensure business continuity

• Steadily implementing earnings structure reforms (re-examining capex plans, cost reduction and rationalization)
• Pursuing financial activities with a conservative scenario in mind to secure necessary funds for equipment, etc.

12

(For Reference)

Changes in Tire Production (New Rubber Volume)

（Unit: 1,000 Tons） * Bar graph values show tire production volume composition ratio by region (％)

			70.0
			60.0
					18.2%					18.5%				18.3%				18.2%
																		17.9%
			50.0
					28.7%					27.3%				29.1%				29.0%
			40.0
																							31.7%
		Asia	30.0																									21.3%
			20.0																									23.2%
		N.Ameri
				53.1%					54.2%				52.6%				52.9%			50.4%
		ca
		10.0																									55.5%
		Japan
		0.0
				FY2019 Jan-Mar	FY2019 Apr-Jun FY2019 Jul-Sep	FY2019 Oct-Dec FY2020 Jan-Mar	FY2020 Apr-Jun
														FY2019												FY2020
	(Unit: 1,000 Tons)						1H							2H			Full Year					1H
					Jan-Mar	Apr-Jun		Jan-Jun	Jul-SepOct-Dec		Jul-Dec	Jan-Dec			Jan-Mar	Apr-Jun	Jan-Jun
					Results		Results		Results	Results	Results		Results	Results			Results	Results		Results
Japan		32.7		33.1		65.7	32.2		32.7		64.9	130.6			29.1	19.2		48.3
N. America	17.7		16.7		34.4	17.8		17.9		35.7	70.1			18.3	8.0		26.3
Asia		11.2		11.3		22.5	11.2		11.2		22.3	44.9			10.3	7.4		17.7
Total		61.6		61.1		122.7	61.2		61.7		122.9	245.6			57.7	34.5		92.2

13

(For Reference)

Year-on-Year Change in Tire Sales Quantity by Region

* Year-on-Year when the same period of the previous year = 100

FY2019

FY2020

(Unit: ％)	1H			2H		Full Year		1H
	Jan-Mar	Apr-Jun	Jan-Jun	Jul-SepOct-Dec	Jul-Dec	Jan-Dec	Jan-Mar	Apr-Jun	Jan-Jun
	Results	Results	Results	Results	Results	Results	Results	Results	Results	Results

OE Total	112	100	106	107	83	94	100	82	38	62
RE Japan	105	112	109	126	87	103	105	98	89	93
RE Overseas	95	93	94	103	98	101	97	95	82	89
Of which	100	91	95	105	98	102	99	88	98	93
N. America
Of which	92	84	89	105	91	99	93	100	70	88
Europe
Of which	89	105	97	89	105	96	97	103	61	80
SE Asia
Total	100	97	98	107	93	100	99	93	75	84
										14

(For Reference)

Price Changes in Major Raw Materials

◆Market Price Trends

Change in Dubai Crude Oil and Domestic Naphtha Prices

Change in Natural Rubber TSR #20 Prices (ＳＩCOM)

（USD／bbl）

（1,000 Yen／kl）

（USC／kg）

125

100

300

Dubai Crude Oil

Natural Rubber

TSR#20

100

Domestic Naphtha

80

250

200

75

60

150

50

40

100

25

20

50

0

16/12

17/9

17/12

18/12

19/12

0

0

16/12

17/12

18/12

19/12

16/3

16/6

16/9

17/3

17/6

18/3

18/6

18/9

19/3

19/6

19/9

20/3

20/6

16/3

16/6

16/9

17/3

17/6

17/9

18/3

18/6

18/9

19/3

19/6

19/9

20/3

20/6

◆Price Changes & Impact by Raw Material (Operating Income Basis)

(Unit: billions of yen)

FY2019

FY2020

Raw Material

1H

2H

Full Year

1H

	Jan-MarApr-Jun	Jan-Jun	Jul-SepOct-Dec	Jul-Dec	Jan-Dec		Jan-MarApr-Jun	Jan-Jun
	Results	Results	Results	Results	Results	Results	Results		Results	Results	Results
Natural Rubber	＋0.4	＋0.1	＋0.5	(0.1)	(0.1)	(0.2)	＋0.3	(0.0)	＋0.0	＋0.0
Petroleum Products	(0.9)	0.0	(0.9)	＋0.8	＋2.2	＋3.0	＋2.1		＋1.3	＋0.9	＋2.2
Other Raw Materials	(0.1)	＋0.3	＋0.2	＋0.2	＋0.6	＋0.8	＋1.0		＋0.6	＋0.4	＋1.0
Total	(0.6)	＋0.4	(0.2)	＋0.9	＋2.7	＋3.6	＋3.4		＋1.8	＋1.4	＋3.1

15

(For Reference)

Changes in Interest-Bearing Debt Balance and Capital Ratio

(billions of yen)

250.0

200.0

150.0

100.0

50.0

0.0

Interest-Bearing Debt		Capital Ratio
Balance (Left Axis)		(Right Axis)

47.5 48.5

33.6 32.5

28.8

132.9	120.0	137.3	118.5	123.9

FY2016	FY2017	FY2018	FY2019	FY2020
				2Q

（％）

60

50

40

30

20

10

0

16