Toyo launches new mid-term business plan

Along with the unveiling of its ‘Vision 2020’ strategic plan that outlined aims leading up to its 100th anniversary, in May 2011 Toyo Tire & Rubber announced its ‘Mid-term 11’ plan that identified goals for the years to 2015. The tyre maker now reports that due to a favourable business climate, including a weakening of the Japanese yen and lower raw material prices, it has met the Mid-term 11 targets – such as boosting supply capacity – ahead of schedule. Toyo has now set itself a new three-year mid-term business plan, titled ‘Mid-term ’14 GO BEYOND’. This latest plan sets this year as a starting point and covers specific targets up to the end of 2016, while looking forward five years to 2018.

Toyo says it formulated its new mid-term business plan as “a declaration of our intent to take on the challenge of an even higher business stage.” The business objectives of Mid-term ’14 are consolidated net sales of 470 billion yen (£2.7 billion) in the year ending December 2016, with 380 billion yen (£2.2 billion) of this earned within the Tire business unit. The previous plan’s FY 2015 target sales of 400 billion yen (£2.3 billion) are expected to be achieved this year. The operating income target is 52 billion yen (£302.6 million), including 46 billion yen (£267.7 million) in the Tire business unit, and an operating margin of 11.1 per cent (12.1 per cent for the Tire business unit). The prior, 2015 target of 30 billion yen (£174.6 million) operating income and 7.5 per cent operating margin was met in 2013.

The plan also calls for capital investments of 130 billion yen (£756.5 million) during the 2014 to 2016 period, including 105 billion yen (£611.0 million) in the Tire business. Projects to be implemented during the Mid-term ’14 timeframe include increases in production capacity at Toyo’s tyre factory in Malaysia and the transfer of standard tyre production from Japan to this site. Product variation at Toyo’s plants in China will rise and Toyo will boost ‘phase four’ production capacity in the US. Global capacity is expected to rise from 214,000 tons in the 2013 financial year to 270,000 tons in the 2016 financial year, with the ratio of production taking place outside Japan jumping from 35 per cent to 50 per cent; by the 2016 financial year, facilities in the US will account for 30 per cent of total global production capacity and plants in Asia for a further 20 per cent.

SUV/CUV and TBR tyres are a particular focus during the Mid-term ’14 period. Toyo aims to establish a firm brand position in the SUV/CUV tyre market and says it will “aggressively boost sales” in this segment. The target is to increase sales volumes of these products 45 per cent over 2013 levels by the 2016 financial year. While these tyres accounted for 32 per cent of Toyo’s global sales last year, by the end of the 2016 financial year this ratio is expected to reach 40 per cent, and the company’s share of the US SUV/CUV tyre market should rise from 4.5 per cent (FY 2013) to 6.0 per cent (FY 2016). As for the truck and bus radial segment, Toyo states it wants to develop this business in North America, Japan, China and the Middle East.

In regards to the European market, Mid-term ’14 identifies a moderate recovery. Toyo aims to respond to European environmental regulations by increasing sales of its ‘Nanoenergy’ products. The company also intends to “aggressively develop” markets in Northern and Eastern Europe where winter tyres are used, and increase its sales of SUV/CUV tyres in Russia.