Toyo Tires‘s first-quarter financial reports indicate that the company posted net sales of 82,094 million yen (approximately $764.3 million), a decrease of 8.9% from the same period of fiscal year 2019.
Toyo’s tyre business net sales (approximately $673.09 million) was down 8.2% from Q1 2019, while its automotive parts business net sales (approximately $91.07 million) was down 14% from Q1 2019.
The company’s operating income at the end of Q1 2020 was 6,936 million yen (approximately $64.57 million), a decrease of 31.8% from Q1.
“As governments around the world impose restrictions on outings and movement of their people in response to the ongoing novel coronavirus pandemic, purchasing behaviors of consumers and economic activities by businesses remain hampered,” the company says. “The Toyo Tire Group is not immune to this state of affairs: we are experiencing a setback in demand as consumer spending showed a sharp downturn in our key sales territories and elsewhere, a curtailment of sales operations due to the restriction on outings and other activities in many countries, and the impact of production adjustments by auto manufacturers, to name but a few.”
“As governments restrict outings, declare an emergency, and lockdown cities, economic activities have been severely hampered,” Toyo continues. “Demand has dropped as people drive less due to restrictions on movement and auto manufacturers adjust their production, etc. The restrictions are being eased in some regions, but we need to be careful in determining the timing of full-scale recovery of demand, etc.”
Coronavirus caused the company’s Japanese Sendai plant to close for a week in April; its U.S. plants to close from April 1-May 2; its Chinese plants to close in early February; and its plants in Malaysia to close in late March.
Toyo says it will draw up a procurement plan in response to the coronavirus based on a “Conservative financial plan,” assuming a worst-case scenario will result in a 50% drop in net sales.