Toyo Tire to sell its non automotive business.
Toyo Tire and Rubber is planning to sell its non-automotive operations and use the funds to strengthen its tyre business as the company rebuilds following several scandals involving its construction materials.
News reports from Japan say up for sale are the company’s industrial materials plant and a subsidiary making urethane for construction. Various industrial products will also be sold off, including rubber hoses and waterproofing materials, media are reporting. The businesses together generate about 30 billion yen ($264 million) in sales, nearly 10% of group sales. Industry experts expect they will be sold for more than 10 billion yen based on earnings potential.
Toyo Tire hopes to sell nearly all of the non-automotive businesses in a package, except for the scandal-hit products, possibly to an investment fund, sources say. Toyo Tire has booked more than 110 billion yen in extraordinary losses from the cheating scandal involving quality data for seismic shock absorbers. The company suffered a net loss in 2016. The tyre business generates roughly 80% of group sales, and other automotive operations include seat cushions and anti-vibration materials installed in vehicles.
Toyo Tire intends to use the money from the sale to expand a tyre plant in Malaysia as well as strengthen operations, including a US design center set to open as early as 2018. Toyo Tire has been involved in four scandals since 2007, including cheating on quality data for building insulation materials, forcing two presidents to step down to take responsibility. All of the improprieties involved non-tire businesses.