Toto Ltd. closed two factories in China on Monday, slashing its manufacturing footprint in the world’s second-largest economy as the Japanese bathroom fixture maker struggles against a prolonged property downturn and intensifying competition from local rivals.
Operations at the Beijing and Shanghai plants have already halted, with Toto moving to liquidate the operating companies that generated combined sales of 800 million yuan ($110 million) last fiscal year. The closures affect approximately 2,000 employees.
The strategic retreat will reduce Toto’s Chinese production capacity by about 40%, leaving just one operational facility until a new plant in Dalian comes online later this year. The remaining factory features advanced automation that the company expects will optimize productivity despite the reduced footprint.
“We’re booking the cost necessary for us to stop the bleeding of red ink and swing to the black,” Toto President Shinya Tamura said. The company has yet to finalize the exact figure of extraordinary losses to be recorded for fiscal 2025.
The bathroom fixture maker is already reeling from deteriorating Chinese operations, with group net profit plunging 67% to 12.1 billion yen ($84.7 million) in the fiscal year ended March due to 34 billion yen in impairment losses unrelated to the factory closures.
Toto plans to refocus its China strategy on releasing new products for the mid-to-high-end segment. Meanwhile, the company projects profit will more than double this fiscal year to 31 billion yen, driven by its ceramics components business for semiconductor manufacturing equipment.
