Sumitomo earnings plunge; sales up 12%

Kobe, Japan — Sumitomo Rubber Industries Ltd. (SRI) suffered double-digit drops in operating and net income for the quarter and half-year ended June 30, but is still raising its earnings forecast for the full fiscal year.

The revised earnings forecast, up 26% over the projections from May, is based on the expected easing of raw materials prices, stable currencies and gradual economic recoveries in key markets during the second half of 2017.

For the half-year, SRI's operating income fell 27.1% to $188.9 million and net profit decreased 31% to $110.6 million. SRI cited the "soaring prices" of raw materials for the drops.

Driven by solid growth in its tire business, SRI's sales for the period rose 12.4% to $3.59 billion. As a result, the operating ratio fell nearly three points to 5.3%.

SRI's tire business reported a 35.7% drop in first half operating income, to $155 million, while sales increased 13.1% to $3.23 billion.

SRI attributed the solid sales performance to better-than-expected gains in the domestic replacement market, increased aftermarket sales in North America and Europe and solid OE business in Japan, China, Brazil and Turkey.

The acquisition of UK tire sales company Micheldever Group Ltd. in February also contributed to the increased sales.