Kobe, Japan — Sumitomo Rubber Industries Ltd. (SRI) has suffered double-digit drops in operating and net income for fiscal 2018.
In its annual financial report published 13 Feb, the company pinned the declines on foreign-exchange losses and an impairment loss related to its South African subsidiary.
Operating income for the period dropped 15.3% to $519.6 million (€460 million) on 1.9% higher sales of $8.13 billion.
The results are in line with a forecast SRI published along with its third-quarter earnings report in November last year.
At the time, the company named ‘rising raw materials and fixed costs, eroding prices and an unfavourable price/mix component’ as key factors in adjusting the fourth quarter outlook.
SRI cited the "deterioration in the sales environment" in South Africa for its decision to record an impairment loss on goodwill related to its Sumitomo Rubber South Africa (Pty.) Ltd.
The company added capacity for radial truck and bus tires last year at the Ladysmith, South Africa, factory it acquired from Apollo Tyres Ltd. in 2013.
For fiscal 2019, SRI is forecasting a further erosion of earnings on a slight increase in sales.
Specifically, the company sees operating income falling about 5.5% for the year.
The company also expects a second-half improvement to offset “to a large degree” a nearly 45% drop in the first half.