Sumitomo earnings drop 39%, 2019 forecast unchanged

Kobe, Japan – Sumitomo Rubber Industries Ltd. posted a 39.2% drop in operating profits for the half-year ended 30 June on 0.9% lower sales revenue.

SRI cited the negative impact of foreign exchange rates, increased fixed costs and expenses, and higher prices of raw materials — particularly petroleum-based ones — for the earnings decline.

Operating income fell to $149.6 million (€135 million) on revenue of $3.9 billion, SRI said, resulting in an operating ratio of 3.8%, down from 6.3% a year ago.

Net earnings fell as well, down 55.5% to $57.4 million, SRI said.

In published comments on the results, SRI noted that the US economy continued to recover steadily and the European economy remained on a gradual recovery trend.

However, the firm added, issues such as a gradual economic slowdown in China and a potential downside risk to the economy depending on situations over trade issues has deepened the uncertainty in the outlook.

Despite the downward trend in the first half, SRI said it is sticking with its fiscal 2019 forecast made in early May: An operating income decline of 5.5% on 2.9% higher sales versus fiscal 2018.

In the tire segment, half-year earnings fell 39.5% to $188 million, while sales increased 1.8% to $3.28 billion, yielding an operating ratio of 5.7%.

SRI said overseas sales revenue increased on higher demand in North America, Europe and emerging markets, but fell in Asia and Oceania due to an economic slowdown in China.

Domestically, SRI reported lower OE and replacement market sales revenue despite increased shipments of higher value-added products.