Sumitomo Rubber revises down full-year outlook on rising raw materials costs

Tokyo – Sumitomo Rubber Industries has revised down its financial guidance for the year 2021 in view of continued increases in raw material prices, and marine transport costs.

The Japanese group now expects full-year sales revenue to come in at Yen925 billion (€7.2 billion), down Yen5 billion compared to the previous estimate of Yen930 billion. 

Business profit is projected to come in at Yen46 billion, Yen9 billion lower than earlier estimates, the group announced 9 Nov.

The revision in sales mainly reflects a Yen7 billion decline in estimated tire sales to Yen787 billion, and a Yen1 billion lower projection in industrial products revenue at Yen40 billion. 

By contrast, the sports business, which manufactures a variety of products including golf and tennis products, is expect to post sales of Yen98 billion, Yen3 billion higher than the previous estimate.

In terms of business profit, the forecast for the tires business has been revised down to Yen37 billion, Yen9.5 billion lower than the earlier projection. 

The sports business is expected to post Yen7 billion in profits, Yen1 billion higher than expected, while the industrial products are set to come in Yen500 million lower than the earlier estimate at Yen2 billion.

During the third quarter of 2021, Sumitomo Rubber was particularly impacted by the “rising prices of natural rubber and petroleum-based raw materials as well as soaring marine transport costs.”

These, said the group, were balanced by positive developments, such as the recovery trend in many markets including the US and China, and improvements in the export environment due to the weakening of the yen against other currencies.

Overall, the group's third quarter sales rose 8% to Yen217 billion while business profit declined by more than 80% to Yen2 billion.

Over the nine-month period to end of September, however, the group increased business profit by 306% to Yen32 billion, on 21.6% higher sales of Yen657 billion.

Breaking down the performance, sales in the tires business was up 7% during the third quarter at Yen183 billion, but the unit reported a business loss of Yen200 million, compared to Yen8.6 million profit reported in the same quarter last year.

Over the nine-month period, tire business sales increased 19.7% to Yen552 billion, while business profit grew 202% to Yen23.3 billion. 

Sumitomo Rubber linked the nine-month improvement to a low comparison basis in 2020, recovery in the replacement markets both the domestically and overseas, particularly in China. 

However, the unit was ‘greatly affected’ by the shortage of containers for international exports, particularly to North America.

In the sports business, third quarter profit rose 28% to Yen1.6 billion, on 24% higher sales to Yen25 billion. 

Sales revenue for the first nine months was up 53% at Yen76 billion, while business profit grew substantially to Yen 7 billion, up from a Yen1.8 billion loss reported last year. 

The group linked the improvements to a ‘trend reversal’ in the golf and tennis goods market, which was impacted by the outbreak of Covid-19 last year. 

Third quarter sales within the industrial and other products business declined by 4% to Yen9.7 billion, while business profit came in slightly lower than the previous year at Yen500 million.

Over the first three quarters, unit sales decreased 1.4% to ¥29 billion, while business profit fell 22.4% to Yen1.6 billion. 

Sumitomo Rubber said the segment was impacted by a decline in “large-scale projects in infrastructure-based products”, while sales increased for precision rubber parts for medical use and office machines.