Sumitomo Rubber posts 40% earnings rise in ‘sluggish market’

Kobe, Japan – Sumitomo Rubber Industries (SRI) has reported an increase of more than 40% in first half earnings (business profit), driven largely by its tires business.

Over the six months ended 30 June, the group reported a 40.6% year-on-year improvement in earnings to Yen39.8 billion, on 8.3% higher sales of Yen620 billion, SRI said 6 Aug.

Tires business posted a 9.4% increase in sales to Yen66.6 million, while segment earnings increased by nearly 54% to Yen34 billion, said SRI.

Tire volumes remained “more or less on the same level” as the year before, despite increased sales resulting from the launch of Dunlop brand tire sales in Europe at the beginning of the year.

Market conditions, SRI said, “remained sluggish and geopolitical tensions in the Middle East weighed on demand.”

In the local Japanese market, OE volumes were higher than the year before, despite a decline in car production due to factors such as the war in the Middle East.

SRI linked the growth to securing “a high market share” in new models.

In the Japanese replacement market, volumes grew year-on-year, helped by “strong sales of summer tires and Synchro Weather all- season tires.”

In the overseas OE market, volumes fell below the level of the same period the year before, “due to stagnant sales of Japanese car manufacturers in China.”

In addition, the Middle East conflict impacted demand in Asian countries such as Thailand and Taiwan.

Replacement demand in overseas market was mixed with volumes flat in Asia-Oceania but significantly up in Europe, where the group launched its sales of Dunlop tire brand as of January.

In the North America, volumes declined year-on-year, due in part due to sluggish market conditions, while South America volumes were negatively impacted by imports from outside the region.

SRI’s sports business reported a 3.1% year-on-year increase in first half revenue Yen66.6 billion, but business profit decreased 7.2% to Yen3.7 billion.

Industrial and other products business reported a decline both in sales and earnings, with business profit down 7% year-on-year to Yen1.9 billion, on 2.6% lower sales of Yen18.7 billion.

The unit saw sales in civil works and marine products, medical rubber products, vibration control dampers, and rubber gloves increase during the period.

The gain, however, were offset by declines in sales of architectural flooring, rubber parts for office equipment, and sports artificial turf.

Business profit also fell mainly due to the decline in sales of rubber parts for office equipment and artificial turf, as well as the effects of soaring raw materials prices of rubber gloves, following the war on Iran.