Sumitomo Rubber links profitability slide to global economic woes 

Tokyo - Sumitomo Rubber Industries Ltd (SRI) has posted a gloomy assessment of current business prospects alongside 2022 figures showing a sharp decline in group profitability

“The outlook of the global economy, despite signs of recovery from the effects of Covid-19, continued to raise concerns over economic growth,” commented the Japanese group. 

As well as the impact of the war in Ukraine, inflationary trends and interest rate hikes, SRI noted adverse trends around foreign exchange and prices and soaring costs for freight raw materials and energy.

In 2022, SRI increased sales by 17.4% year-on-year to Yen1,098,664 million (€7,681 million), but operating profit fell 69.5% to ¥14,988 million, the company reported 14 Feb.

Sales revenue in SRI’s tire business increased 18.2% year-on-year to Yen939,941 million, despite “sluggish” sales in the domestic OE market, linked to the global shortage of semiconductors. 

In the domestic replacement market, while sales had been strong earlier in 2022, a dip in consumer sentiment due to late snowfall and rising prices was seen toward the end of the year. 

In the overseas OE market, sales exceeded prior-year levels, as orders received recovered as the impact of Covid-19 lessened.

SRI’s overseas replacement sales fell below the level of the previous fiscal year in the Asia and Oceania region, particularly due to sluggish sales in China as a result of its zero-COVID policy and other factors. 

In Europe, sales volumes fell below 2021 levels, with SRI also noting a slowdown in demand for tires due in part to the growing inflation. 

In the Americas region, while sales volume in North America declined, SRI improved its product-mix, largely by cutting back on the sales of low-margin products and proactively raising our prices. 

Overall, SRI concluded that “sales revenue in the tire business exceeded the level of the previous fiscal year, but business profit decreased from the previous fiscal year.”

Meanwhile, sales revenue in the Japanese group’s Sports Business increased 15.0% year-on-year to Yen116,597 million, helped by strong demand in the golf and tennis goods markets.

At SRI’s Industrial and Other Products Business, sales increased 6.5% to Yen42,126 million, reflect strong demand for rubber parts for medical devices and office equipment. Sales of vibration control system and infrastructure products also increased. 

However, sales of ‘daily life supplies’ particularly as disposable gloves revenues declined due to intensified competition, among other factors, noted SRI.