Sumitomo Rubber revises up full-year outlook on strong first half

Tokyo – Sumitomo Rubber Industries (SRI) has revised up its full year forecast following a strong half-year performance.

The Japanese group now expects full-year revenue to come in at Yen1,170 billion (€7.4 billion), up nearly 1% from an earlier forecast of Yen1,160 billion, said SRI in a 7 Aug statement.

Business profit forecast has been revised up to Yen50 billion from the previous Yen44 billion, while operating profit is expected to reach Yen41 billion, nearly 19% above the previous forecast.

SRI attributed the improved outlook to the positive effects of price increases and foreign currency translations, and despite lower automotive production due microchip shortages.

In addition, the group said its profits exceeded the previous forecast partly due to an easing of raw material prices and improvement of the sales mix by focusing on advanced tires.

Over the first six months of 2023, the Japanese group saw “business profit” increase to Yen17 billion, up 20.4% compared to the year before.

Operating profit for the period grew 33.7% to Yen16.8 billion, up from Yen12.5 billion reported in 2022.

Sales, meanwhile, increased by nearly 10% year-on-year during the first half, to Yen561 billion, noted SRI's half-year financial report.

All segments – including tires, sports and industrial parts – saw improvements in both sales and profits, according to the tire and rubber-product maker's 7 Aug review.

At SRI's Tires business, revenues increased 9.3% year-on-year to Yen71 billion, and business profit increased 27.4% to just under Yen10 billion.

The increase was linked in part to improved OE sales in Japan, amid an easing of the impact of microchip shortages on the domestic automotive industry.

In the Japanese replacement market, sales of summer tires were on a par with levels of the prior-year first half, while winter tires registered “strong sales”.

Domestic sales were also positively impacted by a temporary surge in demand in the run-up to price hikes.

In the overseas OE market, sales fell below 2022 levels, as car production remained under pressure due to microchip shortages.

Despite that, sales in many regions exceeded prior-year levels, as markets recovered from a Covid slump, reported SRI.

In the overseas replacement market, revenues rose in the Asia and Oceania region, with demand in China gradually recovering after the lifting of zero-Covid policies.

However, in south east Asia, sales fell below first-half 2022 levels amid an “overall sluggish market”.

In Europe, volumes declined as a result of slow demand for winter tires due to a mild winter.

In the Americas, sales volumes fell year-on-year in North America due in part to “control of sales of low-profit products”.

However, sales of flagship Falken tires exceeded the 2022 levels, SRI added.

In South America, SRI said it “continued to achieve solid sales backed by robust demand.”

At SRI's 'Sports goods' unit, business profit increased 3.6% year-on-year to Yen6.4 billion on sales 11% higher at Yen68 billion.

SRI linked the improvement to strong demand in all segments: golf goods, tennis goods and wellness business.

At the group's 'Industrial and other products' unit business profit increased by nearly 200% to Yen868 billion, on 11.2% higher sales of Yen22 billion.

Here, SRI said, orders increased for rubber parts for medical applications, infrastructure products, and other products, while demand declined for gloves and office equipment.