SRI delivers strong earnings growth amid ‘gradual’ economic recovery

Kobe, Japan – Sumitomo Rubber Industries (SRI) has reported significant growth in first half business profit, as the economic environment “continued to recover gradually.”

Business profit increase 148% year-on-year to Yen24 billion (€150 million) on 4.6% higher sales of Yen587 billion, The Japanese group reported 7 Aug.

Though some regions remain at “a standstill”, SRI said it expected the Japanese economy to continue to recover steadily with the improvement in the employment and income environment.

Furthermore, foreign exchange impact on earnings “considerably improved” during the six-month period, offsetting lower tire volumes caused by automotive production cuts.

Breaking down segments, SRI said its Tires business posted a 248% year-on-year increase in first-half business profit to Yen34 billion, on 5.3% higher sales of Yen496 billion.

In the domestic OE market, sales fell "significantly below" the level of the same period last year, as some of the car makers reduced production in Japan.

In the domestic replacement market, SRI said first half volumes fell year-on-year due to a high comparison base last year, when there was a “rush demand” before price hikes.

In the overseas OE market, sales "substantially declined" mainly to Japanese car makers in the Asia region.

Overseas replacement market was buoyed by higher sales in Europe as demand grew for all-season tires and other products such as the Falken brand.

In Asia-Oceania region, China and Southeast Asia performed weakly due to “market stagnation”, while Americas reported lower sales due to stronger comparison base last year.

In the sports business, revenue increased 5% year-on-year to Yen71 billion, and business profit grew 8.3% to just under Yen7 billion for the first half.

Here golf goods market reported higher year-on-year sales while tennis goods declined due to “worsening market conditions in Europe”.

SRI’s ‘industrial and other products business’ reported an 11.8% drop in first half in sales to Yen19 billion, while business profit increased 49.3% to Yen1.3 billion.

Sales of medical rubber parts decreased as the group conducted a stock transfer of its medical subsidiary in Europe earlier in the year.

Medical revenue was also impacted by a “temporarily halt” in domestic operations to prepare factory equipment for future production increases.

Sales were up year-on-year for infrastructure products and rubber parts for office equipment, but vibration control business and daily life supplies reported a drop in revenue.