Sumitomo Rubber results buoyed by currency gains

Kobe, Japan – Sumitomo Rubber Industries (SRI) has finished 2024 on a strong note, due in part to the appreciation of the yen against the US dollar and the euro in the final quarter of the year.

Full-year earnings came in at Yen88 billion (€547 million), up 13.2% year-over-year and 9.9% above the group’s previous estimate in November 2024.

Sales for 2024 came in at Yen1,210 billion, up 2.9% compared to the year before and 1% above the earlier forecast, SRI announced 13 Feb.

The Japanese group linked the improved results to the positive impact of exchange rates in the fourth quarter as well as the effects of ‘cost containment’.

During the fiscal year, SRI said, the economic environment continued to recover gradually, though some regions remained at a standstill.

While the Japanese economy is expected to continue to recover gradually, SRI noted a risk of “deceleration” in overseas economies which could impact its domestic business.

Such risks, it said, include the impact of continued high interest rates in the US and Europe, the stagnation of the real estate market in China, and an uncertainty of the situation in the Middle East.

On the performance of its operations, SRI said tire volumes declined during 2024, due to production halts by automotive OEMs as well as market stagnation caused by inflation.

The effects of foreign exchange, however, “considerably improved” profits compared to the year before.

Overall, ‘tires’ business posted a 20% year-on-year increase in earnings to Yen76 billion, on 4% higher sales of Yen1,046 billion.

In the domestic OE market, sales fell “significantly below” the level the previous year, due mainly to a typhoon in August 2024 as well as production cutbacks at some automotive OEMs.

In the domestic replacement market, overall volumes were lower than the previous year due in part to “having strategically reduced low-profit products.”

In the overseas OE market, sales "substantially declined" year-on-year as Japanese OEMs reduced production in Asia.

Replacement demand in the overseas replacement also fell slightly over the previous year, due in part to market stagnation in China.

Replacement tire sales in Europe dipped due to short supply of Falken-branded all-season tires.

Volumes also declined in Americas but the sales of a flagship Wildpeak series increased and motorcycle tire sales performed steadily.

In South America, sales exceeded the level of the previous fiscal year.

SRI’s sports business saw a slight year-on-year decline in revenue to Yen125 billion while earnings fell 37% to Yen7.8 billion.

SRI linked the decline in profits to lower sales within its “golf goods”, due to “deteriorating market conditions in South Korea and intensification of competitive environments in North America.”

In the tennis goods markets, sales were up year-on-year, helped by strong performance in Japan and North America and in spite of decreased sales in Europe.

In ‘industrial and other products business’, revenue dropped 10.3% year-on-year to Yen40 billion, while earnings increased 132.3% to Yen3.7 billion.

Sales of rubber parts for medical applications decreased as SRI conducted a stock transfer of its European subsidiary at the end of January 2024.

The group said it also had to “temporarily halt” operations at its Japanese plant due to construction to improve production capacity.