Sumitomo Rubber sharpens focus on Dunlop brand, non-tire in 10-year strategy

Kobe, Japan – Sumitomo Rubber industries (SRI) has unveiled its long-term management strategy (Rise 2035), which will see the group intensifying its focus on tire 'premiumisation' and its non-tire business.

Short for 'rubber/resiliance/reliable, innovation, solution, evolution', the strategy prioritises investment in certain target areas to achieve short-term and long-term , said SRI 7 March.

The growth, it said, will be supported by the development of its recently acquired Dunlop brand, which covers premium tires in almost all global regions as well as sports products.

Goals, it said, are to create “new value experiences derived from rubber,” strengthen brand-management and create a more resilient organisation that supports the mobility, sports, medical-care and consumer industries.

Portfolio optimisation

Much of SRI's 10-year plan is centred on growing the proportion of premium tires to 60% of total tire sales, from 40% currently; while building new “revenue pillars” in non-tire and other growth areas.

Overall, the Japanese group aims to see 70% of its earnings derived from tires by 2035, with the other 30% coming from non-tire developments.

The ratio currently stands at 87% tires and 13% non-tire, according to SRI.

To achieve these goals, SRI said it will tap into its 'visualisation' technology to enhance “rubber-value creation”.

These will include further investment in process R&D, and the establishment of a ‘quantum computer innovation centre' by 2028 in Japan and a North America 'innovation lab’ by 2026.

SRI will also promote the use of ‘cutting-edge’ technology, while increasing collaborations with universities and startups as well as pursuing M&A activities.

In rubber innovation, SRI said it would leverage its ‘active tread’ technology, which enables tire rubber to adapt to changes in road surfaces and driving conditions.

A further target is to develop differentiated 'active tread' premium products using new “compounding, design, and development process technologies.”

Manufacturing strategy

To deliver technological advances, SRI is adopting an ‘in-house factory’ manufacturing strategy.

The concept is to upgrade parts of an existing plant with advanced equipment to enable high-tech manufacture without halting the entire production operation.

SRI expects to carry out the upgrades across its production facilities in Japan and Thailand, which it has designated for exports, particularly to North America.

The group will, therefore, invest in increasing the production of large-diameter tires for SUVs and pick-up trucks at these locations.

Other bases, including plants in China, Indonesia, South Africa, Europe and South America will be producing tires for local markets.

Business targets

In the period between 2025 and 2027, SRI said it aimed to strengthen the Dunlop brand, through 'unification of Dunlop identity', and improve profitability by promoting premium tires.

In 2028-30, it will promote global brand-management centered on Dunlop, and then leverage established brands, focusing on cash-flow generation and securing a strong market position.

For the second half of the 10-year period, SRI said it aimed to expand its non-tire “growth businesses” and transform its portfolio, with a focus on “continuous innovation in products and services.”

In financial terms, the group said it had achieved its medium-term targets ahead of schedule and therefore revised its targets for profit margin from 7% to 10% in 2027, aiming for 15% by 2030-35.

SRI expects structural reforms and cost-cutting in management processes, as well as the Dunlop acquisition to help it achieve the margin.

The group has also targeted an increase in the return-on-equity to 12% in the long-term, with the mid-term goal 10% by 2027.

SRI also revised up targets for return-on-invested-capital (ROIC) from 6% to 8% for 2027, targeting 10% for 2030-35.

In Rise 2035, we aim to "continue to provide everyone with new experience value created from rubber," leveraging our strengths of "rubber and analytical technology," said SRI.