Despite double-digit growth in tire sales last year and record high company sales, operating profit at Sumitomo Rubber Industries Ltd. (SRI) fell by almost 70% for the 12-month period.
The company’s overall sales grew by 17.4%, to nearly 1.1 trillion yen, up from 936 billion yen in 2021.
Tire sales grew by 18.2%, to more than 939 billion yen, up from 795 billion yen at the end of 2021.But the company’s profits from its tire business fell by 70%, to 12 billion yen, down from 41 billion yen a year ago.
SRI’s operating profit was just shy of 15 billion yen, down 69.5% from 49 billion yen in 2021.
The company pointed to several uncertain economic pressures that contributed to its 2022 results, including the ongoing recovery from the effects of COVID-19, “high inflation and drastic interest rate hikes,” global tensions due to the war in Ukraine, plus uncertain foreign exchange rates. “Soaring freight costs and rising prices for raw materials and energy costs” placed additional pressures on the business.
SRI says its original equipment business, both in Japan and abroad, was affected by ongoing production issues due to the global shortage of semiconductors. Outside of Japan OE tire sales exceeded 2021 levels.
In North America, the company said sales volume in the replacement market declined in 2022, though “we were able to improve our product mix as a result of cutting back on the sales of low-profit products and taking other measures, in addition to proactively raising our prices.”
Tire sales in North America totaled 214.6 billion yen, up 23% from 174.4 billion yen in 2021. Replacement volumes in North America were 82% of 2021 totals.
For 2023, SRI expects overall sales to rise 9.2%, to 1.2 trillion yen. In the first half of the year, the company is forecasting sales growth of more than 11%, to 570 billion yen. The company expects tire sales to total 1.0 trillion yen in 2023.
