While tire sales increased by 9% in the first quarter of 2023 for Sumitomo Rubber Industries Ltd., the company’s profit from those tire sales totaled just 1.9 billion yen, down from 10.4 billion yen in the first quarter of 2022.
The company’s profit from its tire sales fell 81.5% for the first three months of the year.
Tire sales totaled 229.7 billion yen, up from 210.8 billion yen in 2022.
SRI pointed to continued economic uncertainty, including tensions related to the war in Ukraine, high inflation in some regions and “drastic” interest rate hikes in response to those higher prices. “The Japanese economy, while also expected to recover as the effects of COVID-19 subside, has witnessed rising uncertainty, including trends in foreign exchange and prices.”
The company noted “there has been a lull in the impact of soaring freight costs and raw material prices,” and it has focused on projects that “reinforce our business foundation” with the goal of meeting its mid-term plan for 2027. “At the same time, we worked to strengthen our competitive advantage through such efforts as developing and expanding sales of high performance products that meet the needs of customers.”
In Japan, SRI noted automobile production remains slowed due to semiconductor availability, while its winter tire sales exceeded those of the previous year and showed “strong market acceptance.”
Outside of Japan, SRI’s replacement tire business saw a drop in sales in Asia and Oceania, while Thailand and Indonesia sales were up for the period. Volumes were lower in Europe because “demand for tires is somewhat slowing down due in part to the growing inflation.”
In the Americas, SRI says sales of the WildPeak series helped the company “maintain momentum” in North America. There was also “robust local demand” for SRI’s products in South America, the company said.
SRI did lower its sales forecasts for the first half and full year of 2023 “mainly because the impact of production cuts at auto manufacturers which stemmed from the shortage of semiconductors continues longer than we expected.” For the first six months, SRI expects tire sales to total 458.0 billion yen, down from 472.5 billion yen. For the year, the company revised its tire sales projections to 988.0 billion yen, down from 1.0 trillion yen.
The company increased its forecasts of business profit, operating profit and profit attributable to the owners due to less pressure from “soaring freight costs and the rising prices of raw materials.”
