Sumitomo Reports Q1 Profits Decline Despite Increase in Sales Revenue

KOBE [Japan]: Sumitomo Rubber Industries ltd. reports a 45.2% drop in operating income for Qs1 despite higher sales revenue of 10.5%. unrealized profits, volume/mix issues, and elevated raw material costs contribute to the earnings decline. Operating ratio drops three points to 2.8%, while net earnings fall by nearly two-thirds to $30.3 million.

Geopolitical tensions, inflation & interest rate hikes create concerns over economic growth in Q1. However, positive signs of declining freight and raw material costs lead to an upward revision of consolidated financial results projection for the rest of fiscal 2023 compared to earlier forecast issued in February.

Vehicle makers' production cuts due to semiconductor shortages likely to affect sales revenue negatively, leading to a downward revision of previous forecast. SRI's Q1 tire business profit plummets 81.5% to $14.6 million despite 9% rise in sales revenue to $1.74 billion.

Operating ratio drops to 0.8% from 5% a year ago. Lower sales in both OE and replacement markets reported in most regions.

SRI's North America tire business unit records a 2.5% revenue increase to $373 million. SRI's recent five-year business plan introduces the possibility of additional production capacity in North America from 2026 onwards. The initiative aims at boosting profitability and performance.

In Asia and Oceania, sales decline, except in China, Indonesia, and Thailand as covid-19 restrictions ease. in Europe, slowing demand for tires attributed to growing inflation. However, the Americas region reports strong sales for SRI's SUV/light truck tire series in North America, and solid sales in South America fuelled by robust local demand.