KOBE, Japan — Sumitomo Rubber Industries (SRI) reported recovery in 2023 that it said was driven by higher sales and "significantly" lower costs.
The Japanese tire and rubber group posted a 250% year-over-year increase in business profit to $552 million, on 7.2% higher sales of $12 billion, SRI announced Feb. 14.
The economic environment during the fiscal year continued to recover, said SRI, despite high levels of inflation in certain regions and drastic interest rate hikes.
SRI noted conflicts in Ukraine and the Middle East, as well as economic stagnation in some regions, impacted the overall business environment. SRI, however, said "significant reduction" in freight costs and a lull in the soaring raw material prices and energy costs helped it "considerably improve" profits compared to 2022.
Breaking down segment performance, SRI said its tire business increased revenue 7.1% year-over-year to $7.1 billion, while business profit surged 416% to $452 million.
In the domestic OE market, SRI said sales "significantly exceeded" the levels of last year, noting that the automotive industry recovered from the chip shortage crisis. In the domestic replacement market, however, sales slightly declined due to sluggish shipments in the third quarter, affected by the price increases of winter tires in July, and a warm winter.
In the overseas OE market, sales were on par with last year, reflecting increased sales in Europe and the U.S., as well as declines in China and Indonesia.
In the overseas replacement markets, demand in Asia and Oceania remained "at a low level" but sales in China exceeded the previous year, when orders significantly declined due to the impact of COVID-19. In Indonesia and ASEAN (Association of Southeast Asian Nations), sales fell year-on-year, as volumes declined "due to the impact of the deteriorating market conditions."
Volumes in North America fell below the prior year's level, but sales of flagship Falken-brand tires exceeded the 2022 levels with the strong performance of the Wildpeak light truck series.
In Europe, volumes fell below the level of last year as the "tire replacement frequency was sluggish" and consumer purchasing power slowed down due in part to the prolonged inflation.
