KOBE, Japan — Sumitomo Rubber Industries Ltd. (SRI) generated double-digit earnings growth in fiscal 2024, thanks in part to the appreciation of the yen against the U.S. dollar and the euro in the final quarter.
Business profit rose 13.2% to $581 million on 2.9% higher sales of $7.99 billion, yielding a slight gain in the operating ratio to 7.3%. The revenue gain came despite lower unit sales.
Net earnings dropped 73.4% to $65.1 million.
SRI is projecting 3.2% sales growth during fiscal 2025, as the full impact of its regaining rights to the Dunlop brand i— North America and Europe won't be felt until fiscal 2026 and beyond. That deal represents an annual revenue boost of $500 million or more.
Sumitomo Rubber said it expects revenue in North America and Australia to benefit in 2025 from the Dunlop deal, while its decision to close its sole U.S. factory, i— Tonawanda, N.Y., will offset some of the gains.
Separately, SRI expects moves it's taking to accelerate sales of premium tires will help improve earnings.
The Dunlop brand transition license agreement calls for Goodyear will continue to manufacture, sell and distribute Dunlop consumer tires in Europe through at year-end 2025, with the Akron-based tire maker paying a royalty to SRI during this period on Dunlop sales. Goodyear will retain all profit from those sales.
SRI linked the fiscal 2024 improved results to the positive impact of exchange rates in the fourth quarter as well as the effects of "cost containment" measures.
During the fiscal year, SRI said, the economic environment continued to recover gradually, though some regions remained at a standstill.
While the Japanese economy is expected to continue to recover gradually, SRI noted a risk of "deceleration" in overseas economies which could impact its domestic business.
Such risks, it said, include the impact of continued high interest rates in the U.S. and Europe, the stagnation of the real estate market in China, and an uncertainty of the situation in the Middle East.
On the performance of its operations, SRI said tire volumes declined during 2024 due to production halts by vehicle makers as well as market stagnation caused by inflation. The effects of foreign exchange, however, "considerably improved" profits compared with the year before.
SRI's tires business unit posted a 19.8% increase in operating earnings to $509.3 million on 4% higher sales of $6.91 billion.
The revenue gain was buoyed by strong sales in North America (up 9.1% to $1.64 billion) and Europe (up 7.6% to $1.27 billion). Revenue gains in both regions came despite lower unit sales volumes, SRI said,
Replacement tire sales in Europe dipped due to short supply of Falken-branded all-season tires, while volumes overall also declined in North America with the exception of the Falken Wildpeak line and motorcycle tire sales.
In Japan, OE market sales fell "significantly below" the level the previous year, due mainly to a typhoon in August 2024 and production cutbacks at some automotive OEMs.
In the domestic replacement market, overall volumes were lower than the previous year due in part to "having strategically reduced low-profit products."
In the overseas OE market, sales "substantially declined" year-on-year as Japanese OEMs reduced production in Asia.
