KOBE, Japan — Sumitomo Rubber Industries Ltd. (SRI) has revised upward its full-year fiscal 2023 earnings forecast following a strong half-year performance.
SRI said it expects its full-year operating income to finish the year nearly 19% ahead of earlier forecasts, in large part due to the positive effects of price increases and foreign currency translations, and despite lower automotive production due to microchip shortages.
If realized, the 2023 earnings would be more than double those reported in fiscal 2022.
Full-year revenue is expected to reach $8.52 billion, up nearly 1% from an earlier forecast and roughly 6.5% above the fiscal 2022 revenue, SRI said.
For the six months ended June 30, SRI reported 20.4% higher business profits of $124.4 million on 9.6% higher sales of $4.09 billion, raising the operating ratio slightly to 3%. Net earnings fell 52.3% to $59.7 million.
SRI said profits exceeded the previous forecast partly due to an easing of raw-materials prices and an improvement of the sales mix by focusing on advanced tires.
SRI's tires business reported a 27.4% gain in business profit for the half year to $71.1 million on 9.3% higher revenue of $3.43 billion. The operating ratio increased one point to 3%.
The increase was linked in part to improved OE sales in Japan, amid an easing of the impact of microchip shortages on the domestic automotive industry.
In the Japanese replacement market, sales of summer tires were on a par with levels of the prior-year first half, while winter tires registered "strong sales." Domestic sales were also positively impacted by a temporary surge in demand in the run-up to price hikes.
In the overseas OE market, sales fell below 2022 levels, as car production remained under pressure due to microchip shortages. Despite that, sales in many regions exceeded prior-year levels, as markets recovered from a COVID slump, reported SRI.
In the overseas replacement market, revenues rose in the Asia and Oceania region, with demand in China gradually recovering after the lifting of zero-Covid policies.
In the Americas, sales volumes fell in North America due in part to "control of sales of low-profit products." However, sales of flagship Falken tires exceeded the 2022 levels, SRI added.
Overall, tire-related revenue in North America was up 3.7% to $767 million.
In Europe, volumes declined as a result of slow demand for winter tires due to a mild winter. However, in Southeast Asia, sales fell below first-half 2022 levels amid an "overall sluggish market."