KOBE, Japan — Sumitomo Rubber Industries Ltd. reported a fivefold increase in operating profit for the quarter ended March 31 on 12% higher revenue, spurred by double-digit business recoveries in the firm's international units.
Operating profit jumped 466.1% to $147 million on sales revenue of $2.02 billion, SRI reported, raising the operating ratio six points to 7.3%. Net income was $100.7 million, versus a loss a year ago.
Sumitomo said its results rebounded markedly against the year-ago quarter despite a "severe" business environment that includes the negative effects of the rising prices of natural rubber and petroleum-based raw materials as well as higher shipping costs.
On the more positive side, the export environment improved due to the weakening of the yen against other currencies and a recovery trend in some markets.
As a result of the positive first-quarter results and the firm's belief that revenues and business profits are expected to exceed the previous forecast due to the rapid recovery in regions such as North America, mainly in the tire business, SRI revised upward its forecast for fiscal 2021.
The Kobe-based company's revised 2021 earnings forecast is 9% greater than that issued in February and 21% higher than the 2020 figure. Sales are expected to exceed the February projection by 4.6% and be 15% higher than the 2020 revenue.
In the firm's tire business, business profit jumped 459.4% to $124 million on 10.5% higher sales revenue of $1.7 billion, based heavily on recoveries in China and North America. Domestically, OE business fell but replacement market revenue recovered.
SRI's sports business generated 34.4% higher sales during period, which allowed the unit to reverse a 2020 loss into earnings this year.
SRI reported revenue from sales outside of Japan jumped 16.7% to $1.35 billion, or two-thirds of overall sales.
Business in Asia — which experienced the effects of the COVID-19 pandemic before most of the rest of the world — rebounded the most, 40% to $386 million. Revenue in North America was up 13.6% to $401 million.