Tire volumes for Sumitomo Rubber Industries Ltd. were down slightly in the first half of 2024, but the company has recorded a 248.5% increase in profit on those tires, which it attributes in part to favorable exchange rates.
In the second quarter, Sumitomo says its tire business set records for both sales revenue and business profit — with gains in the replacement tire business in Europe and the original equipment market in North America.
And while the company also has sports and industrial sectors in its makeup, the profit gains in tires so far in 2024 have been far greater than those in the other sectors. Still, in the second quarter, Sumitomo says its overall sales revenue, business profit, operating profit and profit attributable to the owner of the parent all achieved new records. And the company has revised its 2024 forecast to account for a higher overall profit — $282.6 million, compared to the previous $261.9 million.
First six months
For the first half of 2024, Sumitomo recorded overall sales of $3.64 billion, up 4.6%. Tire sales totaled $3.08 billion, a gain of 5.3% year-over-year.
In the same period, the company recorded business profit of $262.8 million, up 147.6% from the prior year. The tires unit profit totaled $211.3 million during the first six months.
Sumitomo noted the economy is recovering at different paces around the world.
“While the Japanese economy is expected to continue to recover steadily with the improvement in the employment and income environment, there is a risk that the deceleration in overseas economies may depress the domestic business conditions, which is due primarily to the impact of continued high interest rates in the U.S. and Europe and the stagnation of the real estate market in China, and an uncertainty of the situation in Middle East as well as the trends in foreign exchange, interest and prices.”
The company says the lower tire sales volume, which was “slightly lower” than the first half of 2023, “stemmed from the impact of production halted at some automobile manufacturers and the market stagnation due mainly to inflation, the effect such as foreign exchange considerably improved the profit as compared with he same period a year ago.”
Regional tire results
Sumitomo provided a glimpse into each of its important geographic regions:
Japan: Tire sales for the OE market fell “significantly” below the level of the prior year as some automakers lowered production. In the replacement market, sales volume declined “due to rush demand before the prices increase in the same period of the last year, the market share has improved as sales figure of winter and summer tires outperformed the industry.”
Asia: The OE tire market sales dropped “mostly for Japanese automobile manufacturers in the Asian region.” In replacement tires, market stagnation resulted in low sales in China. In Southeast Asia, sales were down “amid the overall sluggish market.”
Europe: Replacement sales exceeded previous year levels, which Sumitomo credited in part to sales of all-season tires and other products in the Falken lineup.
America: Replacement sales were down compared to the prior year, which was a strong period for comparison purposes. The company also noted it did see “strong sales” of its flagship Falken WildPeak line following “new products (that) were released at the beginning of this year, and robust motorcycle tire sales.”
Also noteworthy is that for the first six months of 2024, Sumitomo notes that when looking at sales revenues based on where customers are located — tire sales in North America outpaced tire sales in Japan. In the five years of data Sumitomo displayed in its latest financial report — from 2000 to 2024 — it’s the first time another region’s tire sales outpaced that of the company’s home base. ($760.6 million tire sales in North America, compared to $722.7 million in Japan.)
South America: Sales were down slightly “although we seek to expand sales in the environment where import products increased int eh market against the backdrop of a decline in ocean freight.”
