KOBE, Japan—Sumitomo Rubber Industries Ltd. suffered double-digit declines in operating and net income for the quarter that ended March 31 on a combination of factors including currency exchange losses and pricing and volume/mix issues.
Sales also declined by 2.9 percent to $1.55 billion, but Sumitomo said it is sticking with its fiscal 2015 results forecast from February—a 4 percent gain in operating income and 7 percent rise in sales.
First quarter operating and net income fell 34.4 and 29.3 percent, respectively, to $101.7 million and $64.5 million, according to the company. As a result, the operating ratio fell 3 percentage points to 6.5 percent.
In its commentary, SRI said its results suffered from a “weak” overall global economy, which was affected by the stagnant European economic recovery and slowing Chinese growth. A lone bright spot was the continued U.S. expansion.
SRI said factors affecting the business environment in its key sectors included “intensified” competition in overseas markets, weakening conditions in many markets and the yen depreciation. Offsetting these to an extent were low natural rubber prices.
The company's tire business also suffered a double-digit drop in operating profits—down 27.9 percent to $100 million, on 2.9 percent lower sales of $1.33 billion.
SRI's domestic original equipment and replacement sales fell due to lower automobile production volumes on the OE side and because of lower winter tire sales and the lingering effects of a above-normal sales in the fourth quarter of 2014 tied to a consumption tax rate change.
Overseas replacement market sales were up due primarily to higher sales volumes in the U.S., which offset lower volumes in Europe, Russia and Brazil. Overseas OE volumes rose on an expansion of business with car makers in Europe, North America and Thailand.
SRI's overall sales in North America—tire and non-tire businesses combined—jumped 27.9 percent to $213.9 million. Sales in Europe, by contrast, fell 15 percent.