KOBE, Japan—Sumitomo Rubber Industries Ltd. suffered a 10.6 percent drop in operating income for the year that ended Dec. 31 on 1.3 percent higher sales.
Sumitomo attributed the earnings decline, to $636.9 million, to increased expenses in almost all categories, which offset more than $300 million in reduced costs for raw materials. Net income was up 4.6 percent to a record $461.4 million, due to extraordinary income associated with the dissolution of the company's global alliance with Goodyear.
Sales were $7.01 billion. The operating ratio fell 1 percentage point to 9 percent.
Sumitomo described the overall global economy in 2015 as “weak … in a generally unstable environment.” Although the U.S. economy continued to expand at a moderate pace, SRI said, there was a sense of uncertainty about the future due to factors including dollar appreciation after the interest rate hike and falling crude oil prices.
During the year, the tire division's operating income fell 6.8 percent to $604.2 million on 0.1 percent higher sales of $6.05 billion. Sumitomo said overseas sales were up in most markets, reflecting volume increases and an appreciating yen; sales in Japan, however, were below 2014 on lower original equipment sales volume and reduced winter tire sales in the face of a warm winter.
Revenue in North America—where the company took over a portion of the Goodyear Dunlop joint venture in the fourth quarter—were up 44.5 percent to $1.1 billion, according to SRI figures.
For fiscal 2016, Sumitomo is forecasting 6 percent higher operating income on 0.3 percent better sales, although it did not elaborate on its reasons for the improvements.
SRI said it will continue to expand sales of high-value-added products, including fuel-efficient tires, while also entering new markets and business fields.