KOBE, Japan—Sumitomo Rubber Industries Ltd. suffered double-digit drops in net income for the quarter and half-year ended June 30, but is still raising its earnings forecast for the full fiscal year.
Net profit decreased 31 percent to about $113.7 million for the half year. The firm cited increases in raw materials prices as the primary factor for the decline. Sales increased 12.4 percent to $3.69 billion, driven by a 13.1 percent increase in its tire business, which reported sales of $3.17 billion.
Its non-tire units also reported increased sales for the six-month period. Its sports unit, which consists of sporting goods such as golf clubs, golf balls and other golf goods, grew by 4.4 percent to $346.8 million. Its industrial/other products unit, which consists of high-performance rubber products including vibration control dampers, increased by 16.8 percent to $176.3 million.
SRI attributed the solid sales performance to better-than-expected gains in the domestic replacement market, increased aftermarket sales in North America and Europe and solid OE business in Japan, China, Brazil and Turkey. The acquisition of the British tire sales company Micheldever Group Ltd. in February also contributed to the increased sales.
For the quarter, all segments reported an increase in sales combining for a 14.5 percent increase in sales to $1.93 billion. Its tire unit up 15.3 percent to $1.65 billion, industrial/other products up 15.2 percent to $87.9 million and its sports unit up 8.2 percent to $192.2 million.
Sumitomo revised its earnings forecast up 26 percent compared to projections from May based on the expected easing of raw materials prices, stable currencies and gradual economic recoveries in key markets during the second half of 2017.