KOBE, Japan—Sumitomo Rubber Industries Ltd. suffered a 45.2-percent drop in operating income for the quarter ended March 31, despite 10.5-percent higher sales revenue.
SRI cited "unrealized" profits and other volume/mix issues along with higher raw materials costs for the drop in earnings.
Operating profit fell to $58.7 million on revenue of $2.09 billion, dropping the operating ratio three points to 2.8 percent. Net earnings fell by nearly two-thirds to $30.3 million.
SRI noted in its earnings statement that the first quarter played out amid concerns over economic growth, due to the geopolitical tension reflecting the war in Ukraine, high levels of inflation in certain regions and drastic interest rate hikes.
For the rest of fiscal 2023, SRI said it expects earnings to exceed the previous forecast because of signs that rising freight and raw materials costs are peaking and starting to reverse direction. That led management to revise the firm's consolidated financial results projection upward over the forecast issued in February.
Sales revenue, on the other hand, is expected to fall below the previous forecast mainly because the impact of production cuts at vehicle makers, which are still dealing with shortages of semiconductors.