Sumitomo reports strong 2021, cautious for 2022

KOBE, Japan—Sumitomo Rubber Industries Ltd. (SRI) reported double-digit growth in sales and earnings in fiscal 2021, but the company is cautioning that rising operating costs will impact earnings potential significantly in 2022.

For the year ended Dec. 31, Sumitomo's operating profit jumped 27 percent to $447.8 million on 18.4 percent higher sales of $8.52 billion, yielding an earnings ratio of 5.3 percent. Net income rose 30.4 percent to $268.4 million.

For the current fiscal year, SRI said it expects rising costs for raw materials and transportation/logistics, combined with uncertain economic outlooks in certain markets, will cut operating income by 60 percent or more, even as the company sees sales rising by over 13 percent.

SRI said the business environment of the past year was impacted predominantly by soaring freight and raw materials costs, while recovering demand in the U.S. and European markets and a weakening of the yen against other currencies aided sales.

To deal with these conditions, Sumitomo focused on developing and expanding sales of high-performance products and maximizing the effects of its various manufacturing and sales bases.

SRI's tire business generated only a modest gain in operating earnings (up 1.1 percent) to $377 million on 16.9 percent higher sales of $7.24 billion, cutting the operating ratio nearly a point to 5.2 percent.

SRI attributed its tire unit sales gain primarily to higher replacement market demand for its products in Asia/Oceania and Europe as well as in its domestic market. OE-related business was down in nearly all markets due to lower vehicle production tied to the global shortage of semiconductors, etc.

In the Americas region, business was greatly affected by the tight supply-and-demand situation of shipping containers, in addition to soaring freight costs. One bright spot was strong sales of the Wildpeak series for SUVs in North America.

Despite the headwinds, revenue in North America jumped 27.5 percent to $1.82 billion, SRI's figures show, split roughly 88/12 tires/non-tire products.