KOBE, Japan—Sumitomo Rubber Industries Ltd. generated 17.1 percent higher operating income for the fiscal year ended Dec. 31 despite 11.5 percent lower sales, driven down primarily by pandemic-induced business interruptions in the first half of the year.
Operating earnings rose to $362.5 million on sales of $7.41 billion, yielding an operating ratio of 4.9 percent, up a point over that from fiscal 2019. Net income was up 87.2 percent to $211.7 million.
Based on conditions prevailing in early 2021, Sumitomo is forecasting a rebound in sales this year of 10 percent and continued gains in earnings of 11 percent. Within this forecast, SRI sees the tire and industrial products businesses growing by 9 percent, and the sporting goods business by 19 percent.
SRI's tire business reported double-digit drops in both sales and earnings. Operating income fell 12.3 percent to $383.6 million on 11.4 percent lower sales of $6.37 million.
The company's sales revenue declined in all regions except North America, where SRI reported sales were essentially on par with 2019 at $1.46 billion.
SRI noted that its business outside of Japan declined sharply in most markets in the first half of the year due to "largescale lockdowns" in many areas to help prevent the spread of COVID-19.
The second half of the year was a different story, SRI said, although the pace of market recovery varied by region. The firm worked to expand sales of high-performance products mainly in regions such as China and North America, where market conditions had recovered quickly.
SRI said the business environment remained "extremely severe" throughout most of the year, causing the sales environment to "deteriorate significantly." In addition, the currencies of emerging countries have depreciated and the prices of natural rubber and petroleum-based raw materials fell and remained low.
Under these circumstances, SRI said it pursued various initiatives based on the premise of the "With Corona" era to reinforce its business foundations and improve profitability with the goal of accomplishing the New Mid-Term Plan, which sets 2025 as the target fiscal year.