Sumitomo’s earnings drop for first half

KOBE, Japan—Sumitomo Rubber Industries Ltd. suffered drops in operating and net income during the six months ended June 30 as price/mix and foreign exchange offset gains the company reported in lower materials costs.

Operating income fell 16.6 percent to $243.4 million while net earnings were off 8.4 percent to $166.4 million. Sales were up 2.7 percent to $3.24 billion.

Sumitomo’s tire business reported an operating income drop of 12.8 percent to $229 million on nearly 1 percent higher sales of $2.76 billion.

The company said higher sales overseas offset lower revenue in Japan, where both the original equipment and replacement markets suffered for a variety of market and tax-related reasons. International sales grew 8.3 percent during the period, despite low consumption in markets such as Russia, Brazil and Indonesia, and severe market condition due to the effect of the depreciation of local currencies.

SRI’s overall sales in North America jumped 30.3 percent, to $476 million.

Sumitomo prefaced its remarks by noting the global economy was weak as a whole, with the U.S. economy expanding at a moderate pace and Europe showing signs of economic recovery despite a downturn risk owing to the Greek debt crisis.

Elsewhere, SRI said, there was further slowdown in economic growth in China and economic stagnation became apparent in emerging markets such as Russia, Brazil and Indonesia.

Looking at factors affecting SRI directly, the company noted that natural rubber and crude oil prices remained at low levels and the depreciating yen helped improve exports.

Sumitomo’s earlier forecast for 2015 remains unchanged—modest sales and earnings increases of 7.5 and 4.3 percent, respectively, leaving the operating ratio essentially unchanged at 10 percent.