Recently, Sumitomo Rubber announced its long-term management strategy (Rise 2035), which aims to strengthen its tire "premiumization" and non-tire businesses.
Sumitomo Rubber said the strategy, an abbreviation for "Rubber/Resilience/Reliability, Innovation, Solutions, Evolution," prioritizes investments in certain target areas to achieve short-term and long-term goals.
This growth will be supported by the recent acquisition of the Dunlop brand, with the goal of creating "new value experiences derived from rubber", strengthening brand management and creating a more resilient organization to support the mobility, sports, medical and consumer industries.
01 Portfolio optimization
Much of Sumitomo Rubber's 10-year plan focuses on increasing the proportion of high-quality tires to 60% of total sales from the current 40%; while establishing new "revenue pillars" in non-tire and other areas.
Overall, the Japanese group aims to generate 70% of its earnings from tires and 30% from non-tire businesses by 2035. Currently, the ratio is 87% tire business and 13% non-tire business.
To achieve these goals, the company said it will use its "visualization" technology to enhance "rubber value creation", including further investment in process research and development, the establishment of a "quantum computer innovation center" in Japan by 2028, and an "innovation lab" in North America by 2026.
Sumitomo Rubber will also promote the use of cutting-edge technologies while increasing collaboration with universities and startups, and pursuing mergers and acquisitions.
In terms of rubber innovation, the company said it will leverage its "active tread" technology, which enables the tire's rubber to adapt to changes in road surface and driving conditions.
Another goal is to develop differentiated "active tread" premium products using new "compounding, design and development process technologies".
02 Manufacturing strategy
To achieve technological advancement, Sumitomo Rubber is adopting an "internal factory" manufacturing strategy. The concept is to upgrade existing factories with advanced equipment to achieve high-end manufacturing without stopping the entire production operation.
The company expects to upgrade its production plants in Japan and Thailand, which are mainly used for export, especially to North America.
At the same time, the group will invest in increasing production of larger-size tires for SUVs and pickup trucks in these regions.
Other sites, including plants in China, Indonesia, South Africa, Europe and South America, will produce tires for local markets.
03 Business objective
Sumitomo Rubber said it will strengthen the Dunlop brand by "unifying the Dunlop identity" between 2025 and 2027 and improve profitability by promoting high-end tires.
From 2028 to 2030, it will drive global brand management centered on Dunlop, then leverage well-known brands, focus on cash flow generation and ensure a strong market position.
Sumitomo Rubber said that in the second half of the 10-year plan, the goal is to expand its non-tire growth businesses and transform its portfolio, focusing on continued innovation of products and services.
On the financial front, the group said it had achieved its medium-term targets ahead of schedule, and therefore raised its profit margin target to 10% from 7% for 2027, with the goal of reaching 15% by 2030-35.
The company expects that structural changes in management processes and cost reductions, as well as the Dunlop acquisition, will help achieve margin expansion.
The group also raised its long-term return on equity to 12%, with a medium-term target of 10% by 2027; the return on invested capital target for 2027 was raised to 8% from 6%, with a target of 10% for 2030-35.
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