Recently, Sumitomo Rubber Industries (SRI) released its 2024 performance report, with sales of its tire business increasing by 4% year-on-year to 1,046 billion yen, and operating profit increasing by 20% year-on-year to 76 billion yen.
The company said the improved performance was related to the positive impact of foreign exchange rates in the fourth quarter and the company's "cost control." While Japan's economy is expected to continue to recover gradually, there is a risk of a "slowdown" in the overseas economy, which could affect its domestic business. These risks specifically include the impact of continued high interest rates in the United States and Europe, stagnation in China's real estate market and uncertainty in the Middle East.
Regarding its operating performance, SRI said tire sales fell in 2024 due to production stoppages by automotive OEMs and a stagnant market caused by inflation.
In Japan's original equipment market, sales were significantly lower than the previous year's level, mainly due to the typhoon in August 2024 and production cuts at car factories; overall sales in the replacement market were also lower than the previous year because the company "strategically reduced low-profit products."
In the overseas original equipment market, sales "dropped significantly" year-on-year due to production cuts by Japanese automakers in Asia; Overseas replacement demand also fell slightly, partly due to stagnation in the Chinese market.
In Europe, Falken brand all-season tires were in short supply and replacement tire sales in Europe fell; Sales in the Americas also declined, but sales of the flagship Wildpeak series increased, and motorcycle tire sales were stable; Sales in South America exceeded the previous year's level.
It is worth mentioning that in November last year, SRI announced the termination of all production activities of its consolidated subsidiary Sumitomo Rubber USA, LLC (SRUSA), and its tire manufacturing plant in Tonawanda, New York will be closed.
It is reported that the Tonawanda plant currently has 1,550 employees and mainly produces passenger car, truck and bus, and motorcycle tires, with sales of approximately US$456 million in 2023.
The plant is expected to be completely closed within the next 12 to 24 months. The plant's research and development operations will be transferred to Sumitomo Rubber North America, at a location to be determined.
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