Sumitomo Rubber Industries, Ltd.

Business Details

Develops tires and tubes for automobiles, construction vehicles, industrial vehicles, and motorcycles, as well as the Automotive Business (Tire Repair Kits, Tire Pressure Warning Systems, etc.). Centered on domestic and overseas OE and replacement tires, the company holds multiple brands including DUNLOP and FALKEN. In 2025, the company acquired the DUNLOP trademark rights for passenger car tires in Europe, North America, and Oceania, and began selling DUNLOP brand tires in Europe from January 2026. Manufacturing sites are globally deployed in Indonesia, Thailand, Brazil, South Africa, Turkey, the United States, China, and elsewhere.

Recent Overview

Increased revenue and profit driven by the start of DUNLOP brand sales in Europe; Tire Business profit up 35.0% year on year.

In Q1 FY2026 (January to March 2026), Tire Business revenue was ¥259,918 million (up 6.3% year on year), and business profit was ¥14,762 million (up 35.0% year on year). European replacement tires increased significantly due to the effect of starting DUNLOP brand tire sales in Europe from January 2026. On the other hand, domestic replacement tires declined due to a rebound from pre-price-increase demand in the same period of the prior year, while OE and replacement tires for North America decreased due to sluggish market conditions and the impact of tariffs. South America also saw a decline in sales volume due to increased imports from outside the region and a challenging pricing environment. Exchange rates were 157 yen to the dollar and 184 yen to the euro, with the yen weakening year on year, which boosted revenue.

Key Products

Growth Drivers

• Sales expansion through the European rollout of the DUNLOP brand (started January 2026) and significant increase in European replacement tires
• Expansion of the sales base through the North American and Oceania rollout of the DUNLOP brand (started 2025)
• Promotion of premiumization through products featuring Active Tread technology (SYNCHRO WEATHER) and plans for expansion into Europe and the U.S. in 2027
• Monetization of the tire-related services business leveraging SENSING CORE and Viaduct's AI technology
• Improved product mix and profitability through price increases and reduction of low-margin products
• Continued effects of fixed cost reduction and productivity improvement from the closure of a North American tire plant
• Increased sales volume of domestic OE tires accompanying recovery in automobile production (recovery from production declines at some manufacturers)
• Shift toward increased overseas OE tire sales to China

Risks

• Pressure on sales volume and pricing due to intensifying global competition (particularly aggressive pricing by major Chinese manufacturers)
• Increased costs in the North American business due to U.S. tariff impacts (North American replacement tires also declined year on year in Q1 FY2026)
• Increased raw material costs due to rising prices of natural rubber and other materials (expected to be partially offset by price pass-through in the full-year forecast)
• Decreased sales volume due to sluggish market conditions for North American OE tires
• Decreased sales volume in South America due to increased tire imports from outside the region and a harsh pricing environment
• Decline in domestic replacement tires due to a rebound from pre-price-increase demand in the prior-year period and decreased orders for offtake products
• Reduction in yen-converted overseas earnings due to the yen's appreciation trend (foreign exchange risk)
• Costs incurred from launching the DUNLOP brand in Europe, North America, and Oceania
• Litigation related to a warehouse lease agreement involving the Chinese subsidiary (Sumitomo Rubber (China) Co., Ltd.) (impact amount undetermined)
• Risk of downside in automobile production due to the impact of Middle East tensions, among other factors