SRI investing in “advanced” tyre capacities, cutting “unprofitable” SKUs

Sumitomo Rubber Industries (SRI) intends to raise production capacities at a number of its facilities around the world, but at the same time it will remove some products from its portfolio in order to address rising costs.

In a presentation published along with the company’s Q2 2022 financial results, the Japanese firm shared it would increase capacity “to produce more advanced tyres” at its Miyazaki plant in Japan and at facilities in China, Thailand and Turkey. Specific measures include upgrading equipment capacity to produce larger PCR tyres for electric vehicles at the Sumitomo Rubber AKO Lastik Sanayi ve Ticaret A.Ş. plant in Turkey as well as in China. It did not specify the extent of these increases or when they would be implemented.

SRI also states that it is “steadily increasing” production capacity in the USA, Brazil and South Africa in order to “promote higher rates of local production for local consumption.” While it doesn’t name the products to benefit from these capacity gains, tyres accounted for 86 per cent of SRI’s turnover in 2021 and are therefore likely play a central role here.

A third point that the world’s fifth-largest tyre maker stressed when outlining plans to optimise its production allocation is that it will focus upon “flexible” allocation in response to changes in the business environment, such as demand or fluctuating currency exchange rates. SRI will also prune “unprofitable” SKUs to “improve profit rate and productivity,” and adopt a policy of “narrowing SKU” when developing new products.