Creating Value throughout the Sumitomo Rubber Group and the Six Capitals That Support It

Key Management Resources

For more than 110 years, the Sumitomo Rubber Group has been accumulating various forms of capital. This capital, in turn, constitutes an integral part of the foundations supporting our pursuit of the embodiment of “Rubber and Beyond, Driving Our Future,” the worldview defined under “Our Philosophy.” In addition to financial capital, we regard manufactured capital (s factories and production facilities), diverse human capital, intellectual capital (including research & development capabiliti intellectual property), social capital (e.g., trust and cooperation with various stakeholders), and natural capital (such as energy resources) management resources.

Financial Capital

Sound financial capital is a key management resource that supports sustainable growth. The ratio of equity attributable to owners of parent, which represents the shareholders’ equity ratio, was 49.3% at the end of fiscal 2023. The rating provided by Japan Credit Agency, Ltd. was “A+” as of December 12, 2023.
Looking ahead, we intend to continuously execute capital expenditure to increase production capaci advanced products in the Tire Business. In addition, we aim to simultaneously secure corporate growth, a sufficient level of liquidity and a more robust fin position. With this in mind, we achieved the D/E ratio of 0.5 times in 2023, well ahead of the target of 0.6 times or less set in our Mid-Term Plan (2023–2027).

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A Message from the Executive Director in Charge of Finance

Financial and Non-Financial Data

Manufactured Capital

In fiscal 2023, the Group supplied 108.36 million tires to markets around the world. To support the global marketing of tires, we have secured four production bases in Japan and eight production bases in countries abroad, with the ratio of overseas production volume amounts to 64%. The utilization ratio in 2023 was 83% and expected to be 84% in 2024.
In fiscal 2023, our capital expenditure totaled ¥62,920 million. We allocated ¥60,117 million to the Tire Business to promote the shift toward the production of advanced products via facility upgrades as well as to expand the production capacities of overseas factories and achieve carbon neutrality. Also, we allocated ¥1,693 million and ¥1,110 million to the Sports Business and the Industrial and Other Products Business, respectively, mainly for the development of sales structures in place at the former’s overseas bases and to enhance the latter’s overseas factories. For fiscal 2024, our plans call for capital expenditure amounting to approximately ¥75,800 million, which comprises ¥71,600 million for the Tire Business, ¥2,300 million for the Sports Business, and ¥1,900 million for the Industrial and Other Products Business.

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Production Base Sustainability Initiatives (Japanese Only)

Financial and Non-Financial Data

Human Capital

The Group’s consolidated headcount totals 39,975, with 27,949 employees at overseas bases accounting for 70% of the overall number. Looking at the proportional composition of this workforce by region, operations in Asia and Oceania (excluding Japan) account for 41%, while operations in Europe and Africa and those in the Americas account for 18% and 11%, respectively.
The basic aim of the Group is to respect the human rights of employees, fostering a workplace environment in which everyone feels safe, respected and free to engage in the open exchange of ideas and is encouraged to take on challenging tasks. In line with this, we are striving to create a corporate culture that supports employee efforts to achieve personal growth in step with the Group’s business growth. As for the fostering of global human resources, we aim to ensure identical product quality irrespective of the factory in which manufacturing takes place, so that all employees are able to grow and to feel job satisfaction.

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A Message from the Executive Officer in Charge of Human Resources

Social

Financial and Non-Financial Data

Intellectual Capital

The Group promotes a wide range of research and development in fields related to Tire, Sports and Industrial Products businesses, thereby securing the driving force that generates products with competitive advantages as well as new growth. Research and development and intellectual property resulting from it are the source of our competitiveness. To maximize corporate value, R&D spending totaled ¥27.3 billion, which accounts for 2.3% of consolidated sales revenue.
As a direct link to the competitiveness of our products, we have already published 29 patent applications related to ACTIVE TREAD technologies, which we announced in 2023. (As of September 27, 2023) As a result of these activities, we are ranked in the first place in terms of the size of patent assets in the rubber product industry according to a survey undertaken by Patent Result Co., Ltd. In November 2023 to comprehensively assess patent assets held by businesses from both qualitative and quantitative aspects.

Intellectual Capital Strategies

The Group proactively carries out intellectual property activities that support its businesses. Specifically, the Group undertakes intellectual property activities focusing on three pillars, namely: (1) securing intellectual property rights with regard to such industrial properties as patents, utility models, designs and trademarks; (2) exercising such rights to guard against the infringement of Sumitomo Rubber Industries’ intellectual property rights; and (3) eliminating risks by developing a structure to defend against attacks by third parties. In step with the rapid expansion of its overseas operations, the scope of the Group’s intellectual property activities is growing worldwide, encompassing not only Japan but also the U.S.A., Europe and such Asian countries as China, as well as Russia and countries in South America, the Middle East and Africa.
Efforts are now underway to nurture human resources and strengthen our systems to conduct intellectual property activities commensurate with such globalization. In particular, the Group is providing training sessions for not only Intellectual Property Department members but also employees at every national office with the aim of raising awareness of intellectual property and improving the competencies of the entire workforce. Such actions facilitate the development of an organization that ensures intellectual property activities are carried out smoothly and seamlessly on a Group-wide level. In particular, we are focusing on acquiring more effective rights by having Intellectual Property Department staff based in Europe. Focusing on the above-mentioned three pillars, the Group will promote the more efficient implementation of intellectual property activities at a global level.

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Roundtable Talk among Officers in Charge of Technology and General Managers of Business HQs

Financial and Non-Financial Data

Social Capital

Building favorable relationships with customers, suppliers, local communities, shareholders, investors, employees and all other stakeholders is essential to enhancing our corporate value. Employing a variety of communication methods, the Group strives to live up to what stakeholders expect of us and accommodate their needs, thereby fulfilling our social responsibilities.

• Relationship with customers: To prevent the occurrence of traffic accidents attributable to poor tire condition, for 16 years since 2008, we have sponsored DUNLOP Nationwide Tire Safety Inspections. As of the end of 2023, the total number of cars inspected amounted to 116,000.
• Relationship with neighboring communities: We launched the Sumitomo Rubber Industries CSR Fund in 2010 to support neighboring regional societies and pursue harmonious coexistence through employee fundraising; as of the end of fiscal 2024, a total of approximately ¥130 million has been extended in donations to support activities undertaken by a cumulative total of 567 groups.
• Relationship with employees: We engaged in activities in which labor and management are united in the pursuit of corporate development and employee happiness, such as when we organized a Labor-Management Wages Study Group comprising personnel from the union leadership and the Company’s Human Resources Department, with the aim of reviewing the human resources system and working conditions and have maintained it ever since. In 2023, we eased the paid leave system and also eased the number and conditions for obtaining shorter working hours for childcare and nursing care.
• Commendations and certifications: We received commendations and certifications from administrative agencies and local governments (see pages 89 and 90).

  	Targets	Methods, frequency, etc.	Examples of themes
  IR	Institutional investors and analysts	A total of 171 financial results briefings and small-group meetings were held(71 of these were held for overseas audiences).	Details of quarterly operating results and dividends Future outlook on operating results Content of the Mid-Term Plan and its progress, etc.
  SR	Institutional investors	A total of 11 companies(10 domestic and 1 overseas) were interviewed individually online.	Initiatives to achieve our reduction targets for CO2 emissions Progress of the Mid-Term Plan Independence of outside officers, etc.

• Commendations and certifications: We received commendations and certifications from administrative agencies and local governments (see pages 89 and 90).

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Stakeholder Engagement

Social Contribution Activities

Honors and Certifications from Outside Organizations

Natural Capital

In line with “Our Philosophy,” a corporate philosophy structure, the Group’s basic management policy is to enhance not only its economic value but also its societal value and to contribute to the development of a sustainable society. We are acutely aware that natural rubber and other natural resources constitute key management resources for sustainable growth. Based on this awareness, the Group is working to conserve the global environment and to use finite energy resources effectively while contributing to the realization of a decarbonized, circular economy.
Each production base aims to be carbon neutral in Scope 1 and 2 emissions, incorporating initiatives such as promoting energy conservation, expanding cogeneration systems, introducing solar power generators, shifting to green energy procured from renewable energy sources, and adopting hydrogen as an alternative fuel.

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Environment

Financial and Non-Financial Data