Value Chain, External Environment, Risks and Opportunities

• As it strives to realize a sustainable society, the tire industry is being engulfed by increasingly intense global competition to develop products made with renewable resources that will enable it to break away from fossil resources and otherwise reduce the environmental footprint of tires through, for example, the use of recycled materials.
• With CASE (an acronym for “Connected, Autonomous, Shared & Services, Electric”) expected to become a key concept determining what the next generation mobility society will look like, tires equipped with more advanced functions will be sought after. These functions will include the Tire Pressure Monitoring System (TPMS) as well as those supporting value-added maintenance services designed to ensure safe and secure driving.

• Developing next-generation technologies and products through the application of the core SMART TYRE CONCEPT
• Developing tires equipped with Active Tread technologies
• Promoting solutions businesses employing sensing technologies based on the TOWANOWA concept
• Increasing the content of sustainable raw materials (biomass and recycled raw materials) used in our products^*1
• Employing the “Fugaku” supercomputer to carry out rubber material simulations
• Maintaining the No. 1 position in terms of the patent asset ranking for the domestic rubber industry^*1
• Improving rubber quality
• Further strengthening our global development structure

• Natural rubber is a primary tire raw material. And, approximately 70% of the natural rubber produced worldwide is used for tires. The Para rubber tree, an abundant producer of best-quality latex in the form of the tree sap, originates from the South American Amazon river basin. The tree’s current habitat stretches from the 15th parallel north to the 15th parallel south, forming the aptly nicknamed “rubber band,” a tropical belt centered on the equator and particularly vulnerable to the effects of climate change. Today, about 80% of global rubber production volume is concentrated in Southeast Asia.
• The social issues that must be addressed in connection with natural rubber procurement range from the effects of climate change and the industry’s impact on forests and other natural ecosystems as well as biodiversity to the protection of human rights and labor rights.

• Upholding a Sustainable Natural Rubber Policy^*1
• Promoting CSR procurement based on the Procurement Guidelines^*1
• Conducting surveys on the status of supplier initiatives to address environmental risks

• We had to reduce production volume in light of such factors as automakers deciding to curb production on the back of semiconductor shortages as well as stagnation in demand in some regions due to deteriorating market conditions.
• Going forward, however, expanding our overseas production will remain essential to securing sustainable growth. Accordingly, it is important to develop human resources by, for example, instilling skills and passing down the know-how of experienced operators.
• Looking ahead, we will also promote proactive initiatives to achieve carbon neutrality in tire manufacturing.

• Improving the profitability of our factories by reducing fixed costs and reorganizing Stock Keeping Units (SKUs)
• Reducing the environmental impact of factories^*1
• Green logistics^*1
• Maintaining complete zero landfill waste^*1
• Pursuing same quality throughout the world
• Expanding sales of retread tires and reusing waste tires

• In tire marketing, the maintenance of an after-sales service structure is a matter of importance as is the development of a sales network. The Sumitomo Rubber Group has secured robust sales and service networks at home and abroad. The enhancement of these networks helps us raise our brand value while boosting our product capabilities and supporting our promotional activities.

• Developing and enhancing our global sales and service networks^*1
• Increasing brand value^*1
• Releasing commercial EV tires
• Pursuing the possibilities of data utilization and the sustainable business model based on the TOWANOWA concept
• Promoting the DX-driven streamlining of inventories^*1
• Gathering customer feedback and making use of it to improve products and services^*1
• Expanding sales of fuel-efficient tires

• Due to fallout from the COVID-19 pandemic, the general public’s health awareness has grown alongside a refreshed recognition of the role and importance of sports. Against this background, golf has attracted particular attention as sport that is played outdoors and that poses no problems concerning social distancing. This, in turn, has brought an increasing number of newcomers to the sport, causing demand for golf equipment to grow worldwide. Currently, however, market demand has plateaued. Meanwhile, the wellness business, including fitness club operations, have begun to see gradual recovery from previous stagnation due to the COVID-19 pandemic.
• We believe that, to help realize a sustainable society, we are being called upon not only to contribute to the resolution of environmental concerns but also to support the mental and physical health of people of all ages. Through our Sports Business, we must thus strive to help people enjoy affluent lives as part of our corporate social responsibilities.

Product Development

• Developing high-performance products sensitively designed to appeal to and help users feel a greater sense of joy in sports
• Developing products with even smaller environmental footprints, to this end enhancing product durability, developing biomass materials and incorporating recycled and other sustainable raw materials

Procurement/Production/Supply

• Reducing the volume of plastics used by abolishing plastic lids for a portion of tennis ball packaging tubes made of PET while switching from shrink wrap-type plastic labels to paper labels
• Promoting energy-saving initiatives at factories and wellness business bases

Sales/Services

• Accelerating initiatives to enhance the value of the “DUNLOP” brand in the golf business
• Ensuring the safe operation of sports gyms and the stable provision of wellness services designed to help senior citizens avoid the need for nursing care, with COVID-19 infection countermeasures thoroughly in place for these operations

• In step with such trends as growing public awareness regarding sustainability, contributing to social sustainability through business activities is more important than ever. The public call for sustainability is also growing stronger in the face of the evolving global situation and concerns over the pandemic. Given these circumstances, we deem it essential to accurately identify business fields and product development themes deserving our focus.

• We have positioned rubber parts for medical applications and vibration control dampers as priority operations requiring our constant focus as the former helps accommodate medical needs, while the latter contributes to countermeasures against earthquakes, typhoons and other natural disasters. We will strive to expand these operations on a global basis.
• In the infrastructure business, we are currently engaged in verification testing to curb the dispersion of microplastics^*2 from artificial turf for sporting facilities. This testing is a pioneering project of its kind in the industry and is being conducted at public facilities in collaboration with the Ministry of the Environment and local governments.
• In the rubber glove business, we are focused on marketing natural rubber gloves that are environmentally friendly while planning to introduce product package labeling that indicates their carbon footprint.