Bridgestone: Cautious as Usual

Analysts were not surprised by Bridgestone’s recently posted operating profit increase of 7.9 per cent, according to a Deutsche Bank report. At the same time as posting its 2004 full year results, the company predicted a downturn in operating profit of 14 per cent in 2005. The analysts’ verdict? Cautious as usual.

“The numbers did not surprise, as usual beating the company targets. They were driven by higher volumes in Europe and the US and an improved product mix,” the report says. The Deutsche Bank representatives continued by commenting that Bridgestone’s projected full year profit dip has accounted for higher raw material costs, but not the effect of passing these on to costumers. According to the analysts Bridgestone’s conservative estimates reflect a desire to reinforce its negotiating position with synthetic rubber and chemical material suppliers; underscore how tough the earnings environment is in order to make a stronger case for its own price increases; and gives extra leverage for unresolved labour contract issues with North American unions.