Bridgestone’s First Quarter Net Profits Down 18.4%

Bridgestone has reported an 18.4 per cent fall in first quarter net profits, compared with the same period a year ago. The company cited slow US demand and the strengthening yen as reasons for the slower performance. Net profits dropped to 22.96 billion yen ($220 million; 143 million euros; 111 million) from 28.14 billion yen in the same period last year. Meanwhile revenue rose 3.6 per cent to 797.84 billion yen ($7.7 billion; 5 billion euros; 3.98 billion pounds) thanks to steady sales in Japan and Europe. Sales in Japan account for almost 40 per cent of the company’s total revenue.

Sales in Europe increased 5 per cent over the previous first quarter to 126.6 billion yen ($1.3 billion, 612 million), while operating income decreased 75 per cent to 1.1 billion yen ($11 million, 5.32 million) due in part to increasing raw material costs and sales expenses.

In Europe unit sales of passenger car and light truck tyres reportedly remained on a part with the previous first quarter, while unit sales of strategic products, apparently led by run-flat tyres and UHP tyres grew considerably over the previous first quarter. Unit sales of TBR tyres have reported a “significant increase” over the previous first quarter. While unit sales of large and ultra-large OTR radials greatly exceeded the previous first quarter “on the back of continued strong demand.”

North and South America combined accounts for about 44 per cent of Bridgestone’s revenue. Sales in the region were little changed at 336 billion yen in the first quarter, it said in the statement. Operating profit in North and South America, Bridgestone’s biggest market, fell 30 per cent in the period.

Bloomberg quote Toru Iwai from Credit Suisse Securities Japan Ltd as saying the yen had more of an effect that expected. “Oil prices are really going to hurt the company this year…Every 1 dollar increase in the price of oil per barrel reduces the company’s operating profit by 1.3 billion yen,” Iwai said.