Bridgestone Sustains 52% Operating Income Decrease

Bridgestone has announced its consolidated business and financial results for the fiscal year ended 31 December, 2008. The company commented in its report on the “challenging operating environment,” with its major markets in Asia, the USA and Europe declining over the course of the fourth quarter. This environment is illustrated by the worldwide 5 per cent decrease in tyre segment sales, down from 2,756 billion yen (20.54 billion pounds sterling; 1 GBP: 134 JPY) in 2007, to 2,629 billion yen (£20.05 billion), an effect in part, the company says, of the exchange impact of the stronger Japanese yen and a decline in unit sale. However, bottom line increases also hit hard, as Bridgestone tyre lost 52 per cent of its operating income; down to 92.7 billion yen in 2008 from 195 billion in 2007.

Bridgestone’s statement said that it “worked to maximise its sales momentum by introducing appealing new products worldwide, while at the same time improving and expanding strategic production sites around the world in support of respective product domains, particularly those that have been identified as strategic and important to the company’s future growth.” The fourth quarter’s decline in global automotive production and sluggish demand in the replacement market went some way to affecting the drop in sales in all three major markets.

In Japan, Bridgestone saw unit sales of tyres decrease in both the original equipment and replacement sectors from the previous year. In the Americas, the North American tyre business saw a decline in unit sales for passenger cars, light trucks, trucks and buses in both the original equipment and replacement sectors, but there was a large increase from fiscal 2007 in replacement sector sales of UHP (ultra-high-performance) tyres and other strategic products. In Europe, unit sales of passenger car and light truck tires were down year over year, due in part to the significant effect of a decline in sales of original equipment tyres, but there was a year-over-year increase in unit sales of strategic products, led by runflat and UHP tyres, in the replacement sector. In truck and bus tires, unit sales in the original equipment sector increased from the previous year, but unit sales in the replacement sector decreased from the previous year due to a significant impact from weak demand. In the specialty tyre business, unit sales of large and ultra-large off-the-road radial tyres rose significantly from the previous year as a result of continued strong demand.

FY2009 predictions

Bridgestone also commented in its report on what it predicts for the forthcoming year, though it was at pains to emphasise the difficulty in forecasting “due to the rapid deterioration in global business conditions.” Since measures against the economic downturn vary from country to country, it said, “some time will likely be required until these measures take effect and economies turn toward recovery.” owever, what does remain clear is that the company believes that in Japan, North America and Europe the downward trend in tyre sales is likely to continue throughout the coming year.