Bridgestone Posts Loss for “Challenging” First Three Quarters

Bridgestone reports that its operating environment “remained challenging” in the first three quarters of the 2009 fiscal year. The nine months to September 30, it comments, was a time of “weakened consumer spending and declines in private sector capital investment, which counteracted signs of recovery among some exports.” The continuation of recession conditions in Europe and the United States was tempered by some sectors showing signs of stabilisation, however, and a gradual recovery was seen in China. Other regions also began to show slight signs of recovery, the tyre major states.

Net sales within this nine-month period amounted to 1,873.9 billion yen (£12.6 billion), 75 per cent of those at September 30, 2008. Operating income plummeted from 119.1 billion yen a year earlier to 12.0 billion (£80.3 million) in 2009, while ordinary income decline from 89.0 billion yen to –9.2 billion (-£61.6 million). The company recorded a net loss of 27.4 billion yen (£183.4 million) during the first three quarters of 2009, down from a 49.4 billion yen a year earlier.

An attempt was made to maximise tyre segment sales by introducing “appealing new products” worldwide and “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 future growth, Bridgestone discloses. Unit sales of tyres were substantially down in Japan year-on-year. In North America and Europe, units sales for passenger car, light truck, truck and buses tyres were both significantly lower, yet replacement market sales of “strategic products” such as run-flat and UHP tyres increased significantly. Sales of ultra-large OTR radials for construction and mining vehicles were also “favourable,” the company notes. Net sales in the tyre segment reached 1,544.1 billion yen (£10.3 billion)in the first three quarters of 2009, 24 per cent per cent lower than a year earlier, and operating income amounted to 14.6 billion yen (£97.8 million), a year-on-year drop of 83 per cent.

While Bridgestone concedes that the global economic recession makes predicting future operating conditions difficult, company management forecasts that the operating environment in the remainder of 2009 will continue to be challenging. While the business climate in some regions showed signs of recovery, Bridgestone believes a fully-fledged global economic recovery will be a slow process. Amidst such a business environment, company management predicts that unit sales of tyres in Japan, the Americas and Europe will fall below the previous year’s level.

For the full year to December 31, 2009, Bridgestone predicts net sales of 2,590.0 billion yen (£17.3 billion), down 20 per cent on the 2008 financial year. Operating income is anticipated to reach 60 billion yen (£401.7 million), ordinary income 29 billion yen, while a net loss of 10 billion yen (£67.0 million) is anticipated. The company anticipates net income falling below projections made in August due to the decision to close its factories in Australia and New Zealand.