Tuesday, February 19, 2013
Bridgestone Logs Record Op Profit For '12
TOKYO (Nikkei)--Bridgestone Corp. (5108) on Monday announced a record group operating profit of 285.9 billion yen for 2012, up 49% on the year, surpassing the previous peak from before the 2008 Lehman shock.
A drop in the cost of raw materials, including natural rubber, provided a boost, as did higher tire prices adopted in 2011 in Japan and the U.S.
Net profit shot up 67% to 171.6 billion yen, surpassing the yen equivalent sales of rival Michelin. The French firm had a 7% increase in net profit to 1.57 billion euros, or about 160 billion yen.
The Japanese firm's group sales edged up 1% to 3.03 trillion yen. While new-tire sales were strong in Japan and the U.S., sales of replacement tires were sluggish, especially in Europe.
In the domestic market, which accounts for roughly 20% of overall sales, the operating profit margin rose to 13% after a prolonged period below 10%.
Even amid the strong yen, exports of lucrative large tires for mining equipment were brisk thanks to their competitive edge.
In the Americas -- which accounts for some 40% of overall sales -- the firm faced competition from cheaper Chinese products, but secured a profit increase by curbing price cuts.
In the current year through Dec. 31, the company seeks to generate 382 billion yen in operating profit, another all-time high and a 34% jump on the year. The impact of the weaker yen is expected to account for nearly 80% of the 96 billion yen gain. A recovery in sales of replacement tires in North America will also likely contribute. The firm will raise its annual dividend by 22 yen per share to 54 yen.
The benefit of cheaper materials costs and higher product prices will be minimal this year as price competition intensifies in regions like North America and the price of natural rubber hovers around the same level as last year.
Three industry giants -- Bridgestone, Michelin and U.S. firm Goodyear Tire & Rubber Co. -- together hold roughly 40% of the global tire market, based on 2011 sales.
Bridgestone "aims to be way ahead of rivals," says Chief Executive Officer Masaaki Tsuya.
(The Nikkei, Feb. 19 morning edition)