TOKYO (May 11, 2005) — Bridgestone Corp. saw operating income fall 6.6 percent in the first quarter, to $410 million, as rising costs of raw materials ate into its profit margin.
Sales rose 7.9 percent, to $5.62 billion, with the European and Americas operations each contributing double-digit growth.
Bridgestone management expects the earnings squeeze to continue through the second quarter, although not quite as severe as originally projected earlier this year. First half operating income is forecast to fall about 15 percent shy of the 2004 performance, but this projection is a 20-percent improvement over the earlier forecast.
In the Americas, operating income fell 5 percent from a year ago, to $68 million, on 10-percent better sales of $2.35 billion, the Tokyo-based tire maker said. Unit-wise, sales of passenger car and light-truck tires in North America increased in the replacement sector but shipments to original equipment customers declined. Unit sales of truck and bus tires increased greatly in both the original equipment sector and replacement sectors.
In the U.S., Bridgestone cited continuing “economic vigor,” driven by personal consumption and rising capital spending, for business improvements at its Bridgestone/Firestone subsidiary.
In Latin America, business improved in diversified operations.
Globally, the tire segment suffered an 11.2-percent drop in operating income while sales grew 7.6 percent to $4.46 billion on the strength of new product launches, increased marketing efforts and improved product mix.
Moving forward, Bridgestone said it is working on several fronts to ensure progress in this “challenging business environment,” including expanding global production capacity, enhancing sales initiatives, raising productivity and improving logistics.
In the past six months, Bridgestone has disclosed $1.39 billion in tire capacity expansions, including four new tire plants.