Bridgestone sees 9 % sales rise in H1, but no rise in income

By Liz White, ERJ staff

Tokyo-Bridgestone Corp.'s first half results showed a net sales rise of 9 percent in the first half, to ¥1256 200 million [$11400 million]. The group's H1 operating income remained static at $831.7 million-equivalent to that in H1 2004-while ordinary income increased 2 percent, to $800.9 million.

The tyre and rubber products group stressed a "defining trend" in the first half: "continued global upward movement in the cost of crude oil and other raw materials."

Meanwhile, the Japanese economy continued to recover, the US experienced continuing economic vigour, and recovery proceeded gradually in Europe, Bridgestone said. Strong economic growth continued in China, with other Asian regions also growing steadily, the group commented.

In tyres, Bridgestone's sales rose 9 percent to $9000 million, but rising cost of raw materials and other factors offset the earnings contribution from this sales growth, so that operating income declined 7 percent to $620.1 million.

Bridgestone said its tyre sales grew as a result of new products, strong marketing, and a better product mix as well as strong demand in overseas markets.

In diversified products, operating income in the first half was 29 percent higher than for H1 2004, at $209.7 million, on sales which rose 11 percent to $2500 million. In this segment, Bridgestone said, "business was especially strong in the building materials operations in the US and in precision components for office equipment."

In Europe, Bridgestone had first half operating income 1 percent higher than H1 2004, at $77.7 million, on a 14 percent increase in sales, to $1600 million. Higher earnings from sales growth offset the effect of rising raw material costs, the group said.

European unit sales of car/LT tyres increased over H1 2004 in both OE and replacement sectors, while truck and bus tyre sales also rose fuelled by growth in the OE sector.

In Japan, tyre sales remained flat versus H1 2004, while exports increased.

In its North American tyre operations, Bridgestone's unit sales of car and light truck tyres declined in the OE sector but increased in replacements. Unit sales of truck and bus tyres increased over H1 2004, led by growth in the OE sector, said the group's first half results statement.

The Japanese tyre and rubber products group said its net income increased 95 percent, to $919.4 million-primarily from an extraordinary gain of $730.4 million from an employee pension plan. This gain outweighed $26.2 million in impairment losses due to the early adoption of an accounting standard on impairment of fixed assets.