Bridgestone cuts earnings forecast on costs, US slowdown

Tokyo – Higher than expected raw-materials costs and a US market slowdown have prompted Bridgestone Corp. to cut its forecast for full-year operating income by 7% to Yen430.0 billion (€3,255 million) and its sales projection by 1% to Yen3,650.0 billion.

The downgrade reflected the emergence of a more “challenging business environment,” since its previous financial guidance of 9 Aug, the tire and rubber-product maker said 9 Nov.

The news accompanied the Japanese group’s financial report for the first three quarters, showing a 9% year-on-year drop in operating income to Yen299.7 billion on net sales 9% higher at Yen2,663.0 billion.

In the Tires division, operating income fell 9% to Yen274.4 billion, while net sales increased 10% over the first nine months to Yen2,207.4 billion. Bridgestone attributed the Yen25.9-billion drop in profit solely to rising raw materials costs.

Sales-growth, meanwhile, was linked to increased passenger car tire (PCR) and truck & bus tire (TBR) sales in Japan. The gains were offset by significantly lower PCR and light truck tires sales in North America. European sales were higher in each of the main road-tire segments as were sales in China and Asia Pacific.

Net sales at Bridgestone’s Diversified Products division came in 6% higher at Yen467.2 billion, but operating income was 13% lower at Yen25.3 billion.

Overall, Bridgestone estimated raw materials costs at Yen31.0 billion in the third quarter and Yen99.0 billion for year-to-date up to 30 Sept.

The group, though, now foresees some respite on the materials front, projecting a full-year cost of Yen116.0 billion, 8.6% lower than its previous forecast.

The tire maker reported per-kilo prices for natural rubber grades TSR20 and RSS3 at $1.53 and $1.80 respectively in the third quarter. This compared to equivalent figures of $1.31 and £1.67 in the prior-year third quarter, and $2.06 and $2.53 in the first quarter of 2017.