Bridgestone improves earnings, sales on strong currency tailwind

Tokyo – Bridgestone Corp. has reported a slight year-on-year improvement in its first quarter results, helped by strong currency tailwind.

For the three months to end of March, adjusted operating income rose 3% to Yen120 billion (€714 million), on 2% higher sales of Yen1,064 billion sales, said the Japanese group 13 May.

The stronger year-on-year performance was achieved despite a decline in truck & bus tire volumes in North America and Europe as well as the “deterioration” of Latin America business, said Bridgestone.

The stronger year-on-year performance was achieved despite a decline in truck & bus tire volumes in North America and Europe as well as the “deterioration” of Latin America business, said Bridgestone.

Flat sales in “ultra-large off-the-road tires” as well as sales mix improvement with the increase of large tires, as well as a currency exchange tailwind “wiped out” the negative impact of volume declines.

Bridgestone said it continued to improve sales mix by further reinforcing a focus on premium products and accelerating “the reduction/discontinuation of loss-making/unprofitable business[es]”.

Furthermore, lower raw material costs helped offset the negative impact of the yen depreciation on manufacturing costs.

Bridgestone also said cost saving initiatives, detailed in its latest medium-term business plan, have gradually affected the group’s performance and increased profit.

The initiatives, according to the group, covered a broad area of global procurement, global supply chain logistics transformation, BCMA (Bridgestone communality modularity architecture) as well as green & smart technologies.

Breaking down regions, Bridgestone reported positive development in operating income in all regions but Americas, which was impacted by a ‘deteriorating’ Latin America business.

Here, the group said the LatAm business, especially Argentina, were Bridgestone approaches the “worst case of our scenario in the February guidance”, leading to exposed impact on profit.

Incidentally, the Americas was the only region that reported a positive sales development.

The Americas business reported a 32% year-on-year decline in operating income to Yen37 billion on 6% higher sales of Yen526.5 billion.

Japan contributed the most with a 29% increase in year-on-year operating income to Yen53.4 billion, on 4% lower sales of Yen289 billion.

Asia Pacific, India and China posted a 19% increase in operating income to Yen13 billion, while sales in the region fell 6% to Yen130 billion.

Europe, Middle East and Africa posted a 38% improvement in earnings to Yen5.4 billion, despite a 2% decline in sales to Yen202 billion.

In terms of segments, Tires business saw a slight decline in sales to Yen710 billion, while adjusted operating income rose 5% to Yen106 billion.

Diversified products, which include hydraulic hoses, rubber tracks, conveyor belts and seismic isolation, posted a 23% decline in operating income to Yen2.7 billion, on 2% higher sales of Yen78 billion.

Sales within the solutions business, which includes tire retail and fleet management services, grew 10% year-on-year to Yen328 billion, as operating income remained flat at Yen12.5 billion.