Despite Challenges, Bridgestone Rides Recovery in H1 2010
For Bridgestone, the first half of the 2010 financial year presented an operating environment “plagued by rising prices for raw materials.” Yet, despite these challenges, the Japanese tyre maker saw signs of a slight recovery in its domestic market plus a gradual recovery in the US and accelerated recovery in Asia and particularly in China. Bridgestone acknowledges that conditions in Europe remain “challenging”, but notes that the business climate there showed signs of bottoming out. In these operating conditions, Bridgestone states that during the six months to June 30, 2010 it stepped up efforts to improve manufacturing productivity, increase sales of highly competitive products, strengthen supply capacity and effectively utilise its management resources.
During the first half of 2010 Bridgestone’s net sales totalled 1,385.9 billion yen (£10.1 million), a 15 per cent increase on the first half of the 2009 fiscal year. Operating income amounted to 78.4 billion yen (£573.9 million), compared with an operating loss of 19.9 billion yen a year earlier, and net income was 44.5 billion yen (£325.7) compared with a net loss of 38.3 billion yen in the first half of 2009.
Sales of tyres in Japan “considerably” increased in the first half of 2010, while North American sales of passenger car, light commercial and truck and bus tyres exceeded the first half of 2009 by a “considerable margin” due to the recovery in demand. A significant increase in units sales of strategic products such as UHP tyres was also seen in the replacement sector. In Europe, unit sales of passenger car, light commercial and truck and bus tyres “greatly” increased year-on-year due to a recovery in demand, and sales of strategic products such as run-flats and UHP tyres grew considerably in the replacement sector. In Bridgestone’s specialty tyre sector, sales of large and ultra-large OTR mining and construction tyres “greatly exceeded” those of a year earlier. As a result, Bridgestone’s tyre segment net sales in the first half of 2010 equalled 1,147.0 billion yen (£8.4 billion), a 16 per cent year-on-year increase. Operating income totaled 70.6 billion yen (£516.8 million) in contrast to an operating loss of 15.2 billion yen a year earlier.
Looking forward to the second half of the year, Bridgestone reports with refreshing honesty that “although a modest recovery has become apparent, the companies will likely experience challenging conditions because of the continuing economic uncertainties and high prices of raw materials. In addition, the group is expected to face rapid changes in the structures of demand and competition worldwide.” Despite the obstacles presented by such a business environment, Bridgestone’s management predicts unit sales of tyres to increase year-on-year in Japan, the Americas and Europe. The company projects full-year sales of 2,900.0 billion yen (£21.2 billion), a 12 per cent increase over 2009, operating income of 157.0 billion yen (£1.1 billion), 107 per cent above the 2009 result, and a net income of 91.0 billion yen (£666.1 million). These current estimates exceed Bridgestone’s previous financial projection as the company claims to have become more cost competitive and seen results from its expense reduction initiatives.