Weak Yen Lifts Bridgestone Profit

Powered by the yen's weakness, tire maker Bridgestone Corp.'s sales and profits rose in the fiscal first quarter, but it took a conservative stance on its earnings outlook for this year.

The world's largest tire maker by volume said its net profit for the quarter rose 2.2% to ¥43.11 billion ($435 million) from ¥42.20 billion a year earlier.

Sales rose 9.4% to ¥794.58 billion from ¥726.25 billion, while operating profit increased 18.1% to ¥74.45 billion. Net profit grew at a more moderate pace than operating profit partly because of a higher corporate tax burden compared with a year earlier.

The company's performance in the quarter showed how a weaker yen is helping boost the Japanese tire maker's profits, overcoming concerns about the faltering economy in Europe. The yen is improving the profitability of high-margin exports such as large-size tires used in mining vehicles and "run-flat" tires, which can be driven on even when punctured.

The company said "the unit sales of tires for passenger cars and light trucks in North America increased" from a year earlier. In China, unit sales of tires for passenger cars and light trucks gained strongly, while those in Europe declined due to a drop in sales of original-equipment tires.

Despite the performance in the just-ended quarter, the company continues to expect a fiscal-year net profit of ¥235 billion, up 36.9%, and sales of ¥3.550 trillion, up 16.8%.

Bridgestone continues to assume the dollar will average ¥89 and the euro ¥119 for this fiscal year. In the just-finished quarter, the dollar and the euro averaged ¥93 and ¥122, respectively.

The latest outlook looks conservative even with a wide fluctuation of raw materials, such as natural rubber, which may be exacerbated by the yen's weakness.

Based only on currency fluctuations, Bridgestone has room for an upward earnings revision, as it expects each one yen change in the dollar/yen and euro/yen to either lift or cut its group operating profit by ¥3.9 billion and by ¥900 million, respectively.

"We see things are going as planned," said a Bridgestone spokesman.

The company's earnings are based on Japanese accounting standards.