Sales up, profits down for Bridgestone Bridgestone Corp. posted net income of 85.1 billion yen ($714 million) on net sales of nearly three trillion yen ($25.1 billion) for its fiscal year ended Dec. 31, 2006. That compares to net income of 180.7 billion yen on sales of 2.7 trillion yen for fiscal 2005. In addition to net income, operating income decreased as well, dropping 11% from 213.8 billion yen to 190.8 billion yen ($1.6 billion).
The company says a number of factors impacted 2006 income, including the following:
* high prices for natural rubber, crude oil and other raw materials;
* an extraordinary loss of 21.7 billion yen in connection with the announced closure of two tire plants in the Americas.
"A defining trend of the business environment in fiscal 2006 was continued global upward movement in the cost of crude oil and other raw materials," says the company. "The Japanese economy continued to recover as a result of gradually expanding personal consumption, improving corporate earnings and increases in capital spending.
"In the United States, while personal consumption and capital spending showed an overall increase, the economy appears to be slowing, and there are concerns about the economy's future direction based on such indicators as a decrease in housing construction.
"Economic recovery proceeded in Europe, supported by domestic demand. Strong economic growth continued in China, while other Asian economies expanded steadily."
Bridgestone says it succeeded in emphasizing the sale of "high-value-added products" and launched "appealing new products," strategies it is carrying out globally.
Worldwide tire sales, which accounted for 80% of total sales (2.4 trillion yen), increased 11% in fiscal 2006 versus 2005. In the Americas, sales increased 15% to 117.5 billion yen ($986 million), in part due to better brand and product mix and higher selling prices (as well as a favorable dollar to yen exchange rate). Operating income increased 8% to 42 billion yen ($353 million) despite the impact of increasing raw material costs.
In North America, passenger and light truck tire unit sales declined in both the original equipment and replacement segments "due to an industry-wide decrease in demand." Unit sales of truck and bus tires increased mainly in the OE sector.