Bridgestone Braces for Severe Business Environment

The Japanese tire manufacturer has recently reported its financial results for 2009 which reveal a drastic drop in net profits when compared to 2008. However, the company said it already aims recovery in 2010, but believes it might take more time to revive profit levels.

The Japanese group reported a net profit of JPY 1.04bn (US$ 11.3m) for 2009, which accounts for a 90 percent drop when compared with fiscal year 2008. Global Bridgestone tire sales also fell 20 percent in 2009, from JPY 3.234 trillion (US$35.3bn) to JPY 2.597 trillion (US$ 28.3bn) due to declining tire demand and weak global auto market business climate.

For the fourth quarter of 2009, however, the company did record a significant rise in operating profit, from JPY 12.4bn last year, to JPY 63.6bn. Despite this encouraging performance, Bridgestone remains cautious regarding a speedy recovery of the tire market, as it points out to last year’s world wide government incentives for new cars, which boosted car sales near the end of the year.

The company forecasts a 24 percent increase in operating profit for 2010 and a 9 percent rise in sales to JPY 2.830 trillion (US$30.8bn). Bridgestone, like every tire manufacturer out there, was also hit in 2009 by the rising cost of rubber and braces for a year when worldwide government subsidies might come to an end.

"Despite signs of economic recovery, we are bracing for a severe business environment given rising raw materials prices and a rapid shift in the global market structure for competition and demand," Bridgestone president Shoshi Arakawa explained.