Tyre maker Bridgestone Corp. on Friday posted a 7.9% rise in 2004 operating profit but forecast a drop this year anticipating massive pressure from higher raw material prices, Reuters reported.
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The news agency said that, though Bridgestone expects healthy demand to push up revenues by 3% to a record 2.5 trillion yen ($US23.7 billion) this year, it has forecast a double-digit drop in operating profit citing an expected 60 billion yen rise in the cost of procuring steel cord, carbon black, synthetic and natural rubber and other materials.
“We are trying to combat the rise through enhanced efficiency group-wide, bigger sales volume, a better product mix and higher prices, but the pace of the rise is too much to absorb,” president and CEO Shigeo Watanabe reportedly told a news conference.
For 2005, Bridgestone expects operating profit to fall 14% to 170 billion yen ($US1.61 billion), also anticipating losses from a stronger yen and a depreciation of assets, Reuters said, adding that the tyre maker expects net profit to climb 22% to 140 billion yen – half of that attributed to special pension-related gains.
According to Reuters, for the year ended December 31, operating profit was 197.7 billion yen, better than the company’s projection of 185 billion yen but slightly short of an average forecast of 200.43 billion yen in a survey of 12 brokerages by Reuters Estimates.
Net profit rose 29% to 114.45 billion yen in 2004 as revenue grew 4.9% to 2.42 trillion yen thanks to stronger sales in Japan, Europe and the Americas, the report added.
To keep up with an estimated 4% annual growth in global tyre demand until 2008, Bridgestone said it would invest 125 billion yen over the next three years in a broadened capital spending programme for its core business, Reuters said.
