Tyre recalls at its Bridgestone/Firestone subsidiary dragged down Japanese tyre maker Bridgestone Corp.’s profits by 2 percent in 2001. However, the company said that it expects earnings to more than triple this year.
Bridgestone’s net earnings declined to 17.4 billion yen ($130 million) in 2001 from 17.7 billion yen the previous year.
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The 2% decline to earnings was largely caused by a 203 billion yen ($1.5 billion) extraordinary loss at its US unit Bridgestone/Firestone for costs for tyre recalls and litigation fees and for closing a US plant.
Operating income fell 40 percent to 74 billion yen ($552 million) as business in North America suffered from declining sales, the economic downturn and inventory adjustments, Bridgestone said.
The projections for a tripling of earnings this year are mainly based on prospects for stronger sales in the United States as new Bridgestone-brand products get introduced and retail channels are expanded.
Bridgestone/Firestone has recalled 6.5 million ATX, ATX II and Wilderness AT tyres under the August 2000 replacement programme, because they could lose their tread. The tyres were mainly used as original equipment on the Ford Explorer and have been blamed in thousands of accidents and 271 deaths in the United States.
A further 13.5 million Firestone tyres were brought into a Ford tyre replacement programme last May.
Ford and Firestone have at times engaged in blaming each other for some of the problems and the ‘Firestone debacle’ has cost Ford considerably in its financial bottom line, contributing to the ousting of Jac Nasser as CEO last autumn.
