TOKYO (Aug. 9)—Bridgestone Corp. is cautioning its shareholders that increasing raw material costs are eating into its profitability.
Bridgestone management expects fiscal 2005 operating earnings to be level with 2004 despite an increase in sales of as much as 8 percent. In particular, the firm blamed the rising cost of natural rubber and synthetic rubber and other petroleum-based products.
For the first half of fiscal 2005, Bridgestone reported a fractional increase in operating income to $831.8 million, while sales grew 8.9 percent to $10.4 billion. Net income nearly doubled to $919.5 million on the effects of an extraordinary gain of $730.4 million related to a pension fund change in Japan.
Bridgestone's tire business suffered a 7-percent drop in operating earnings, to $620.1 million, while sales grew 9 percent to $9 billion. The firm's diversified products business chipped in a 29-percent increase in operating earnings and 11-percent sales growth.
Operating earnings in the Americas rose 23.9 percent to $173.6 million as sales grew 10.9 percent to $4.87 billion, putting the Americas business unit on equal footing with Japan in terms of sales volume. In North America, sales growth came from increased business in replacement passenger and light truck tires and higher truck tire volume in both the replacement and original equipment markets, Bridgestone said.