TOKYO (Feb. 20, 2009)—Bridgestone Corp.'s 2008 net income plummeted 92 percent to $114 million on a 5-percent drop in net sales to $35.5 billion, compared with a year ago.
The tire maker blamed the results on the currency exchange impact of a stronger Japanese yen and a decline in unit sales.
Sharply higher prices on raw materials caused its year-end operating income to decrease 47 percent to $1.44 billion, compared with 2007. Operating income for the company's tire business segment fell 52 percent to $1 billion on a 5-percent drop in sales to $28.9 billion for the year, the Tokyo-based firm reported.
The fourth quarter—marked by a decline in global auto production and a sluggish replacement tire market—in particular impacted year-over-year results, the company said.
In North America, Bridgestone's 2008 unit sales for passenger/light truck and commercial tires in both replacement and OE markets declined. However, there was a large increase in UHP replacement tire sales compared with 2007, the company reported.
In the Americas geographic segment, Bridgestone reported a 58-percent slide in 2008 operating income to $237 million as sales slipped 6 percent to $15.6 billion, compared with 2007.
Bridgestone also reported an 8-percent decline in net sales in Europe but a 9-percent increase in sales in China and the rest of Asia for the year.
As a result of the “rapid deterioration in global business conditions,” Bridgestone said it expects a continued decline in sales and earnings for 2009, predicting a 71-percent drop in net income to $32.9 million on a 22-percent decline in net sales to $27.8 billion.
In an apparent effort to reduce costs, Bridgestone's board of directors has proposed to abolish its retirement benefits system for directors and corporate officers and instead implement payment of termination benefits and offer stock compensation incentives. The proposals will be considered at the company's annual shareholders meeting March 26.