TOKYO—Bridgestone Corp. reported double-digit growth in operating and net income for the first half of fiscal 2014, based largely on gains from lower raw materials costs and favorable foreign exchange rate changes.
Sales rose 2.6 percent on gradual recoveries in Japan, North America and Europe and despite slowing Asian economic growth, the company said.
Operating and net income rose 17.2 percent and 21.5 percent, respectively, to $2.12 billion and $1.39 billion. Sales rose to $17.1 billion, yielding an operating ratio of 12.8 percent, up nearly 2 percentage points over 2013.
Low raw materials costs yielded $380 million of earnings growth, according to Bridgestone, while foreign exchange gains produced $185 million toward the operating profit. Offsetting these gains were negatives from price/volume/mix and other operating expenses.
As a result of the first-half gains, Bridgestone management upgraded the firm's full-year earnings forecasts marginally while at the same time revising downward slightly the sales expectations. As a result, the projected fiscal 2014 operating margin is now 13 percent, up from the 12.1 percent projected in February.
The tire sector's performance mirrored the company's overall results—operating income up 16.6 percent, to $1.97 billion, with sales up 1.5 percent, to $14.3 billion, for an operating ratio of 13.8 percent.
Bridgestone reported a strong increase in unit sales of tires for passenger cars and light trucks in Japan, ahead of a tax increase. Sales of tires for trucks and buses also increased substantially compared to the first half of fiscal 2013.
In North America, Bridgestone noted a steady rise in unit sales of tires for passenger cars and light trucks, while demand from the truck and bus sector “increased strongly” over to the first half of fiscal 2013.
In Europe, meanwhile, unit sales of tires for passenger cars and light trucks increased “firmly,” while sales of tires for trucks and buses increased “steadily,” the Tokyo-based tire maker said.
Asia Pacific sales of tires for passenger, light and medium trucks fell from the first half of fiscal 2013, although within the region, sales in China of tires for passenger cars and light trucks “increased substantially.”
Within the specialty tire business, the sales volume of OTR radials for construction and mining vehicles fell from the 2013 period due to a decline in the demand of tires for mining vehicles.
Bridgestone reported 7.3 percent higher operating income in its Americas geographic segment at $818.5 million and 3.9 percent better sales of $8.14 billion, or a ratio of 10.1 percent.
Looking at its markets overall, Bridgestone said the domestic, U.S. and European economies showed some signs of gradual recovery—in the U.S. due to “an increase in consumer spending.” However, it noted that “the Asian economic expansion continues to slow down, particularly in China and India.”