Bridgestone sees sales, profits soar in 2022

TOKYO—Bridgestone Corp.'s flexibility in pushing successful tire areas and "strategic price management" helped the world's second-largest tire manufacturer to weather much of the chaos that beset the 2022 fiscal year.

With net sales of $31.3 billion in 2022, Bridgestone witnessed a 27-percent increase over 2021's $24.7 billion in net sales. Adjusted operating profit in 2022 registered $3.68 billion, a margin of 12 percent, according to Bridgestone's year-end financial report.

"While the recession in Europe became apparent, the uncertainty about the U.S. economy growing in the second half of the year (was a concern)," Bridgestone stated in the recently published financial report.

In addition, there were various "management risks" that occurred in the first half of last year, such as the suspension of domestic production in Russia and tire exports to Russia, lockdowns in China and a cyber incident at an air springs subsidiary in the Americas.

"While restrictions on economic activity due to COVID-19 have been relaxed in many countries, raw material prices have skyrocketed and supply chains have been in turmoil due to the prolonged situation in Ukraine and the lockdowns in China, and accelerating inflation has heightened uncertainty about the outlook for the global economy," the company said.

An economic slowdown surrounded sales of replacement tires in both Europe and the U.S., causing tire demand to slow significantly in the fourth quarter of 2022.

"On the other hand, demand for passenger car and light truck tires remained relatively strong in areas such as high-rim diameter tires (18 inches or larger) and premium brands for truck and bus tires in North America," Bridgestone said.

In terms of OE fitments for new vehicle tires, demand has continued to decline in the first half of this year as vehicle production remains affected by the shortage of semiconductors.

"But the sluggish demand does show signs of recovery," Bridgestone said about its 2023 estimates.

The company expects low to no growth in sales in 2023 at around $31.3 billion, with an adjusted operating profit of $3.85 billion, or a similar margin to 2022 of 12 percent.

Still, a sharp rise in crude oil prices (reflecting geopolitical risks), surging rates for ocean freight, energy costs and labor costs were some of the headwinds opposing Bridgestone's profitability in 2022.

"In this business environment, Bridgestone has worked to respond quickly to the unprecedented sharp rise in raw material prices and high inflation," the company said. "In addition to further strengthening ... each region, we responded to fluctuations in tire demand through flexible supply management based on our global production system, which is one of Bridgestone's strengths, and worked to ensure profitability and expand sales at the same time."

Overall, Bridgestone said favorable impacts of price, mix and volume offset "almost all the unfavorable impacts of raw material and other costs such as energy, labor and freight costs."

Passenger and light truck tire sales continued to lead the way for Bridgestone in 2022 at about $17 billion in net sales, against $13.2 billion in net sales for passenger and light truck tires last year.

The 2022 product segment results for PS/LT represent a 29 percent increase over 2021 sales.

"Sales expansion focused on the premium segment and replacement sales," the company said. "The market share of premium tires (replacement), for which demand was relatively strong, continued to grow despite a slowdown in demand from the third quarter onward."

As for OE sales, Bridgestone said improved vehicle production heightened demand for OE fitments in the passenger and light truck space.

Truck and bus tires (including Bridgestone's retread segment) registered at $7.88 billion in net sales for 2022 against 2021's $6.2 billion, a jump of 27 percent.

"For replacement tires (in truck/bus), sales in North America, Japan and Europe remained strong, with North America in particular showing a strong increase over 2019," the company said.

For original fitments, demand continued to recover from the impact of semiconductor shortages from the second quarter of 2022 onward.

"OE sales were particularly strong in Europe," Bridgestone said.

Specialty tires, including those for aircraft, off-road and heavy duty mining and off-road sport vehicles, came in at $4.16 billion in 2022 against 2021's $2.99 billion, a 39-percent increase year-over-year.

"In mining we saw a sales decline due to the suspension of exports to Russia, which was compensated for in other markets, resulting in an increase in the global market share," Bridgestone said.

Both replacement and OE sales increased in construction.

"OE sales expanded significantly in line with steady demand growth of infrastructure construction," the tire maker said in its report.

Rounding out sales by product, diversified products saw net sales of $2.26 billion in 2022, according to Bridgestone, a 2-percent decline against 2021 net sales.

The Americas led the way for Bridgestone in 2022 with $15.1 billion in net sales, a 37-percent jump over net sales in the Americas in 2021.

The company registered $7.89 billion in net sales in Japan, an increase of 19 percent over 2021 net sales.

The combined Europe, Russia, Middle East, India and Africa segment saw $6.63 billion in sales, a 25-percent leap over 2021 net sales in that region.

And China and the Asia-Pacific region saw net sales of $3.48 billion, an increase of 18 percent over 2021 net sales.

"Looking ahead, demand in OE is expected to improve as the semiconductor shortage improves," Bridgestone said. "And although there are differences by region, a solid recovery in replacement tire sales is expected globally from the second quarter of 2023 onward. Premium tire demand is expected to remain relatively strong."

In addition, both natural rubber and crude oil prices are expected to rise from the levels of the second half of last year, the company said.

"Cost increase is expected due to energy and labor costs for suppliers," Bridgestone said. "And factory energy costs are expected to continue to rise in 2023."