Bridgestone Americas’ decision to impose a drastic 12% increase of North American truck and bus tire prices in only likely to recoup roughly a fifth of the increased rubber costs the tire manufacturer has had to pay recent, Deutsche Bank analysts reported.
"In view of the likely penetration rate for the price hikes, we calculate an earnings impact of some $244.71 million. Based on price increases announced to date, we look for a ¥100 billion impact in the 2010-11 full year," the analysts wrote in an investors note.
Their view is that the company’s price hikes to date are not enough to offset higher raw materials costs. “Assuming a natural rubber price (RSS3) of $5.8/kg, and a naphtha price of $95/bbl, we calculate a cost increase of 200 billion yen from higher raw materials prices,” the bankers explained. (Tyres & Accessories)