Net sales increased 13% to 3,390.2 billion yen (£16.118 billion), and operating income jumped 31%, or 59 billion yen (£280.5 million), to 249.9 billion yen (£1.19 billion). Net income, at 131.6 billion yen (£625.65 million), showed a 55% increase on 2006 results.
Bridgestone reports that, amidst an environment of increasing raw material costs, a slowing US economy, recovering Japanese and European economies and economic growth in Asia, Bridgestone group companies managed to increase production capacity in strategic product lines while benefiting from strengths in research and development. Furthermore, Bridgestone adds the companies “also maintained group-wide efforts to enhance their portfolio of highly competitive products and businesses despite an increasingly difficult business environment caused by changes in the global structure of demand and competition.”
The company’s tyre division was the star performer of the Bridgestone group, recording sales of 2,755.9 billion yen (£13.1 billion), up 15% on those achieved in 2006. Operating income increased by 40% to 195 billion yen (£927 million). Diversified products achieved more modest gains, with sales increasing 5% to 656.3 billion yen (£3.12 billion), and operating income up 6% to 54.7 billion yen (£260.05 million). Bridgestone believes credit for strong tyre division sales can be partially attributed to the introduction of new products while at the same time improving and expanding strategic production sites around the world in support of products the company has identified as strategic and important to its future growth.
Unit sales of tyres in Japan remained on par with those of 2006, while unit sales of strategic products and high value-added products expanded steadily. Bridgestone reports strong sales of passenger car and light truck tyres in Europe, with total company sales increasing 23% to 516 billion yen (£2.45 billion) and operating income up 16% to 17.2 billion yen (£81.77 million). The company’s European operating profit margin of 3.8% was slightly higher than last year’s, but only slightly over half that achieved in 2004. Stronger European sales are believed to be driven by a considerable increase in the unit sales of strategic products, particularly run-flat and winter tyres. Unit sales of truck and bus tyres were also significantly stronger than in 2006, as were those of large and OTR radial tyres.
Bridgestone management has proposed a year-end dividend of 13 yen (£0.06) share. Including an interim dividend of 13 yen, the annual dividend is expected to be 26 yen ( £0.12) per share.
More modest projections for 2008 have already been reported on, and Bridgestone itself states that “the operating environment is expected to remain challenging in 2008.” The tyre major adds that “raw material and energy costs are anticipated to continue to increase. Concurrently, concerns about a possible economic slowdown in Japan and the United States have heightened. Changes in demand and increasing competition are also expected to contribute to these global business changes.” Unit sales of tyres are expected to increase in Europe during 2008, while OE sales in Japan are expected to increase and replacement market sales to remain on par. (Tyres & Accessories/Staffordshire, U.K.)
