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Japan tire maker lifts full-year outlook

Source: Shanghai Daily
[08:15 August 10 2009]
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Top Japanese tire maker Bridgestone tumbled to an operating loss in the second quarter, hit by the economic slump and a stronger yen, but raised its full-year outlook again after a surprise upgrade in June.

Crediting deeper-than-expected cost cuts, Bridgestone lifted its 2009 operating profit forecast to 61 billion yen ($641 million) from 56 billion yen, catching up with the average projection of a 60.5 billion yen profit in a poll of 11 analysts by Thomson Reuters.

On June 25 the company raised its full-year earnings forecasts, citing improved demand prospects in the second half as well as a weaker-than-expected yen. The surprise upgrade sent Bridgestone shares surging 8 percent next day.

"The upgrade was positive but not a big surprise. I expected Bridgestone to exceed the June 26 operating profit forecast, but it achieved deeper cost cuts than I expected," said UBS Securities analyst Kunihiro Matsumoto.

At this pace of its cost cuts the company has good chance of making another upward revision to its profit outlook, though demand is highly likely to stay poor this year, he said.

Bridgestone's rivals have also beaten analysts' expectations and suggested a degree of recovery in the second half of the year, while they similarly suffered losses in recent months on the back of slumping demand for cars and replacement tires.

France's Michelin, which vies with Bridgestone to be the world's No. 1 tire maker, last month posted a surprisingly smaller loss for January-June and forecast a recovery in the second half.

Goodyear Tire & Rubber of the United States generated a smaller second-quarter loss than expected and said there was evidence the global economic downturn was easing.

Bridgestone expects its tire sales volume for both new cars and for replacement tires in the second half to recover in the US and Europe compared with a year ago, but not in Japan, Chief Financial Officer Koki Takahashi told a news conference yesterday.