Bridgestone Tire To Close US Plant - Reports 1Q 2006 Results
TOKYO, May 1, 2006; Reuters reported that top Japanese tyre maker Bridgestone Corp. lowered its half-year net profit forecast by 9 percent on Monday to account for the possible closure of a U.S. plant in Oklahoma City, while raising its operating profit projection citing a weaker-than-expected yen.
Reporting its first-quarter results, Tokyo-based Bridgestone said it would likely book a total extraordinary loss of $170 million for the potential plant closure, with $140 million of that booked in the first half of 2006.
For the six months to June 30, it now expects net profit of 30 billion yen ($265 million) instead of 33 billion yen. That would be down 71 percent from the year-earlier period, when it wrote down one-off pension-related gains.
On the other hand, it now expects its operating profit to come to 77 billion yen instead of the 70 billion yen it forecast in February, all thanks to a softer yen.
Bridgestone's North American unit, Bridgestone Firestone North American Tire LLD, said at the weekend that it had notified the United Steelworkers that it may close the money-losing Oklahoma City tyre plant by the end of this year, trimming more than 1,400 jobs.
No final decision has been made, but the unit said the U.S. tyre industry faced intense competition from producers in lower-cost countries, and that it would be difficult -- if not impossible -- to make the plant competitive.
Meanwhile, Bridgestone, which competes with France's Michelin and Goodyear Tire & Rubber Co. of the United States in the global tyre market, has been building new factories at breakneck speed in low-cost countries such as China, Brazil, Hungary and Mexico.
For the January to March period, its operating profit grew 7.9 percent to 47.49 billion yen ($419.9 million), while net profit rose 4.0 percent to 27.17 billion yen. Revenue expanded 16.7 percent to 704.68 billion yen.
Bridgestone said it made up for a rise in crude oil and other raw materials costs by boosting sales of value-added products and raising productivity.
Revenue in all major regions, including Japan, the Americas and Europe, grew by double-digit percentages.
"The stronger-than-expected sales performance has been continuing with robust demand for tyres, especially in markets outside Japan," it said in a statement. It added, however, that profitability continued to face pressure from high commodity prices.