TOKYO - Top Japanese tire maker Bridgestone Corp. said on Friday that brisk exports helped its net profit surge 161 percent last year, confirming a comeback from a recall scandal that nearly destroyed its U.S. Firestone brand.
The results offered further evidence that Bridgestone -- battered for two years by the fallout from deadly accidents involving its U.S. unit's tires -- had largely put the Firestone mess behind it after settling more than 700 related cases.
But while the tire giant looked set to build on its bounceback with an aggressive boost in capital spending for 2003, it also forecast a drop in sales and recurring profit for this year amid rising rubber prices and a weakening dollar.
For 2002, Bridgestone rode strong exports to the United States and Asia to a consolidated net profit of 45.38 billion yen ($383.4 million), or 51.97 yen per share, better than the 40 billion yen forecast by the company in December.
Operating profit jumped 56 percent to 183.86 billion yen with revenue rising 5.3 percent year-over-year to 2.248 trillion yen, as Bridgestone also benefitted from a weaker-than-expected yen and the aggressive restructuring of its U.S. operations.
"We have achieved our crucial goal of returning our U.S. operations to the black," President Shigeo Watanabe told a news conference. "And from now...we are working to progress with our efforts to boost growth and profits in Europe...and ensure that the U.S., Europe, Japan, and Asia all make strong contributions."
Anticipating further demand this year for larger tires in the United States and Europe, the tire giant said it would boost capital spending by 63 percent to 190 billion yen in 2003, with much of that going towards expanding global production capacity in Europe and Asia.
BUMPY ROAD AHEAD?
Bridgestone, which is battling rivals Goodyear Tire & Rubber Co. and Michelin for supremacy in the global tire market, forecast a 54 percent rise in net profit to 70 billion yen in 2003 despite a slight drop in sales to 2.24 trillion yen.
But while the net profit forecast would represent a sharp jump from the 2002 result, it undershot the expectations of analysts and was identical to Bridgestone's 2002 forecast before it decided to take a special charge in December to strengthen its European operations.
Recurring profit -- which is pretax and excludes extraordinary items -- is expected to fall more than 15 percent, and company officials cautioned that tire prices were likely to fall in many countries, although not in the United States.
Bridgestone also is expected to take a blow from a strong yen and higher rubber prices, and faces a potential softening of demand in the United States as war fears rise.
"I feel pretty cautious about this year for Bridgestone. There's a good chance that global car sales will slow down and that will hit their earnings," said Hiroshi Nishida at Mitsubishi Trust Asset Management Co. Ltd.
However, the company has come a long way since the dark days of 2001 when its U.S. unit was overwhelmed by lawsuits after U.S. regulators linked Firestone tires mostly installed on Ford Motor Co. Explorers to 271 deaths and more than 800 injuries from rollover accidents.
Millions of tires were recalled and Firestone's century-long relationship with Ford came undone as the U.S. unit sank to a $1.68 billion loss.
Bridgestone also saw its shares plunge on worries over a massive liability settlement and the future viability of the Firestone brand. Few expected a quick bounce-back in 2002.
But a new holding company structure and a $1.3 billion capital injection into Firestone, as well as the closure of an Illinois plant, helped steady the ship last year.
A decision to focus more on Bridgestone tires in North America while the company tried to partially rebuild the Firestone brand also boosted revenues there, while the drop in sales of Firestone-brand tires was not as great as many had feared.
Bridgestone also is believed to have enough resources to settle Firestone's remaining lawsuits.
"Nobody can say for sure that the Firestone risk has totally disappeared, but it was factored into the share price long ago and is no longer a great concern for investors," said Mitsubishi Trust's Nishida.