TOKYO -- Japanese tire maker Bridgestone Corp. boosted its 2004 net profit forecast by 39 percent on Tuesday.
The boost was attributed to solid interim results that were lifted by brisk sales abroad, higher tire prices and a better product mix.
The revision exceeded even analysts' forecasts, even though the Tokyo company, known to give overly cautious forecasts, said conditions would be harsher in the second half due to an expected rise in material prices and a sharp climb by the yen.
"Profit growth was extremely good in the first six months, but in the latter half we're actually expecting a year-over-year decline," Executive Vice President Hiroshi Kanai told reporters.
"The yen is now trading at weaker levels than we anticipated, but we don't know what will happen for the rest of the year."
Bridgestone, which dominates the global tire market along with Goodyear Tire & Rubber Co. and Michelin, now expects net profit of 104 billion yen ($939.7 million) for 2004 instead of 75 billion yen ($676 million) forecast six months ago.
The revised figure would be a 17 percent rise from the $800 million booked last year.
Bridgestone held its average dollar and euro assumption rates during the six months to December 31 at 95 cents and $1.08, respectively, shaving $63 million from profits.
A consensus estimate of 15 brokerages put full-year net profit at $884 million, or up 10 percent from last year.
Kanai added that while natural rubber prices had probably reached a ceiling, they were unlikely to fall any time soon, and other material prices, led by petroleum, were expected to rise further in the second half, slashing $90 million from profits.
"Natural rubber prices won't be a big negative factor in H2, but we're anticipating a rise in other material prices, possibly into next year, too," he said.
Bridgestone said it would try to offset such negatives by improving its product mix, offering more value-added and high-performance tires both in the passenger and commercial vehicle segments to obtain higher margins.
It would also try to pass on higher material prices to more of its corporate customers.
Bridgestone has raised tire prices in the United States four times since last year and in June in Japan, its first domestic price increase in 13 years.
For the January-June period, net profit rose 64 percent to $472 million while recurring profit grew 32 percent to $782 million, easily exceeding Bridgestone's revised forecasts in May of $406 million and $703 million.
First-half sales rose 3.7 percent to $10.39 billion, aided by a 4 percent increase in tire sales mainly on healthy demand outside Japan.
On top of growing tire sales globally, Bridgestone is likely to get a boost from last month's reopening of the rubber-mixing facility at its Tochigi plant, which had been badly damaged by a fire in September 2003, two months ahead of schedule.