TOKYO - Top Japanese tire maker Bridgestone Corp. boosted its 2004 net profit forecast by 39 percent on Tuesday thanks 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-based 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 forecast six months ago.
The revised figure would be a 17 percent rise from the 88.72 billion yen booked last year.
Kanai added that while natural rubber prices had probably reached a ceiling, they were unlikely to fall anytime soon, and other material prices, led by petroleum, were expected to rise further in the second half, slashing 10 billion yen 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.
For the January-June period, net profit rose 64 percent to 52.29 billion yen while recurring profit grew 32 percent to 86.82 billion yen, easily exceeding Bridgestone's revised forecasts in May of 45 billion and 78 billion yen.
First-half sales rose 3.7 percent to 1.153 trillion yen, 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.