TOKYO -- Top Japanese tire maker Bridgestone Corp.'s quarterly profit jumped 32.5 percent as increased sales volume and price hikes offset higher raw material costs. But Bridgestone kept its annual outlook unchanged.
Rising prices of natural rubber, steel cords, and other raw materials are hitting tire makers hard, but the global top three -- France's Michelin, Bridgestone and Goodyear Tire & Rubber of the United States -- have passed on some of the increased costs to customers to maintain profitability.
"It was a strong third quarter (for Bridgestone) ... If exchange rates and raw material costs stay at current levels, the company is highly likely to achieve even higher operating profit growth in the next business year," said Masataka Kunugimoto, analyst at Nomura Securities Co.
He expects Bridgestone, the world's second-biggest tire maker after Michelin, to post 220 billion yen ($1.89 billion) in operating profit this year ending December, up 11 percent.
Bridgestone's operating profit in July-September totaled 61.40 billion yen, which was calculated by subtracting the company's six-month figure from the nine-month result announced on Wednesday.
Strong sales of truck and bus tires after price hikes helped boost profit in the crucial U.S. market, while a weaker yen and a better product mix also helped, a Bridgestone spokesman said.
The company had assumed a yen rate of 105 yen for the third quarter. The yen traded around 116.85 yen on Wednesday.
Net profit in the third quarter doubled to 57.65 billion yen due mainly to special pension-related gains.
Bridgestone kept its full-year operating profit outlook of 198 billion yen, below an average estimate of 208 billion yen in a survey of 13 brokerages by Reuters Estimates, ahead of the high-demand season for highly profitable winter tires in October-December in Japan.
The strong result comes a month after the Japanese company settled a longstanding dispute with Ford Motor Co. over a recall of Firestone brand tires by Ford, paving the way for Bridgestone to improve profitability to its U.S. operations and wipe out uncertainty about its payment obligation.
The company last month agreed to pay Ford $240 million to settle their dispute related to recalls of Firestone tires on Ford vehicles in 2000 and 2001.
Due to tax returns related to the payment, Bridgestone raised its net profit outlook for the year to 180 billion yen from its previous estimate of 163 billion yen.
Goodyear last month said quarterly earnings more than tripled as sales of more expensive tires and price increases offset rising raw materials costs.
Michelin managed to increase sales for the third quarter, but cut its full-year profit outlook, citing a tougher-than-expected operating environment, particularly for truck tire replacement sales.
Bridgestone said last month it would spend $5.2 billion in capital outlays in three years to boost its global output as it aims to overtake Michelin in the world's rapidly expanding tire market by 2008.
The Japanese company aims to take 20 percent of the global market by 2008, up from 18 percent now, by creating a global production and supply network and strengthening productivity.