Rising raw material costs were a key driver in Bridgestone Corp.’s ordinary income dropping 6.4% during the first quarter of 2017, even though net sales increased 3% during the period.
Higher raw material costs had a 19 billion yen — about $167.7 million — negative affect on earnings in the first three months. (In 2016, raw materials were +32 billion yen in the same period.)
The company’s net sales for the period ended March 31, 2017, were 851.8 billion yen, compared to 825.7 billion yen a year ago. Ordinary income was 96.8 billion yen, down from 103.4 billion yen in 2016.
Bridgestone’s income-to-sales ratio was 11.4%.
The company said raw material prices rose “rapidly,” and an unclear situation continued due to uncertainty of the global economy.
Net sales of tires for the first quarter increased 4%, to 707.9 billion yen from 679.7 billion yen a year ago. Operating income within the tire segment fell 5%, to 95.6 billion yen from 100.4 billion yen in 2016.
In North America, the company said demand for passenger car and light truck tires was unchanged from a year ago, while sales of truck and bus tires “increased strongly” compared to 2016.
Net sales in the Americas rose 1.7% in the first quarter, to 416.5 billion yen compared to 409.5 billion yen a year ago.
In Japan, Europe, and the region covering China and Asia Pacific all saw increases in both consumer tire sales and truck tire sales. “In the specialty tire business, sales of large and ultra-large off-the-road radial tires for construction and mining vehicles increased substantially compared to the first quarter of fiscal 2016.” Bridgestone expects OTR tire sales will beat its previously-announced mid-year projections.