BFAH boosts parent company's first-half profits

Aug. 9, 2002

Tokyo-based Bridgestone Corp. today announced a 6% increase in consolidated net sales, to $9.15 billion, for the six month period ending June 30, 2002.

The company recorded an increase in ordinary income of 78% over the same period last year to $466 million, primarily because of improved profitability at its U.S. subsidiary Bridgestone/Firestone Americas Holding Inc. (BFAH), the company says.

Net income was $205 million compared with a net loss in the same period of the previous year (resulting from special charges in the Americas).

While BFAH sales were up slightly over the same period last year, the company reported a dramatic increase in profitability.

BFAH operating income totaled $54 million compared with an operating loss of $75 million for the first half of last year. Net income improved by $483 million over the prior year, resulting in a first half 2002 loss of $14 million.

"Although the company's performance is not yet where we ultimately want it to be, the numbers clearly show that we've stabilized the business and our comeback is well ahead of schedule," says Mike Gorey, controller and vice president of BFAH.

"We've been able to improve sales while cutting costs and improving efficiency," says Gorey. "A lot of the credit goes to the hard work of our 51,000 employees and our loyal stores and dealers across the Americas."

The success of restructuring measures, increased efficiency and lower costs were cited as reasons for the good results. The company says it is operating its tire plants at about 100% capacity.

The result of the combination of positive factors is a 7% increase in gross profit margins over the same period last year.

In addition to the positive effects of its restructuring efforts, the company reported increasing strength in unit sales of truck and bus tires.

Unit sales of passenger and light truck tires grew solidly, led by significant growth in sales in the replacement market of Bridgestone-brand tires, a stabilized market for the Firestone-brand tires, and the launch of several new high profile, popular tire lines, the company says. The robust growth in the replacement market offset a unit sales decline in original equipment tires.

Looking to the full year 2002, BFAH has forecasted net sales of $7.6 billion, operating profit of $190 million and net income of $50 million.

This contrasts sharply with the company's $1.67 billion loss for the year 2001.