--Bridgestone targeting operating profit margin of 10% as early
as possible
--Targeted profit margin would be highest since 1999
--Company will focus on high-end passenger car, specialty
tires
--Says anti-Japanese protests in China won't have significant
impact on earnings this year or next
TOKYO--Bridgestone Corp. (5108.TO) is targeting its highest
profit margin level in more than a decade by broadening its
high-end tire lineup, as the tire maker shrugs off the impact of a
sharp production cut by Japanese auto makers in China.
Bridgestone said Thursday it is aiming for an operating profit
margin of 10% "as early as possible" under a new five-year business
plan setting out its strategy until 2017.
The goal means the world's biggest tire maker by volume is
looking to approach the profit margins achieved by arch rival
Compagnie Generale des Etablissements Michelin SA (ML.FR).
Bridgestone expects to secure a 9.2% margin this year, while
analysts expect the French tire giant to log an operating profit
margin of 11%.
Bridgestone's targeted level in the plan would be its highest
operating profit margin since 1999, when the company logged a
margin of 11.4%. Current business conditions mean the tire maker
would effectively be even more efficient than it was in the late
"90s since natural rubber prices were then only about a tenth of
what they are today, Bridgestone Chief Financial Officer Akihiro
Eto said at a press conference.
The upbeat plan comes as the Japanese tire maker expects a
record operating profit of Y287 billion, up 50%, for 2012, as lower
raw material prices and tire price hikes offset the yen's
relentless strength and slowing demand in Europe this year. It
projects a net profit of Y172 billion, up 67%, in 2012.
To achieve its goal and keep ahead of rising cost-competitive
Asian rivals, Bridgestone is looking to develop its strength in
high-function products, such as run-flat tires, which can still be
used if punctured, and fuel-saving tires, with reduced rolling
resistance.
The company is also seeking to sharpen its focus on specialty
tires such as large tires for aircraft with a plan to build a new
plant in Thailand for off-the-road radial tires used in
construction and mining vehicles at a cost of Y50 billion by
2015.
At the same time, Bridgestone Chief Executive Masaaki Tsuya said
he expects no major immediate blow from the anti-Japanese protests
in China sparked by the territorial spat between the two
countries.
While demand for tires for Japanese car makers in China is
falling, replacement tires sold to consumers aren't much affected
by the anti-Japanese sentiment, he said. Mr. Tsuya added there
would be no significant impact on earnings in the current business
year or next year.
Helped by the firm's Firestone tires, "we're probably seen as a
global brand," Mr. Tsuya said. Bridgestone bought the U.S. brand
more than 20 years ago.
The tire maker's business in China accounts for only 6% of its
total revenue and tires sold to auto makers in China make up less
than half the overall revenue from the country, Mr. Eto said.
Write to Yoshio Takahashi at yoshio.takahashi@dowjones.com
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