Bridgestone Shares Surge 10% on Strong 2013 Outlook
By Jerin Mathew | February 19, 2013 5:27 PM EST
Shares in the world's biggest tyre-maker Bridgestone have surged to over 10 percent on the Tokyo stock exchange, after the company reported a 67 percent increase in its 2012 profit and projected a robust 2013.
Bridgestone shares were trading at 2,812 yen, up 10.06 percent as of 11.49 pm ET. In morning trade, the shares rose to a new 52-week high of 2,822 yen.
Earlier, the company reported a net profit of 171.6bn yen ($1.8bn, £1.2bn) in the year to 31 December 2012, compared with a profit of 103bn yen, a year earlier.
In fiscal 2013, Bridgestone expects to record a net profit of 235bn yen, up 37 percent from the previous year and a new record for the company. It also projected a 9.6 percent growth in output in 2012 due to rising demand in emerging markets.
The company also expects to benefit from a decline in the price of rubber this year due to increased supply. Rubber is projected to average between $3.30 and $3.50 a kilogram in 2013, according to Bridgestone CFO Akihiro Eto.
Despite high raw-material costs, the tyre company witnessed more business in 2012 in line with the recovery in the automotive sector in Japan.
Japanese carmakers had increased their manufacturing in 2012 following a disastrous 2011, boosting the demand for car parts. The sector benefitted from a recovery in the US car market.
Toyota, Japan's biggest carmaker, has sold 9.29 million vehicles in 2012, up 22 percent year-on-year. Rival Nissan's sales rose 6 percent to 4.94 million while Honda Motors recorded a 19 percent rise in sales to 3.82 million.
Additionally, a sharp decline in the Japanese currency has also contributed to the profit growth. The yen has dipped nearly 15 percent against the US dollar since November, helping Japanese exporters with an increased amount of money as they repatriate their earnings generated abroad to the home country.
Bridgestone's rivals, France's Michelin and US-based Goodyear Tyre & Rubber, were pessimistic on their growth prospects in 2013 due to slow auto growth in Europe.
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