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Bridgestone Forecasts Profit Surge on Drops in Rubber, Yen

Bridgestone Corp., the world’s biggest tiremaker, forecast a 37 percent surge in profit this fiscal year as material costs decline, production increases and a weaker Japanese currency boosts the value of overseas sales.

Net income will probably jump to 235 billion yen ($2.5 billion) this year from 171.6 billion yen in 2012, Bridgestone said in a statement today. The forecast compares with the 206 billion yen average of 15 analysts’ estimates compiled by Bloomberg.

The tiremaker also expects to increase output 9.6 percent this year to meeting rising demand in emerging markets, it said today. Bridgestone is also benefiting from a decline in materials costs.

“I expect the price of rubber to fall further because of an excess supply and the weaker yen will of course be an advantage,” said Shiro Sakamaki, an analyst at Daiwa Securities Co. “Considering all these, I’d guess their earnings will grow even more this year.”

Rubber will probably average between $3.30 and $3.50 a kilogram this year, Akihiro Eto, chief financial officer at Bridgestone, said today in Tokyo at a briefing to discuss earnings. The material averaged about $3.38 last year, based on prices for so-called ribbed smoked sheet, grade three.

Bridgestone gets about 80 percent of its revenue outside Japan, with about 45 percent of sales coming from the Americas as of the three months ended Sept. 30, according to data compiled by Bloomberg.

Currency Impact

“We are watching the yen’s moves carefully,” Bridgestone’s Chief Executive Officer Masaaki Tsuya said today in Tokyo.

A 1 yen decline in the Japanese currency’s value against the dollar adds about 3.9 billion yen, and about 900 million yen versus the euro, to Bridgestone’s operating profit, Eto said.

Bridgestone gained 2.8 percent to close at 2,555 yen in Tokyo before the earnings announcement. The shares have climbed 15 percent this year, compared with a 9.7 percent gain for the Nikkei 225 Stock Average.

Sales will probably surge 17 percent this year to 3.55 trillion yen, according to the statement.

Tsuya, 60, said today he will double as chairman after Shoshi Arakawa, 68, leaves his post March 26 over health concerns.

To contact the reporters on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net; Yasumasa Song in Tokyo at ysong9@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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