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Bridgestone Surges After Forecasting Earnings Jump

Bridgestone Surges After Forecasting Earnings Jump
A logo sits on the painted wall of a Bridgestone automobile tire, produced by Bridgestone Corp., at the Paris Motor Show in Paris. Bridgestone got about 77 percent of its revenue outside Japan, with about 43 percent of sales coming from the Americas last year. Sales willPhotographer: Jason Alden/Bloomberg

Bridgestone Corp., the world’s biggest tiremaker, rose the most in more than four years in Tokyo trading after forecasting full-year profit 14 percent higher than analyst estimates.

The tiremaker climbed 10 percent to 2,820 yen at the 3 p.m. close of Tokyo trading, the most since October 2008 and the biggest gainer on the benchmark Nikkei 225 Stock Average, which closed 0.3 percent lower.

Net income will probably jump 37 percent to 235 billion yen ($2.5 billion) in 2013 amid a decline in raw material costs and a weaker Japanese currency, Tokyo-based Bridgestone said yesterday. That compares with the 206 billion yen average of 15 analysts’ estimates compiled by Bloomberg before the earnings announcement. The tiremaker projected output to grow 9.6 percent this year to meet rising demand in emerging markets

“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. in Tokyo. “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 yesterday. The material averaged about $3.38 last year, based on prices for so-called ribbed smoked sheet, grade three.

Japanese rival Sumitomo Rubber Industries Ltd. expects net income to increase 16 percent this year. Yokohama Rubber Co., which forecast a 10 percent increase in profit this year, rose to its highest level since November 2007 today.

Overseas Sales

Following yesterday’s earnings announcement, Credit Suisse AG raised its target price for Bridgestone to 3,200 yen from 2,400 yen.

Bridgestone got about 77 percent of its revenue outside Japan, with about 43 percent of sales coming from the Americas last year, according to data compiled by Bloomberg. Sales will probably surge 17 percent this year to 3.55 trillion yen, it said yesterday.

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

For every 1 yen decline against the dollar, Bridgestone gains 3.9 billion yen in operating profit, Eto said yesterday. The company gets a 900 million yen boost in earnings for every 1 yen drop versus the euro.

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