Profits offset raw material costs

TOKYO - Japanese tiremaker Bridgestone Corp. said Monday net profit for the first quarter rose 4 percent as strong global sales of tires offset the jump in raw material costs.

Bridgestone, the world's second-biggest tiremaker, recorded a 27.2 billion yen ($239 million) profit in the January-March period, up from 26.1 billion yen a year earlier.

Quarterly sales rose 17 percent to 704.7 billion yen ($6.2 billion) from 603.9 billion yen.

Bridgestone's results have only in recent years recovered from losses related to a massive tire-recall scandal at its U.S. subsidiary, Bridgestone Firestone North American Tire, six years ago.

Last year, Bridgestone paid $240 million to Ford Motor Co. to settle its dispute with the U.S. automaker in lawsuits related to the 2000-01 recalls of Firestone tires on Ford vehicles.

At least 271 people were reported killed and hundreds more injured in accidents involving Firestone ATX and AT tires, and the manufacturer recalled 6.5 million tires. None of the tires were produced at the company's flagship Bridgestone/Firestone South Carolina production facility in Aiken County.

The settlement ended the dispute between Bridgestone and Ford, which saw the reputation of its Explorer sport utility vehicle damaged because that model was involved in most of the accidents. Bridgestone blamed the accidents on defects in some Ford vehicles, while Ford maintains the tires were entirely at fault.

Bridgestone, which has boosted profits by developing more expensive tires, saw sales in Japan rise 10 percent in the quarter, while sales in the United States soared 25 percent. Sales in Europe edged up 13 percent, and sales in other areas surged 37 percent.

On Friday, union officials were notified the Bridgestone/Firestone Dayton Tire Plant, in Oklahoma City, may be closed. The factory, which employs about 1,400 people, lost $40 million last year and $17 million in the first quarter of this year alone.

The company is talking to union representatives and no plant closure is expected before Dec. 31. The plant has been hit by rising production costs and strong competition from cheaper imported tires, the company said.

Bridgestone said the plant closure will likely result in a $170 million (135.6 million euro) loss, of which $140 million, or 15.9 billion yen, will be booked as a special loss in this fiscal first half.

Partly because of this, the company lowered its first half forecast Monday to a 30 billion yen ($264 million) net profit on 1.4 trillion yen ($12.3 billion) sales. It initially predicted 33 billion yen ($290 million) profit on 1.39 trillion yen ($12 billion) sales.

Also eroding profitability is the rising cost of natural rubber, crude oil and other materials, the company said.

Bridgestone shares, which have gradually gained 40 percent during the past year, finished down 0.7 percent in Tokyo at 2,755 yen ($24).