Bridgestone Corp. is accepting unpredictability and bracing for the possibility of a second wave of the coronavirus in Japan and abroad. In establishing its first financial forecast of the year, the tiremaker says it is assuming a drop in demand in the fourth quarter of 2020.
As a result, Bridgestone expects sales to hit 2.7 trillion yen in 2020, down 23% from 3.5 trillion yen in 2019. The tiremaker says it’s still too early to predict profit “because it is difficult to reasonably calculate the result in light of the effect of COVID-19.”
In explaining its assumptions for the rest of the year, Bridgestone said, “Even though signs of recovery have been apparent since June, the market environment continues to be unpredictable.
“With regard to the last two quarters, the company has formulated the financial results forecasts with the assumption of the impact of a decrease in demand due to a second wave of COVID-19 infection in the fourth quarter, despite the current expectation of a gradual recovery. The impact of a decrease in demand due to a second wave is expected to be on a smaller scale when compared with the first wave that occurred during the second quarter.”
Results so far in 2020
For the first half of 2020, Bridgestone reported revenue of 1.35 trillion yen, down 23% from the 1.7 trillion in sales a year ago. The tiremaker reported a loss just shy of 21 billion yen in the first six months, compared to a profit of 102.5 billion yen in 2019.
In the Americas, sales are off 22% from 2019 levels, with drops in both the first and second quarters. Sales in the second quarter were much more severely affected in the Americas - down more than 34%, compared to the 8% drop recorded in the first quarter.
Tire production, TireHub
According to rubber tonnage, Bridgestone produced one-third fewer tires in the first half of 2020 than it did the first half of 2019 — 96 tons compared to 64 tons.
In the Americas, the region that last year accounted for nearly half of Bridgestone's rubber usage, the production drop was especially pronounced. In 2019 the second quarter was Bridgestone’s biggest tire production month in the Americas, according to tonnage, with 16 tons of rubber used. Tonnage fell by 56% in the Americas in the second quarter of 2020 — to 7 tons. In the first half of 2020 Bridgestone has so far used 20 tons of rubber to produce tires in the Americas, down from 31 tons a year ago.
Despite the drop off in rubber used and tires made, Bridgestone said the fixed costs at its plants that were recorded despite shutdowns amounted to more than 9.6 billion yen.
Additionally, the company announced an “impairment of investments” of 18.4 billion yen which is “mainly the result of the carrying amount of assets related to investments in TireHub LLC … being reduced by” nearly 17.3 billion yen “because the intended revenue is no longer expected as a result of changes in the business environment, such as the impacts of COVID-19.”
