Top Japanese tyre maker Bridgestone raised its annual net profit forecast by 18 per cent today due to a weaker-than-expected yen.
Bridgestone now expects a group net profit of 106 billion yen for calendar 2007, up from its previous estimate of 90 billion yen and the 85.1 billion yen it booked in 2006.
The Tokyo-based company lifted its group revenue forecast by nearly 9 per cent to 3.35 trillion yen, citing the addition of sales from US retread tyre supplier Bandag, which it acquired earlier this year.
Bridgestone had initially forecast roughly flat profits for the year citing hefty investment spending and high input costs that it expected would offset a rapid expansion worldwide.
The yen has fallen in value to around 122 against the dollar and 164 yen against the euro, compared with the company's assumption in February of an average 110 yen and 140 yen, respectively.
The company is now assuming a still-conservative dollar rate of an average 117 yen and euro rate of 154 yen for 2007, leaving room for an overshoot of the new profit projections. Bridgestone estimates a 1 yen fall in the yen's rate against the dollar adds 1.6 billion yen to its operating profit, and about half that against the euro.