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Investing.com -- Bridgestone Corporation, the Japanese tire and rubber company, reported a 4% miss in Earnings Before Interest and Taxes (EBIT), failing to match the strong Q1 performance of its sector. The company’s revenues stood at YEN 1058bn, a 1% miss to consensus, and EBIT at YEN 111bn.
The company’s >18” share grew in Europe, but for Europe and North America combined, the total volume in the premium was flat year-on-year. This suggests that the premium mix may have declined in the key US market, likely contributing to the decrease in the core tire margin.
Despite the miss, Bridgestone maintained its full-year guidance, which includes a ¥45bn (~100bps margin) assumed impact from US tariffs. Additionally, the company’s increased shareholder returns and cost saving programs are on schedule. Signs of progress were also seen in improving the margins in the Argentina and Retail segments, which increased by 20%pts and 180bps respectively.
The performance of Bridgestone fell short of expectations in all bridge elements other than Foreign Exchange (FX). The mix of 0.3% was notably weak, falling below the 2% estimate and well below Michelin (EPA:MICP)’s Q1 mix of 2.5%. The price was slightly positive at +0.5%, which is below Michelin’s 2.3% but likely in line with Pirelli. Volumes of -2.8% also missed expectations but performed better than Michelin.
Globally, passenger premium segment (>18”) volumes were +4% in Q1, below Pirelli’s +8%, and were up +17% in Europe. However, the sales portion of >18” tires in replacement in North America and Europe were flat year-on-year, suggesting some share loss in North America.
The adjusted EBIT miss was driven by lower revenue and the price/mix performance. Margin weakness was particularly driven by the passenger business, where margins were down 50bps YoY. For the core global tire business, margins were down 150bps YoY, primarily driven by the passenger tire and specialty tire unit which saw a decrease of 280bps YoY.
This was held back by ag tire weakness and raw material inflation. Truck margins improved sequentially with much better US volume performance +8% in replacement, with Firestone gaining +20% in share.
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