Bloomberg News

Bridgestone to Spend $3.9 Billion to Expand Production

October 24, 2011

(Corrects type of tires in second paragraph of story published Oct. 21 .)

Oct. 21 (Bloomberg) -- Bridgestone Corp., the world’s largest tiremaker, will spend a record 300 billion yen ($3.9 billion) next year to expand production to meet rising demand from emerging markets.

Bridgestone will build a factory in the U.S. to produce tires for construction and mining vehicles, and increase manufacturing capacity in China, Bridgestone Chief Financial Officer Akihiro Eto said today.

“In emerging markets right now, demand is topping supply,” Eto said in Tokyo on the company’s mid-term business plan from 2012 to 2016. “We plan to expand our capacity to meet demand as soon as possible.”

Bridgestone and Michelin & Cie. are among tiremakers investing in new factories as rising automobile and aircraft sales in emerging markets spur demand. Global tire sales are expected to climb 50 percent in the decade to 2020, according to Michelin, the world’s second-largest maker of the product.

Bridgestone fell 2.5 percent to 1,695 yen at the trading close in Tokyo. The benchmark Nikkei 225 Stock Average was little changed.

Emerging markets are expected to make up 30 percent of Bridgestone’s fuel-efficient tire sales by 2016 from less than 20 percent now, Eto said. The company aims to boost overall annual sales to 3.6 trillion yen by 2012 and set capital spending at 250 billion yen a year until 2016, he said.

The targets are based on an exchange rate of 85 yen to the dollar.

Michelin, which already has four Chinese plants, said last month it will invest 75 million euros ($103 million) in a Chinese venture with Double Coin Holdings Ltd. and Shanghai Huayi Group Co.

Separately, Bridgestone President Shoshi Arakawa told reporters today that the company’s facilities in Thailand haven’t been flooded. Bridgestone is assessing the costs from disruptions to its Thai output, which are caused by shortages of materials and workers’ inability to commute around flooded areas, he said.

--Editors: Chua Kong Ho, Lena Lee, Young-Sam Cho

-0- Oct/24/2011 23:52 GMT

To contact the reporter on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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