Financial Review 2010 - Bridgestone EUROPE

Management’s
discussion
& analysis
Unless otherwise noted, all figures are taken from the
consolidated financial statements and notes. The U.S. dollar
figures have been translated solely for the convenience of
readers outside Japan at ¥81.49 to $1, the prevailing exchange
rate on December 31, 2010. Financial disclosures by the
Bridgestone Corporation (“the Company”) are in accordance
with accounting principles generally accepted in Japan.
Net Sales
¥ billion
2010
2009
2008
2007
2,861.6
2,597.0
3,234.4
3,390.2
Results of Operations
Business Environment
In fiscal 2010, the operating environment of the Company and
its subsidiaries (“the Companies”) was plagued by rising raw
materials and materials prices and the appreciating Japanese
yen. Despite these challenges, the domestic economy showed
signs of slight recovery. Due in part to the effects of government
economic stimulus measures, the United States is gradually
recovering, and the business climate in Europe showed signs of
slight recovery. In Asia, the rate of recovery continued to
accelerate throughout all regions, particularly in China.
Net Sales
Net sales rose 10%, or ¥264.6 billion ($3,247 million), to
¥2,861.6 billion ($35.1 billion). Demand recovered, and sales
increased in both the tire segment and the diversified products
segment. Higher sales were recorded in each geographic
segment as well.
The average yen/dollar exchange rate in fiscal 2010 was ¥88,
compared with ¥94 in fiscal 2009, while the average yen/euro
exchange rate in fiscal 2010 was ¥116, compared with ¥130 in
the previous year.
2006
Note: Net sales exclude inter-segment transactions.
Currency Exchange Rates
Annual average rates
180
130
80
2010
2009
2008
¥146/€1
¥116/$1
Operating Income
¥ billion
162
118
153
104
130
94
2,991.3
06 07 08 09 10
75X30
75.7
131.6
166.5
116
88
Operating Income
Due in large part to the increase in sales, operating income rose
120%, or ¥90.7 billion ($1,113 million), to ¥166.5 billion ($2,043
million). As a result, the operating margin increased by 2.9
percentage points, from 2.9% to 5.8%.
2007
2006
190.9
250.0
Operating Income Margin
2010 2009 2008 2007 2006
% of sales
Sales of Tires and Diversified Products
Net of inter-segment transactions
¥ billion
2010
484.3
2,377.3
5.8 2.9 4.1 7.4 6.4
2009
445.7
2,151.3
2008
611.5
2,622.9
Performance by Business Segment
The tire segment includes tires for passenger cars, trucks
and buses, construction and mining vehicles, aircraft, and
motorcycles, as well as tubes, wheels, related accessories,
retreading business, and automotive maintenance services.
Including inter-segment transactions, the tire segment’s
sales in fiscal 2010 increased by 11% from the previous year,
to ¥2,379.6 billion ($29.2 billion). Operating income also
increased, rising by 104%, to ¥153.1 billion ($1,879 million).
2007
2006
Tires
639.8
598.1
Diversified products
2,393.2
2,750.4
Annual Report 2010 Financial Review
01