Feb. 20 (Bloomberg) -- Bridgestone Corp., the world's largest tiremaker, said net income may fall 16 percent this year, as rubber prices surge to near-record levels and the dollar weakens, deflating the value of overseas earnings.

Bridgestone's net income will probably fall 16 percent to 75 billion yen ($697 million) in the year ending Dec. 31, while sales may drop 0.2 percent to 2.3 trillion yen, the company said in a statement through the Tokyo Stock Exchange. Profit in 2003 almost doubled to 88.7 billion yen, or 102.56 yen a share, from 45.4 billion yen, or 51.89 yen a share. Last year's result beat the company's 78 billion yen profit forecast.

Bridgestone's U.S. sales rose as Japanese carmakers such as Toyota Motor Corp. grabbed record market share and the company offered to settle lawsuits related to a tire recall in 2000. The Tokyo-based company is expanding in Asian markets such as China, where it plans to open its third plant this year. The tiremaker will probably be hurt this year as rubber prices rise.

``Bridgestone and other suppliers will probably not be able to reflect the price hike of rubber onto their products,'' said Norihito Kanai, who helps manage about $2.5 billion at Meiji Dresdner Asset Management Co. in Tokyo.

Bridgestone shares rose 0.4 percent to close at 1,564 yen in Tokyo. The results were announced shortly before the equities market closed in Tokyo.

Rubber Jumps

Rubber prices may rise 30 percent this year, trimming group current profit, or pretax profit from operations, by 34 billion yen, company spokeswoman Setsuko Ozaki said.

Asian rubber prices have risen about 30 percent since December because of the ``wintering'' season in Thailand, when rubber trees shed leaves and the latex supply is cut. Rising demand from China has also boosted prices.

Bridgestone predicted current profit will fall 22 percent this year to 130 billion yen. Operating profit, or sales minus the cost of goods sold and administrative expenses, may drop 18 percent to 150 billion yen.

Sales last year rose 2.5 percent to 2.3 trillion yen, from 2.25 trillion yen. Operating profit fell 0.3 percent in 2003 to 183.3 billion yen, while current profit rose 13 percent to 167.3 billion yen.

The tiremaker based its forecasts for 2004 on exchange rates of 105 yen to the dollar and 120 per euro. Last year's results were based on 116 yen per dollar and 131 to the euro.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net.

Last Updated: February 20, 2004 02:16 EST