Bridgestone Corporation

Hello, everyone. I am Ishibashi, Global CEO.

Today, I am going to explain the company's summary of financial results for 2024 and business plans for 2025. First, summary of 2024 consolidated financial results.

The structural changes in the automotive industry due to the rise of Chinese EVs and amid the new threats of acceleration of tire industry structural changes caused by an increase in low-end imports, especially in Latin America and Europe, the company did achieve year-on-year increase in both revenue and adjusted operating profit, partly due to a tailwind in foreign exchange rate. Revenue was approximately JPY4.4 trillion, adjusted operating profit, approximately JPY480 billion, with adjusted operating profit margin of 10.9%.

Net income from continuing operations was JPY295 billion, ROIC, 8.2%, and ROE was approximately JPY100 billion of rebuilding cost and was at 8.1%, both below the previous year's level. With the early start of business rebuilding on its second stage, thorough pursuit of premium focus, promotion of sales mix improvement, the company continues to maintain and reinforce a solid foundation of premium tire business.

Global business cost reduction initiatives yielded about JPY75 billion to support the business performance of the company. However, there remained issues in the speed of performance recovery, particularly in Brazil where business conditions deteriorated.

And in addition, the profitability of Japan tire business and diversified products business weakened, which caused the company to land below the fiscal year guidance of August 2024. Shareholder return is focused at JPY210 per share with no changes from the February guidance.

Based on these results, the company positions 2025 as "The year of Emergency and Crisis Management." The company will move towards growth with quality, reinforcing defense, while pursuing offense initiatives and to lay foundation for future growth.

Looking at performance trends, since 2021, earning power and capital efficiency, such as adjusted operating profit margin, ROIC, ROE have been declining and with a strong sense of urgency. The company will focus on building a strong business quality in 2025 from "The year of Emergency and Crisis Management."

Now, I will go through the detailed explanations of our financial results for 2024 by priority management issue area. The North American business, which had issues, increased in both revenue and profit versus prior year, which is a tailwind from the currency exchange.

In passenger car tires, unit sales of both new car and aftermarket tires were down from the previous year, but in terms of unit sales of Bridgestone brand tires for the aftermarket use, sales of ultra-high rim diameter tires of 20 inches and larger was 112% of the prior year. In TB tires, the sales of aftermarket tires was 108% from the prior year and business performance recovered.

The premium tire business foundation has been reinforced. And overall, the premium tire business secured an adjusted operating profit margin level of 14%.

In 2025, the company will promote profitability improvement through optimization of business footprints and costs. The company will rebuild consumer tire business in America, steer the operations in growth areas such as with the strengthening of the freight business with truck and bus tires.

Thus, the company will start on the growth with quality once again. Latin America business, with many issues, decreased in revenue and profit versus prior year to land in the red.

In Argentina, by damage control, we were able to revamp our performance to the breakeven level. In Brazil, however, the deficit continued as measures against structural changes caused by an increase in low-end imports were still insufficient.

In January 2025, the company announced the optimization of plant capacity and workforce in Argentina and Brazil. The company will further reinforce the rebuilding to "transform the shape of Latin America business" to aim for business profit in 2025.

Europe business, which had been a challenge, increased in revenue and profit versus prior year to overcome the worst phase. In the premium tire business, passenger car replacement segment sales increased in revenue and profit versus prior year.

In the truck and bus replacement tire business in the aftermarket, retail and retread operations and deficits were reduced. In retail operations, the early start of business rebuilding with operational improvement and loss impairment started to contribute to the overall results.

In 2025, the company will enhance our premium focus, continue to assess the second stage of rebuilding to "transform the shape of Europe business." The company will further focus on quality and aim to become profitable in truck and bus retail and retail operations -- retread operations.

In Specialties Tire Solutions business such as mining and aircraft tires, the areas of the company's strength, we increased profit versus prior year. In the mining tire business, sales continued to be strong.

In aircraft tires, sales expansion and profitability also improved significantly. In 2025, the company will continue to promote growth with quality by maintaining high profitability and deepening the linkage between premium tiers and solutions.

Summary of 2024 consolidated financial results by business portfolio. In the premium tier business as the core business, the company secured adjusted operating profit of approximately 14%.

In solutions business as growth business, we secured an increase in revenue and profit versus prior year. On the other hand, in diversified products business with deep rooted issues, that segment resulted in a significant decrease in profits.

We at the company will engage in initiatives to rebuild the diversified products and business in 2025. Based on these results, I would like to present the business plan for 2025.

We have positioned 2025 as the year of emergency and crisis management, and with a new global management team, we'll demonstrate "Jukuryo-Danko" and we'll move forward to the true next stage in 2026 by implementing both defense and offense activities in tandem. As for the defense initiatives, following the first stage implemented in the 21MBP in 2024, we embarked on rebuilding at the second stage, which will be further strengthened in 2025.

Bridgestone West, which consists mainly of the US and Europe, has partially started to contribute to profitability. In Bridgestone East, which consists of Japan, Asia, India and others, will continue to rebuild the Japanese tire business and diversify the businesses, which still have many management issues with a sense of urgency.

In particular, in West, last year, we started rebuilding effort to transform the shape of Europe business. In September, we announced our intention to close Lanklaar plant in Belgium.

Also in Europe, we'll enhance efficiency of production, sales, TCE and corporate functions, while accelerating assessment of rebuilding TB and retail operations. In the US, on January 24, 2025, we announced the closure of LaVergne plant that produces TB tires and optimization of the production capacity and workforce at the Des Moines plant that produces AG tires and optimization of workforce in corporate sales and operations functions in the United States.

This by optimizing footprints in the US, strengthening competitiveness and enhancing business quality, we will enhance our premium tire business. Since its merger with Firestone in 1988, Bridgestone has been contributing to the US society, the economy and local communities through establishment of new tire plants in Warren and Aiken and investment in sales and service network of 2,200 equity retail stores and technology center.

Today, with about 34,000 employees, 24 business footprints and 2,200 equity retail stores in the US, our business in the US has become the largest operation in Bridgestone, accounting for 40% of the global revenue. Going forward, by reinforcing and expanding the production and sales, including retail, with no change of the policy of local production for local sales, we will remain committed to contributing to society, economy and mobility of people and goods across the US.

We'll also integrate and simplify the entire list of organization, streamlining organizations in the Americas and Europe, such as solution, tire sales, finance, R&D and production. In terms of management structure as well, we're solidifying the defense.

Since January 1st, we have evolved into a new and true global management structure and established four executive Vice President positions. We clarified the profit and loss responsibility of Bridgestone West and East and cross-functional global optimization responsibility of Global CTO and Global CAO, CSO.

By ensuring that each executive fulfills its roles and responsibility on an equal positioning, we launched the management, which reinforces governance and guarantees check and balance functions to focus on execution and delivering results. Based on this defense approach, we are also promoting offense activities.

In premium tire business, we are accelerating our premium focus and global business cost reduction initiatives. In OE tires of passenger cars, we'll strengthen an approach to premium vehicle and OEM, prestige OEMs and to premium EVs through ultimate customization enabled by ENLITEN technology and plan to have approximately 170 new car models equipped with ENLITEN in 2025.

We also increased high rim diameter tire OE fitment, and in the US and Europe, increased the sales ratio of OE HRD tires to about 75% in 2025, and in replacement, where we will take in recursion demand, increased the sales ratio to about 45%. In addition, the premium tire sales ratio will be enhanced to over 60% rather.

In PS replacement, 30 products equipped with ENLITEN will be launched this year, increasing the equipment ratio to 35%. Furthermore, we're implementing global business cost reduction activities at a speed that will enable us to achieve the 24MBP target of about JPY100 billion one year ahead of schedule through global procurement, global supply chain management logistics transformation, BCMA, shift to green and smart, and steady on-site productivity improvement.

Going forward, we'll position the US, India and commercial B2B solution businesses as new growth markets and will drive growth with quality. In the US business, we will focus on rebuilding the consumer business, creating Dan-Totsu products and new sales structure leveraging features of Bridgestone and Firestone brands to strengthen multi-brand strategies.

In particular, in the revitalization of Firestone brand, we'll leverage the traditional brand power of America's tire since 1900 in the US. To establish a unique position by launching new products, expanding the Firestone [indiscernible] network with 2,200 retail equity stores and strengthening Firestone dealer network.

In addition, we'll promote linkage with B2B solutions in the LT domain. In mining and aviation solutions, we're expanding solutions based on co-creation with customers by integrating the real and digital worlds.

In mining solutions, we are expanding co-creation with BHP and Komatsu. And in aviation solutions, we're expanding co-creation with JAL to include large aircrafts.

In addition, in TB solutions, we'll expand Bridgestone Fleet Care in the US and strengthen customer success activities. I would like to explain our business plan for 2025, which reflects defense and offense.

Revenue is [JPY43.3 billion] (ph) based on sales with high degrees of certainty. Excluding foreign exchange, the year-on-year change will be 102%.

Adjusted operating profit is expected to be JPY505 billion, 111% over previous year without foreign exchange. Adjusted operating profit margin is targeted at the 12% level, which is up about 1% over previous year.

ROIC, a key management indicator, is expected to recover to 9.2%. On the other hand, in 2025, we have included resources for rebuilding, the second stage of rebuilding at the level of approximately JPY100 billion in adjusted items, and we expect net income from continuing operations to decrease year-on-year to JPY253 billion and ROE to be 7.2%.

We will go through with the rebuilding during the year 2025, which we have designated as "The year of Emergency and Crisis Management." The main assumption used as the exchange rate was JPY145 to $1.

Basic raw material cost per unit of natural rubber is foreseen to increase over prior year. As a new management issue, we are closely monitoring the impact of additional tariffs under the Trump administration.

There are uncertainties surrounding these impacts, including the timing of the application of the 25% tariff to Mexico and Canada, and we are not factored this into our financial outlook in external commitment for February. Due to the significant impact on both internal and external stakeholders, we will not act hastily.

We will assess potential cases and construct multiple scenarios to establish a system that would allow us for quick response. We will accurately assess the situation, activate the execution plan at an appropriate timing.

Here, you see the segment based business. And the premium business will be continued to maintain an operating margin of about 14%.

The solutions business as expected achieved a significant increase in revenues of approximately 140% year-on-year as well as an increase in profit. Diversified product business has deep challenges, but will aim for an adjusted operating margin level of 6% through business rebuilding and steady improvement activities.

While being very selective in resource allocation, we will lay foundation for future growth. In the 24MBP, we had planned a total of about JPY1.4 trillion for the three year period, but we strengthened prioritization of our capital investment in light of the drastic changes in the business environment.

We expect approximately JPY400 billion for 2025 and the same level in 2026, and in the revised 24MBP, we expect to achieve approximately JPY1.2 trillion, up 20% level of the JPY1 trillion level of the 21MBP. Bridgestone is committed to maintain -- maximizing contribution to all stakeholders, including shareholders, customers, employees, partners, local communities and sustainable society based on the E8 commitment as the access of value creation under our mission of serving society with superior quality.

For shareholders, we will increase shareholders' value by improving capital efficiency and strengthening shareholders' returns. For our employees, we will increase the amount of investment in human resources per employee based on management KPI of enhancing talent creativity and provide rewards for high performance.

For a sustainable society, we are making advances to realize carbon neutrality, including CO2 reduction for circular economy, increasing the ratio of renewable resources and [on nature] (ph) positive activities focused on the sustainable use of natural rubber and water resources directly related to our business. With respect to reinforcing our capital policy and shareholders' return, we have begun the next stage of our initiatives centered on uniqueness of Bridgestone as access.

Basic stance is to achieve growth with quality, sustainable enhancement of corporate value by improving profitability through reinforcing earning power and carefully selecting and implementing strategic growth investments. To support this, we will attain financial soundness while balancing the capital efficiency improvements in 2025.

We plan share buyback of up to 75 million shares at the cost of JPY300 billion and cancel all shares that are repurchased. The company will use JPY200 billion in debt and JPY100 billion in cash reserve to fund the share buyback.

As a result, consolidated equity ratio will move from 65% in 2024 to 60% in '25 with a medium-term target of 55%. This will be a gradual and steady approach capturing changes in external and internal environment.

We plan to increase shareholders return by JPY20 from JPY200 forecast for 2024 to JPY230 for 2025 and we'll continue to improve the dividend amount on the stable and continuous basis. We also plan to raise a consolidated dividend payout ratio of 50%, one of the highest in the industry.

In addition, in order to support growth with quality, we have updated our capital allocation. As for the sales of capital allocation, although operating cash flow has decreased since the 24MBP, we have secured approximately JPY2.1 trillion, about the same level of 24MBP by utilizing cash on hand and borrowings.

This will be allocated to measures that contribute to the enhancement of corporate value. We will carefully and selectively invest approximately JPY600 billion in strategic resources, consisting of strategic expenses and investments during the 24MBP and we have updated its policy to enhance shareholders' return.

This is a business plan for year 2025. The business environment is in the whirlwind of upheaval, and we anticipate another challenging year.

We will continue to strengthen our business structure by tightening our global grip, and we will pave the way for future growth by placing the highest priority on thoroughly solidifying our defense and steadily implementing our offensive initiatives. In order to achieve Bridgestone's 100th anniversary and our vision for 2031, we will evolve into strong Bridgestone, reinforcing our earning power and move forward to the true next stage in 2026.

We look forward to your continued understanding and support. And thank you very much for your attention.

Thank you very much. So, that was Mr.

Ishibashi, Global CEO, for the summary of financial results 2024 and business plans for 2025. Now, to continue to call upon the Global CFO and Executive Director in-charge of Global Finance, Mr.

Naoki Hishinuma, to discuss financial results for fiscal 2024.

Hello. My name is Hishinuma and I'm in-charge of finance.

This is my agenda today. So, let me start with the consolidated business and financial performance for fiscal 2024.

Consolidated financial results for the full year of 2024 landed with a year-on-year increase in revenue and profit with adjusted operating profit margin of 10.9%. Profit attributable to owners of parent was JPY285 billion.

While a gain on sales of fixed assets of about JPY63 billion was recorded as an adjustment item in the second quarter, the second stage of rebuilding was accelerated to improve future profitability, and related losses and expenses were recorded, resulting in a year-on-year decline in profit. The breakdown of adjustment items will be explained later.

ROIC was 8.2%, down 0.5 points from the previous year. I'll now explain the analysis of adjusted operating profit for fiscal 2024 versus prior year.

In addition to sales mix improvement and business cost reductions, including improvement of Genba operations at production sites, ATO went from the weak and observed impact of the deterioration of Latin America business and volume decrease to landed a slight increase in profit compared to the previous year. Consolidated financial results by segment for fiscal 2024; While profitability in Asia Pacific, India and China and Europe, Middle East and Africa increased during the year, profitability in Japan and America decreased.

In the Americas, auto sales of truck and bus tires recovered in North America. Profitability declined due to lower sales volume of passenger car and light truck tires from the end of significant year-on-year decline in profits from the Latin American business.

In Europe, Middle East and Africa, profitability improved as a result of mix improvement by expanding sales from the higher rim diameter tires as well as the partial contribution of the effects of rebuilding. Consolidated financial results by product: While sales volume of tires for passenger cars and light trucks decreased, the profit margin remained at the same level as the previous year on the back of expanded sales of high rim diameter tires from the replacement market and then the increase from the -- in the HRD tires composition ratio.

In the truck and bus tire business, although full year results were on a par with previous year, sales continued to grow year-on-year, especially in North American aftermarket tires and profitability continue to improve year-on-year in the final quarter continuing from the third quarter. For Specialties, profit increased year-on-year due to strong sales of high profitable mining tire solutions, growth in the aircraft tire solutions business and the tailwind from weaker yen.

The profit margin also improved 0.7 percentage points to 22.3%, a high level of profitability. The diversified product business is explained on the next page.

In diversified products business, the hydraulic hose and crawler business was significantly impacted by lower sales versus last year due to a decline in demand for construction machinery, resulting in lower sales profit and profit margin. In the sports and cycle business, operating profit decreased year-on-year, significantly affected by the decreased profits in the cycle business and the business ended in operating loss.

Diversified product business in the Americas, operating profit declined year-on-year due to the severe business environment for heavy duty trucks and trailers as well as start-up costs for our new EV-related businesses. Adjustment items are listed here.

We ended with full year loss of JPY40 billion, and the breakdown is as shown here. While a gain of JPY63.3 billion on sales on company housing in Roppongi was recorded in the second quarter, as the second stage of business rebuilding is being accelerated, impairment losses and rebuilding related expenses were recorded, especially in Europe, China and South America.

This slide shows balance sheet and cash flow highlights. Total assets amounted to JPY5,723.5 billion down year-on-year excluding currency impacts.

Due to continued strict control of lean inventory, finished products decreased excluding currency impacts from the end of the previous year. We plan to improve the cash and cash equivalents to monthly sales ratio and equity ratio from the viewpoint of efficiency, which will be explained later.

Free cash flow was JPY293.8 billion, mainly due to cash inflows from gain on sale of fixed assets despite year-on-year deterioration in operating cash flow. Capital expenditures totaled JPY389.8 billion as a result of careful selection of capital expenditures while maintaining a balance between investments for the future and business rebuilding given the limited management resources.

Now, I will explain the consolidated guidance for full year of fiscal 2025. For consolidated fiscal 2025, we forecast revenue of JPY4.370 trillion, up 2% year-on-year, excluding impact of currency and adjusted operating profit of JPY505 billion, up 11% respectively.

Adjusted operating margin is expected to be 11.7%, an improvement of 0.8 percentage points year-on-year. Profit attributable to owners of parent is expected to be JPY253 billion, down 11% year-on-year due to one-time expenses arising from business rebuilding.

And ROE is expected to deteriorate by 0.9 percentage points from the previous year. We expect ROIC to improve 1 point through reinforcement of earning power.

Next, analysis of adjusted operating profit for fiscal 2025 versus previous year. Given the growth in sales of global replacement tires and improvement in sales volume and mix through increased sales of premium tires, as well as effects of rebuilding, we expect adjusted operating profit to increase by JPY54.7 billion excluding currency impacts.

Next, the guidance by segment. In the Americas, we expect both revenue and profit to increase year-on-year and the profit margin to improve by 2 percentage points.

The main drivers are expected to be sales growth of replacement truck and bus tires in North America and business rebuilding. In Europe, Middle East, Africa, we forecast revenue to drop, but profit to grow with a 1.6 percentage point improvement in profit margin.

In addition to the mix improvement due to sales expansion of HRD tires, the effects of rebuilding initiatives implemented last year expected to contribute to the improvement in profitability in 2025. And finally, I will explain our financial strategy and shareholders' return.

We are working to improve ROIC spread by improving ROIC by enhancing our earning power through profitability improvements and growth investment and to reduce walk through financial strategy and to continuously increase corporate value by expanding equity spread. In order to move our financial strategy to a new stage, we updated our balance sheet to be optimized based on uniqueness of Bridgeton.

This slide shows our optimal balance sheet for the medium term. As of the end of 2024, equity ratio is to be 65% and financial soundness is improving at a faster pace than expected.

We believe that increasing the spread between ROIC and WACC and increasing the equity spread through balance sheet management will help increase corporate value. And we have decided to improve our capital structure to be both sound and efficient.

And we are considering the optimal capital structure based on the uniqueness of Bridgestone. We have set the level of liquidity on hand at 1.5 months of monthly sales and desired equity ratio at 55% over the medium-term.

We will steadily and increasingly move closer towards the balance sheet we want to have. We will continue to update the optimal balance sheet as it changes with our business portfolio.

Here are the details of the capital policy to be implemented in 2025. As a measure to invest in investment to enhance corporate value and optimize capital structure, we will acquire up to JPY300 billion of its own shares.

We plan to use funds raised at the JPY2 billion level and liquidity on hand of JPY100 billion as the source of funds. Finally, on dividends.

As measured to enhance shareholders return and control capital to an appropriate level, we have changed the dividend payout ratio to 50%. The annual dividend of 2024 is JPY210, an increase of JPY10 from the previous year.

For 2025, we plan to pay a minimum dividend of JPY230, an increase of JPY20 from the previous year. We will continue to strive for stable and continuous dividends increase to enhance shareholders' return.

This concludes my explanation. Thank you very much for your attention.

Thank you very much. That was Mr.

Hishinuma, Global CFO, on the subject of 2024 financial results. Let us move on to Q&A.

Let me explain to you that first of all that there are pre-designated analysts who will go first to ask questions and then move on to media representatives to receive questions as you raise your hand. So, first and foremost, from Morgan Stanley MUFG Securities, Mr.

Kakiuchi, please go ahead.

From MSMS, my name is Kakiuchi. Thank you very much.

So, my first question, severe business environment indeed. So, there was various initiatives that you're trying to counter the pressure, and it was very clear.

Last year, you kept on saying quarter-by-quarter that the business environment continued to be severe. What about as of today?

From looking around here in the business environment, are there any particular regions or the segments where the mood and the symptoms are starting to ease? What do you think that the severity that will continue to persist in 2025?

So, depending on your expectations and your view, that may change the analyst view? So, that's my question number one.

So, please go ahead.

So, if I may, I would like to ask my second question. 2025, the financial plans, Mr.

Hishinuma explained the JPY59 billion as the selling price, the increase. And how that would result in the end result that you quoted.

So, though, the feedstock, the price will increase to the tune of JPY30 billion, it sounds as though that you will be able to counter that adequately with some positive plans. And about the tariff, import tariffs, how it is going to be implemented in the North America in particular, I understood that as of today that you did not include the -- with the explicit numbers.

You gave us a nuance and qualitative remarks, but if you can share further within reason?

Yeah. Sorry, we kept on saying the environment continued from there to be severe and severe and severe.

In North America, on the TB tire, this side of the business, a turnaround has occurred. And so, since last year, towards the end of it, the business and the demand has been continuing to go up.

I participated in the dealer meeting back in January, before the truck and bus tire and the dealers and distributors, [indiscernible] obviously, and there was more positive. And the initiatives they have taken root from the India operations.

This over truck and bus tire in the business, I have strong expectations. And what about for the consumer tires?

Will the EU need to refer into the tariff situations, which still remain rather uncertain, but let us wait to see. So, in any case, the commercial side truck and bus tires and we have stronger expectations.

And also, I talked about India. The business in India, there may be not as large as in the larger regions, but it is steadily and growing and we have been maintaining our top position, so expectation for the future.

So, those are all in the business externalities. We saw North America getting better, among others.

However, our actions would be that, as I discussed, for the consumer goods, multi-brand strategy, particularly with a fragile activation of the Firestone brand. So, not only Tier 2, but we try to penetrate further into Tier 3 auto market as well so that we can expand sales.

So that is going to be the steering of the operations and with high expectations. Point #2, the selling -- on question #2, the selling prices, I'm sure Mr.

Hishinuma will explain, but on tariff, may I say that the various plans are dissimilated and for each of the possibilities, we are trying to come up from the worst possible plans. And we do have to be mindful of end consumers.

We do have to deal with the core assemblers. So, import tariffs in which companies, how the process are going to be the enforced, we do not know for sure.

So, how that can be countered with the strength of our supply chain and distribution network? This is something we certainly should like to be adept at that.

The US local production plants and the capacity, the view of that, will be further utilized. That's the fundamental assumption.

So, there is a combination of all of those on the possible -- the plans to mitigate the otherwise bigger impact of the tariff measures. So that's our thoughts as of today.

And from myself about selling prices, as you pointed out JPY59 billion positive and the RMI that's the JPY28 billion, that's moving Western market. And so, on net replacement, the markets, the prices will be heightened by JPY31 billion.

And then, JPY29 billion worth of input cost from the input -- the feed prices. So, basically, our basic discipline will not change, just adjust to what is going to come in the field ahead.

If I may add, this year, ENLITEN new products will be launched using the Bridgestone brand and we are going to be aggressive at that. Firestone brand, there's going to be one year delay.

So, the good effect from the new models and products, to get to the proper pricing as the company would advocate. So, the mix in pricing, new product launch and the good effects, as well as premium brand and high rim diameter tires, these are the three factors that we are focused on.

Thank you. I hope we answered adequately.

Yeah. Just quickly about the truck and bus tires in North America.

LaVergne, the plant here, you decided to close down. How that would possibly affect the supply in the local market, no negative effect?

Correct. We have growing plant, there was very high profitability and the productivity and quality level.

And so, on the production side, we would strengthen them when the production arrangements from Warren. Truck and bus tires, my view is that there is still available on the production capacity that we can tap into.

So basically, I'm centering on the Warren, the plant in North America, from Latin America, and possibly even from Japan we will support, but it is a Warren plant under which we have high confidence in North America.

Thank you very much.

Thank you.

Thank you very much, Mr. Kakiuchi.

Next from Mizuho Securities, Sakaguchi-san, please.

I'm Sakaguchi from Mizuho Securities. Thank you.

Thank you.

Thank you for taking my question. I have two questions.

Firstly, this year rebuilding resources, we'll have JPY100 billion investment, which is quite high. But as far as you have announced, we don't expect the amount to be that large.

So, at which pace what sort of specific projects will be announced? Can you give us a clue as to what announcement you're going to do?

And if you follow through with this then, in the last final year, 13% adjusting operating margin and ROIC 10%, those are the targets for the final year of the current MBP. So, are you going to be ready for achieving these?

Is that correct? And also, the expense that you spend and the results that you get from that, of course, I know that the business environment is quite uncertain, but what is your vision that you're aiming for with the results reaping out of the spend?

Well, JPY100 billion for this year, of that majority is for LaVergne plant closure, the resources that were spent on that. As Hishinuma will explain later, this really presents a large part.

That's what I wanted to say first. And then, for 2026, this is the final year for 24MBP, and ROIC is the number one target, the most important target for us, and 10% level is what we're aiming for.

And that is assumption that we frame our activities on. Obviously, in terms of ROE, we're getting closer to ROE 11% and that's our aim.

And adjusted operating margin from 12% to 13%, we would like to bring that up to 13%. So, we have to follow through with this to enhance business quality and then we are sowing the seeds for growth.

And with a better business quality, we would like to change the gear to expand sales and then you can enhance operating utilization ratio further. And then, in 2026, with the lean structure, the top-line may be difficult, but in terms of business quality, we would like to bring our numbers to the promised ones as much as possible.

That's how we are doing our business. Now, Hishinima, please.

Well, in that sense, the expenses for rebuilding, as was explained earlier in '24 and '25, JPY100 billion, respectively. So, in total, about JPY200 billion has been posted.

So, there is no cash items included. So, there is no direct cash outflow, but in terms of expenses that is the level that we're talking about.

And as for 2025, return on that spend in terms of that effect, about JPY40 billion return has been incorporated in our plan at the moment. Obviously, toward 2026, more return will be incorporated because there will be cumulative effect and there will be better business quality of our structure.

So that's how you are supposed to look at this.

So, in the first half, there will be various defense measures to be taken and then in the second half, you're going to aim for more growth by improving top-line and reaping the results of JPY40 billion or plus out of the two year efforts that you have been doing?

Yes, there will be JPY40 billion in 2025 already and then there will be more effect that we will see in 2026, but especially -- so, the projects are in different timelines. So, based on those timelines, we are going to make announcements.

Thank you. And second question is about optimal balance sheet.

So, the changes between the end of last fiscal year and this fiscal year, so mid-term 55% of equity ratio is your vision. So, in terms of timeframe, aspiration, 2030, so is that what you're talking about in terms of timeframe?

Or in the final year of the current MBP and also the next MBP, is that also something that has been included? So, can you give us more colors as to which timeline are you going to achieve this target?

Well, can you give us a clue?

Well, it is true that looking at the current situation in this fiscal year and with the new Trump administration and various initiatives, there could be various scenarios. So, then, next fiscal year, we cannot say this and this will be done very quickly.

So, in terms of midterm, of course, you have to go through thorough discussions. That's why we're using the word midterm.

So, 60% level for this fiscal year, so that will be the peak. And then, in the midterm, in three years' term, when you say midterm, that is the kind of scope that we have in mind.

And of course, 27MBP, obviously, we would like to achieve this. That is the timeframe that we have in mind.

Okay. Thank you very much.

Thank you.

Thank you very much, Mr. Sakaguchi.

Because of the time limitations, I would like to ask the next questioners and onwards to ask just one question. SMBC Nikko Securities, Mr.

Maki, please.

Thank you very much. I'm Maki of SMBC Nikko Securities.

Because of one question, I am going to be asking more or less abstract question. I would like to ask you about the succession.

For example, in 2025, JP500 billion of profit, and I think you were going for growth in finance and plan in the past in that order, but I think they are now in more or less the same parallel level. How are you sort of changing your approach?

I think this is something that is welcomed. But since Mr.

Ishibashi assumed your position, I think there has been priority sets on different things. And for the long-term Bridgestone, you think you might be looking for margin or ROE, some new measures have been taken.

You have talked about the business strategy and the KPI and what kind of perspective you have. What is the priority as well as a long-term business management plan do you have?

Well, basically because this is business, we need to grow and we want to grow with quality and that is at the very foundation. So, including a capital strategy, we need to improve the capital efficiency and I believe that that is the big objective that we have.

In that sense, last year and a year before last year, I actually looked into various solutions and worked on new challenges, but then there are something that we need to reflect on what we have done. There are risk management we might have been lacking and not sufficient.

And also, the quality of the management and the business is not fully adequate yet. So, in that sense, we need to have a lean, good quality management and we need to reestablish ourselves so that we will steadily move on in the future.

So, last year and year before last year, we had reflected upon some of our activities and we have had various discussions. As you know, since January 1st this year, there is a new global management team, G-EXCO.

So in that sense, we are looking into good grips of our business lead management and we need to recover growth. As I said earlier, there are various challenges we are experiencing in the United States.

So, we need to look very attentively about what is happening and we need to sort of go back to the growth with quality and invest for that purpose. So maybe you might think that we are sort of taking a seat for the time being and we will focus on the quality so that we can take new initiatives and challenges next.

So, in that sense, we have not given up growth at all. Growth, obviously, and capital efficiency and shareholders return, they are most important.

Bridgestone needs to make biggest contribution so that we can provide return to our shareholders. We have discussed this in our Board of Directors meeting, et cetera.

In order to provide that, we need to grow and we need to have good earnings trends. And that is how we are going to be carrying out our business in that sense, contribution to the shareholders.

And regarding the capital efficiency, we need to move on to the next stage. We are now moving on to the next stage now.

So, within this timeline, we are taking some defense, but we are taking a new stage of capital strategy policy. We need to have growth with quality that is at a basis.

Thank you very much. So, you have long-term aspiration, 15%, and you do have the margin thinking and the growth that you had considered in the past.

It may be a little slower in the beginning and it will be higher in the towards the end. So, in that sense, you do continue to have that aspiration?

Well, there is aspiration and we need to enhance the solution in aspiration steadily. But when you look at B2B, one of the solutions, we have about JPY350 billion level and they will continue to grow and they will not change, but B2C in many areas, we did not do well, we failed.

And in that sense, B2C must be carried out and we need to further work on this intensively. So, the market environment and what we have done and doing will have to be seriously reviewed so that we can make steady improvement.

But the basic strategic move and the direction is that for core and solutions, the direction will not change, will be kept.

Thank you very much.

Thank you very much, Mr. Maki.

Thank you, Mr. Maki.

So, moving on from -- I would like to call upon Mr. Yoshida from Citigroup Global Market, please.

Thank you. So, one question from myself as well.

Adjusted operating profit, they [JPY500 billion] (ph), and I can see that there's going to be JPY40 billion of the rebuilding benefits. And I understand you keep on saying that the North American truck and bus tire business will have -- keep coming back.

So, I may want to hear something more. So, I'm just wondering whether or not that you have other thoughts behind those sets of plans.

And also, by 2026, they going to get as close 13% as possible. But between '25 and '26, as you indeed transform the shape of the business and the rebuilding, to what extent do you get closer to the 13%?

Or do you have any already identified initiatives on which you're confident that you -- in the approach in the 13% level more surely? Thank you.

2023 and '24, there will be various commitments on the top-line level that was made. And despite that, we fell short of that.

Of course, be it, Latin America or Europe, there were changes in the India and the business, the externalities. But after all, it remains as a fact that we were not able to fulfill on the commitments once made.

Coming out of that this year, the team becomes stronger in the business foundation, which means that by enhancing [and better planning] (ph), that we would increase profits. But rather than continuing the -- focusing on that, only 1% or 2% of the prior year level, why net focus on the cost and expenses?

So that is the reason why I kept on focusing on that. So, the top-line, the view for 2025 is rather conservative in comparison with our past.

So '25 and '26, by the time we get to 2026, and the setting a sight the President Trump's administration, we expect to be able to once again steer under the gear of the overall [indiscernible] towards the growth. So that we can manage profitability with more aggressive pursuit of the revenue enhancement so that we can get to the next stage of the business gains.

What that means that the ROE, ROIC, the adjusted operating profit margin, everything, all of those, indeed, should benefit. So, with rebuilding incentives, of course, I would expect benefits to accrue.

Anything from you?

Yes. For 2025, about JPY40 billion, the benefits of that, and as the accumulation, that would take effect.

And by the time we get to the '26, it is going to be bigger than JPY40 billion. However, I cannot quote any particular number.

Rather than forcing ourselves to do that, why not do exactly that we commit that we will do this year. So, that comes rest.

Thank you. Thank you very much.

Thank you very much, Mr. Yoshida.

Next, BofA Securities, Sakamaki-san, please.

Sakamaki speaking. Thank you.

Can you hear me? Thank you.

So, similar to what Yoshida-san asked, this fiscal year's plan and rebuilding efforts that you're having, well, in Page 23 of Mr. Ishibashi's material, if you look at that, JPY20 billion increase in profit in this fiscal year is expected, but JPY30 billion from solutions and diversified JPY10 billion plus premium is expected to decline.

I think that's how you're planning. So, JPY10 billion in profit decline in premium.

So, JPY40 billion effect in rebuilding. Where can you see in this plan?

That's what I'm wondering. And also, JPY640 billion for next fiscal year is the target.

And then Europe and South America rebuilding efforts and Thailand and Japan, logistics and supply chain management transformation, which one will be contributing? I think the JPY100 billion from mostly from LaVergne closure.

So, do you think that this will be more expanded than a plan and there will be more effect in the next fiscal year from the rebuilding, but you have not made any announcement that's why you came up with this very conservative plan? So, on underlying profit, JPY40 billion, where is it included?

So, rebuilding benefits, it's not incorporated really because you haven't made any announcement, is that how we should understand this, because it was not clear?

So, where the JPY40 billion is incorporated in this plan, that's what you're asking about. So, in terms of profit increase, so diversified products, about 40% of the JPY40 billion is included and then expenses, in the SG&A expenses, about 40% is included, and in South America business the remaining 20% is incorporated in this plan at this moment.

Well, so earlier, JPY640 billion in 2026 was mentioned. Obviously, AOP and ROE and ROIC, in terms of percentages, so we are taking on this challenge to achieve these.

But if you look at the top-line, compared to the initial assumption, it is not that sufficient. And in South America especially, we're talking about JPY30 billion, JPY40 billion in profits, but now we are in the deficit.

So, that's where we are starting from. And Europe, we are going to transform the shape from now on, and to what extent we can increase the top-line given this environment that is the key.

So, in terms of business structure quality, ROIC and ROE and AOP, in terms of these indices, we are going to bring the level up to reach the targets. And as for North America, we have made external announcements mostly.

So, there are actually things that have not been able to be announced in other regions. So, going forward, we are going to improve the quality of the business and that's what we are going to do.

Does that answer your question?

So, then LaVergne and Lanklaar plants closure, that effect has been included and that will be done in this fiscal year and the effect will be seen in the next fiscal year looking at the JPY40 billion?

Well, as we retrain, well, we are going to turn that business into profitability in this fiscal year, that's what we're trying to do. So, it is not clearly explicitly shown, there are things that are not explicitly shown in this slide.

So, we have to talk to the legal department of global headquarters in coming up with this slide. Of course, I want to share as much information as possible in terms of IR, but actually that is very difficult.

This is as far as we can disclose. I hope you can kindly understand that.

Okay. Thank you.

Thank you very much, Mr. Sakamaki.

And from here on, we would like to ask the media to ask questions. Of those from the media, if you have question, please push the raise hands button on the screen.

And because of the time, I would like to ask you to limit your question to one each. I will call on the name and I will unmute you, and if you can show your face, please turn on your video and show your face.

From Nihon Keizai Shimbun, [Mr. Kitagawa] (ph).

Can you hear me? I am Kitagawa of Nippon Keiser Shimbun.

Hello. I have two questions for Mr.

Ishibashi. It has already been mentioned somewhat, but for this year, there is an increase in dividend and you are going to be having a share buyback.

Now, concerning the profit situation, there is an increase of the low-end products from China and there are some uncertainties, but you are still trying to improve your return to the shareholders, et cetera. And as for the adjusted operating profit, you are looking for increase.

What kind of risks have you incorporated in reflecting in this final figure?

First of all, as for the dividend or return to the shareholders, we are trying to enhance that and also the capital policy of share buyback. As for the capital policy, in 2020, equity ratio was 50%, has come down to 50%, but we have been able to improve it to 65% although in difficult years.

So, there are fiscal soundness that we have been able to improve during this time. And we would like to look and work towards 55%.

We need to fill in some of the gaps so that we can move on to the next stage of capital policy. And for the purpose, we are going to be purchasing share buyback.

And as for the return to the shareholders, the payout ratio of 50% is something that we are aiming at. It used to be 40%, but now we are trying to improve that to 50%.

I believe that is one of the highest levels in our industry. In this way, we will have a very sound return to our shareholders.

And I think even with that, we will be able to secure our fiscal soundness. And based on that, we have decided to take on those measures.

For this year, we need to look at our results, and based on the results we will have to consider what measures to take. But as mentioned earlier in '24 and '25, we will input a lot of resources for rebuilding.

And in that sense, through rebuilding, there will be values and profit that will be generated and there are certainties for this. So, through the rebuilding JPY40 billion for this year contribution that we are expecting, so based on the items of higher certainties, we built our budget.

So, regarding the top-line, it only will grow by 2% as I mentioned earlier. In that sense, so we have a top-line which are based on quite a bit of certainty.

So, this is how we build budget. And based on this kind of fiscal plan, based on certainty, we had made initiatives.

The biggest risk will be on the US operation. Our US operation is 40% of revenue, and there are various tariff as well as measures taken by President Trump for Mexico and Canada.

We do have one in Canada, two in Mexico. And for steel -- iron and steel, there are steel coils used in the tire.

So, including the suppliers, there are many that are imported into the United States, so that may have negative impacts. And also, the car manufacturers are very important clients.

There are tariffs that are considered and there are a lot of uncertainties. So, how we can deal with this, the impact will certainly be felt.

Therefore, how we can mitigate the adverse impact will be very important. We are looking into various scenarios at present.

And while we are looking into the worst possible cases, we will utilize the strength as Bridgestone. And although we may not make that to full positive, we will try to manage the negative impact as much as possible and I believe that is the biggest risk that we face.

Thank you very much.

Thank you.

Thank you. Mr.

Kitagawa, thank you very much. From Asahi newspaper, [Yamamoto-san] (ph), please.

Yes, from Asahi Shimbun, my name is Yamamoto. I hope you can hear me.

Yes, I hear you.

Hello. Thank you.

Two questions. First of all, EVs, EV as a percentage of total [indiscernible] assembled, that has been rising.

What's your expectation? What portion of the overall on the [indiscernible] assembled will be electric vehicles?

What's your view?

Multi pathway as Toyota says. In the US, the hybrid, the vehicles are selling more and more.

And there is a little bit of the toning down of the straight EVs, particularly in Europe. So, what we think is that it is not because something come as an electric vehicle, but rather our approach isn't that -- it is because there are cars here that there are other business opportunities for us, the OEMs, with prestige motors, premium -- and the motors.

So, we are not trying to classify the EVs as one category in that of course, and we would focus on rather in that premium zone that we would like to find opportunities to offer our services. It is not always only premium, but the basic kind of focus will be there.

And as I keep on saying, at the moment, the EV sales seems to be declining just a little bit. But they are hybrid, the vehicles.

And so, it is the top tier that, as I keep on saying, we supply to OEMs, and as those new cars are fitted with our tires, then the drivers or consumers will come back in a replacement market. Now, please understand it is not just because it is something is in the category of EV category.

Thank you. So, going back a little bit, you talked a little bit about possible the import tariffs from the US.

I think what you said is that assuming that you are going to enhance the local, the production to the max, then we will combine into that kind of possibilities of countermeasures to the tariff and the policy. Do you use -- I'm already starting to think about local, the production, the capacity, which we have not heard about before?

Well, please remember, there is local production for local consumption purpose, sales on their purposes. So, the [400,000] (ph) US alone, it's 60% of passenger car tires as you can see here.

And we do have that production capacity. If the capacity is running at full, the situation will be different.

But there's still the available capacity that we have. When we say capacity, there are the equipments, the machinery capacity, as well as the worker capacity.

We would like to take a look at both the categories of capacity. In the United States, they're highly profitable and highly productive on the plants there.

And other plants also in the US where the productivity or the efficiency is not as much, we do not know what the final output, the outcome of the import tariff on policies will be. However, what we tend to think is that, whatever the import tariff on their policies, will be better for us to produce locally in the United States.

And also, we are mindful of the supply chain network available. But supply chain network can maybe tapped into only to a certain degree when the import tariffs are rising.

Thank you.

Thank you. It's clear.

Thank you very much, Mr. Yamamoto.

Next from [Rubber Hochi newspaper, Mr. Shimizu] (ph), please.

I am Shimizu from Rubber Hochi newspaper. Can you hear me now?

Yes.

Good afternoon. Thank you for today.

Well, diversified products business is what I would like to ask about. This fiscal year's prospect, JPY239 billion in revenue and adjusted operating profit, JPY440 billion and with the rebuilding, you can see increase in profits.

But in the fiscal -- last fiscal year, the hydraulic hose and crawler dropped in revenue, but what sort of demand are you expecting in this fiscal year for these? And you said that there are deep issues.

So, what about rebuilding in this area? How are you going to address this?

Well, in diversified products business in 2024, unfortunately, we were not able to achieve the expectation in hydraulic hose and crawler. And in diversified products business, the cycling business and [air spring] (ph) business, or pneumatic spring business, the business environment has been rapidly changing.

And simply put, demand is declining. And that is what's happening in crawlers business and cycling business, cycle business.

And the demand is declining and we have been late in addressing these. And as for air springs, well, the air springs for passengers cars and the air springs for truck businesses are different.

As for passenger application, in electric vehicles, there is a lot incorporated and we are making investments ahead of the future. And there is upfront investments made, so we are in a difficult situation.

We knew that, but as for air springs for truck business, trucks -- well, the truck manufacturers business is now in difficulty, so this business has become difficult for us as well. And as for hydraulic hose business, there are many agriculture and construction machinery manufacturers and also this is our repair business as well.

And there is also retail business in the US for this. So, this is not just a demand issue, but there are issues in management and operation that have been emerging.

So, the causes are different. So, operational improvements should be there and also we need to have better expense management to become leaner in our structure.

Otherwise, especially for those areas where demand is declining, we will be able to survive. So, there are a lot of combinations of different factors to do rebuilding and improvement in operations.

So that's what we are doing in terms of improvement in this fiscal year. So, that's what we are planning at the moment.

So if that's the case for this fiscal year, demand will be flat compared to last fiscal year. Is that correct?

Especially for crawlers, I think demand will further drop. And in that sense, the air spring for EVs, it won't reach the level that we are expecting to see.

And as for hydraulic hose, there is still potential in the US. There is service business and oil shale and others will come out and then hydraulic hose will see more demand.

So there is still such anticipation and expectation for hydraulic hose.

Well, thank you.

Thank you very much, Mr. Shimizu.

We are getting close to the time to finish this session. So, we will have the last questioner, [Mr.

Hata] (ph) of Toyo Keizai.

Thank you. Hata of Toyo Keizai.

And thank you for the opportunity. I would like to ask two simple questions for fiscal '25 and your plan.

The adjusted for operating cost is 4% or so, and it is 10% originally. And I believe that there are some maybe profits from the sales last year.

You don't have any of these items that were temporary last year.

Last year, I believe that the reduction in the profit is 11%. And I believe that you do have the rebuilding expense of JPY100 billion and you also have that last year as well, but you had some income from selling some businesses last year.

In fiscal '24, there were JPY60 billion for that year to have sold some of the business. But in '25, on the income side, we do not expect such a large sum.

Therefore, there are some negative impact on the net profit.

And last question is about the closure of the LaVergne plant as well as the potential for the optimization in the Des Moines plant. And for the local production and local consumption, maybe there may be an option to leave the operation there even before the Trump administration.

Have you actually thought about rebuilding? And -- actually go ahead with this.

LaVergne is to close and Des Moines is not to close. That's not the final decision.

But we are trying to reduce the production to the optimal level. And under the Trump administration, even before the tariff issues came up, these were discussed among us.

For the LaVergne plant, in 1983, Bridgestone actually acquired through Firestone, and this is a very, very old plant. And fortunately, the productivity is not very good and the cost is high and this is such a plant.

We actually acquired Bridgestone Firestone in '88, including the LaVergne. And for truck tires, we have newly built the Warren plant and we have integrated the production and we have the new US facilities and equipments with very high productivity.

From the standpoint of truck in that sense, we need to optimize production footprints. LaVergne plant itself, this operation is shifting towards Warren plant and eventually there is going to be an integration into Warren plants in the future.

I believe this was announced already in 2022, we will probably spend about JPY70 billion to JPY80 billion to invest into Warren plant. Since last year or from year before last year, truck business is very, very difficult and challenged.

Therefore, this investment has sort of been delayed a little bit. However, we will invest into Warren plant and we will close the LaVergne.

And this is a kind of combination that we are thinking of. It is not that there is a direct result of the tariff that may be incorporated by Trump.

I do not think that this is not because of that. We have had such plan from before.

Thank you very much.

Thank you very much, Mr. Hata.

With this, we would like to conclude the Q&A session.