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Bridgestone Corporation (BRDCY) Full Year 2022 Earnings Call Transcript

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Bridgestone Corporation (OTCPK:BRDCY) Full Year 2022 Earnings Conference Call February 16, 2023 1:00 AM ET

Company Participants

Shuichi Ishibashi – Global Chief Executive Officer

Naoki Hishinuma – Chief Financial Officer

Conference Call Participants

Shinji Kakiuchi – Morgan Stanley Securities

Tairiku Sakaguchi – Mizuho Securities

Kazunori Maki – SMBC Nikko Securities

Shiro Sakamaki – Daiwa Securities

Shuichi Ishibashi

Hello, everyone. I americium Shuichi Ishibashi, Global CEO of Bridgestone Corporation. The Bridgestone Group has been driving guidance on nan mid-term business plan, which covers nan 3 years from 2021 to 2023, aiming to go a beardown Bridgestone tin of adapting to change. Today I would for illustration to supply a summary of 2022, arsenic good arsenic a advancement update connected nan medium-term business scheme 2021-2023, particularly astir plans for 2023 arsenic nan last year. Last year, contempt world unrest and accelerated inflation, we responded to alteration pinch elasticity and agility steadily approaching nan beardown Bridgestone.

Aside from moving moreover person to a beardown Bridgestone, this twelvemonth will beryllium a cardinal twelvemonth successful building foundations for early maturation utilizing nan 2030 semipermanent strategical aspiration aliases a maturation strategy toward nan group's 100th day successful 2031 arsenic a roadmap. We will proceed driving translator based connected 3 axis, tackle past antagonistic legacies squarely without delay, attraction connected execution, and delivering results for contiguous issues and laic instauration for early growth.

First, I will talk astir nan financial results. This chart shows our revenue. In 2022, we responded to turbulent alteration successful nan business situation arsenic a world group, reinforcing elastic and agile proviso management, income and marketplace stock description successful nan premium segment, strategical value management, and others. As a result, including tailwind from rate speech impact, we were capable to execute our first gross of complete ¥4,000 billion. This year, we are readying a 107% maturation versus anterior year, excluding rate speech impact. In nan premium tyre business, which is our core business, we will reenforce our attraction connected premium. Whereas successful nan solutions business, which is our maturation business, we scheme a 111% maturation versus anterior year, a double-digit maturation exceeding nan maturation of nan halfway business.

The solutions business will travel to relationship for 20% of nan group's gross arsenic group retired successful nan mid-term business scheme 2021-2023. We are moving to amended our astir important guidance index, ROIC, crossed nan full worth chain, being conscious of superior cost. In summation to achieving 9.4% successful 2022, we scheme to execute 10.5% successful 2023, which exceeds our target of 10%. Despite irregular antagonistic impacts of 2022, we focused connected premium and strategical value management, reaching an adjusted operating profit of ¥480 billion, a 122% maturation versus anterior year, including tailwind from rate speech impact. For 2023 by continuing to attraction connected execution and results, we scheme to execute ¥510 billion, a 116% maturation versus anterior year, excluding rate speech impact. For adjusted operating profit margin, we scheme 12.3% successful 2023, achieving a 12% level mean for nan play nether nan mid-term business scheme period, 2021-2022-2023. We besides scheme to proceed expanding shareholder returns done sustainable enhancement of firm worth pinch a target of 40% successful dividend payout ratio.

Next, I'll explicate advancement connected nan mid-term business scheme and our translator aligned pinch nan 2030 semipermanent strategical aspiration roadmap. This is simply a strategical representation summarizing nan semipermanent strategical aspiration our roadmap toward 2030. With nan premium tyre business astatine nan core, we will heighten its linkage pinch nan solutions business and return connected nan situation of balancing nan creation of some societal and customer worth arsenic a sustainable solutions institution arsenic group retired successful our vision. I will commencement by talking astir nan premium tyre business. To combat alteration we are continuing to reenforce our attack successful premium segment, which is comparatively resilient. We will proceed expanding income of precocious rim diameter rider car tires globally and steadily grow replacement tyre marketplace stock by approving their worth to customers. Building connected 2022, we scheme further description of marketplace stock successful 2023 for replacement tires successful Europe and North America. In summation to HRD tires, we are reinforcing income of premium tyre brands, which person been built done proving nan worth of our Dan-Totsu products to customers.

In 2023, much than half of nan income of rider car tires for world replacement will beryllium premium products. We will further reenforce our premium attraction besides for motortruck and autobus tires, establishing nan instauration for nan caller premium ENLITEN business strategy. We are besides reinforcing our manufacturing structure. For rider car tires, we are investing and replacement – replacing manufacturing instrumentality globally to manufacture HRD tires and ENLITEN. For motortruck and autobus tires, wherever we are continuing to build a information business model, we are strengthening nan manufacturing building for caller tires and retread. We'll respond to income and marketplace stock description , particularly successful nan U.S., wherever we person beardown business foundations.

We will besides reenforce manufacturing structures for off-the-road tires and motorcycle tires. We scheme to put a full of astir ¥280 billion, including early plans, making judge nan investments are thin done onsite productivity betterment and afloat leverage of existing equipment. Regarding world manufacturing footprint for rider car tires and motortruck and autobus tires, we are building a building aiming for world optimization by ensuring flexibility, each keeping section accumulation for section income arsenic our basal principle. We will accelerate synergy creation successful Bridgestone westbound and eastbound synergy areas, leveraging each region's strengths and characteristics.

Japan will beryllium nan halfway of manufacturing, supporting nan premium tyre business wherever precocious levels of onsite and technological capabilities are required, specified arsenic for a precocious trouble specialty tires for illustration off-the-road tires and craft tires. Our unit and work solutions network, which accompanies customers and provides Dan-Totsu products and work solutions, is nan enabler that supports to maturation and improvement of nan premium tyre and solutions business. We will proceed enhancing them globally arsenic valuable customer touchpoints. Based connected these premium strategies, we will commencement nan creation of caller premium astatine afloat scale.

The halfway for this will beryllium nan ENLITEN business strategy and nan MasterCore strategy for off-the-road tires. By evolving technology, production, products and business models, and by building caller marque powerfulness arsenic caller halfway competencies, we will thrust nan premium tyre business to an moreover higher level. The instauration to support caller premium is BCMA, which realizes simplification and differentiation, creating worth crossed nan full worth chain. It divides nan tyre into 3 modules, carcass, which is nan skeleton of nan tire, belt, which reinforces nan tire, and tread, which makes up nan tyre surface. The star and loop will beryllium shared betwixt different products, while differentiation will beryllium achieved by capacity customization done nan tread. This enables providing customized Dan-Totsu products for each customer done elemental operations. Furthermore, it will besides lend to sustainability specified arsenic betterment of assets productivity and simplification of CO2 emissions.

We will execute this successful ways adapted to nan needs and marketplace characteristics of each region. In nan Americas, we will amended accumulation ratio done communal modules. And for Europe we will recognize nan elemental improvement and accumulation of divers products. In Japan, we are striving for simplification and differentiation crossed nan full worth chain. Shortening accumulation lead clip done modularity will alteration elastic accumulation and optimization of logistics and inventory.

We tin supply customers pinch products astatine nan correct timing by making operations astir thin and efficient. This will not only amended customer satisfaction, but besides particularly trim mislaid income opportunities of wintertime tires, which is our precocious worth added merchandise and maximize income opportunities. In Japanese and Asian plants for export tires, we'll beforehand sharing of modules betwixt regions and strive to build a proviso building ensuring world optimization.

Based connected BCMA, we will lend to build nan ENLITEN business strategy for rider cars, nan caller premium successful EV era, supporting nan realization of a c neutral mobility nine from nan crushed up. First, we will proceed expanding products equipped pinch ENLITEN exertion for OE fitment. We will besides gradually grow ENLITEN instrumentality for replacement tires from Europe toward afloat standard rollout readying 5% successful 2023 and 20% successful 2024.

Furthermore, we will commencement astatine nan building of caller world marque powerfulness nan past portion successful nan creation of caller premium pinch ENLITEN astatine nan core. Bridgestone began participating successful centrifugal sports successful Japan from 1963 and started world centrifugal athletics activities specified arsenic Formula One racing successful nan 1990s. These activities were a driving unit for Bridgestone to go recognized arsenic a premium marque astir nan world.

This twelvemonth we are celebrating nan 60th day of our centrifugal athletics activities. During this memorial year, we scheme nan reactivation of activities successful a caller way, placing sustainability astatine nan halfway and commencement to build a sustainable world premium brand.

Regarding nan Solutions business, which is our maturation business, we are clarifying what we do and what not to do successful each of nan unit and work solutions, tyre centric solutions and mobility solutions toward nan play nether nan midterm business scheme 2024, 2026 and beyond.

By this June, we will complete determining business potentials for each solution successful a broad mode taking into relationship synergy pinch nan premium tyre business maturation imaginable and profitability. Bridgestone's Solutions purpose to understand and lick nan symptom points of nine and customers. We purpose to amplify nan worth of Dan-Totsu products by continuously evolving our Dan-Totsu web and Dan-Totsu to work solutions, pinch a operation of strong, existent and integer capabilities.

Striving to support conveyance cognition systems and nine and mobility systems, we will create some societal worth and customer value. These activities are made imaginable done co-creation pinch society, customers and partners. By amplifying spot based connected our Dan-Totsu products, we will make co-creation and build Bridgestone's mobility ecosystem.

For maturation of Solutions business, we integrated our solutions statement successful Europe and North America to maximize Bridgestone's West Synergy and established a caller statement Bridgestone Mobility Solutions, BMS. BMS manages nan full Solutions business, excluding unit tyre sales, enabling businesslike cognition done integration and strengthening customer focus. We will standard up successful North America pinch Europe arsenic a strategical starting constituent and purpose to summation our gross successful this twelvemonth astatine nan level of 125% versus erstwhile year.

We are evolving nan tyre centric solutions focusing connected trucks and buses. As a caller premium successful information business era, we connection retread successful precocious tyre models specified arsenic tyre deterioration and durability prediction, et cetera. Deepening coordination betwixt nan nutrient and waste and usage of tires, we will found a information business exemplary which amplifies nan worth of Dan-Totsu products and expands societal and customer value.

In bid to build Bridgestone's mobility ecosystem we are besides forging various partnerships pinch sustainability astatine nan core. As a caller illustration successful nan Mobility Solutions business, Webfleet Solutions person entered into a caller business to support nan electrification of fleets successful Europe. It enables america to propose champion suited EV models for customers and support optimal operations specified arsenic electrical fleet guidance and EV charging solutions done conveyance information analysis.

With this initiative, we will strive to support a c neutral mobility nine from nan crushed up. We are enhancing nan Mining Solutions, which is simply a caller premium based connected our Dan-Totsu products Mastercore, which is progressive successful 88 mines arsenic of nan extremity of 2022. We will lend to maximize nan productivity and economical worth of mining operations done nan operation of onsite services, which propose attraction and a amended measurement to usage tyre accompanying customers and integer capabilities.

Regarding Aviation Solutions, a strategical starting constituent for nan Solutions business, we will germinate nan business exemplary that amplifies nan worth of Dan-Totsu products. Strengthening co-creation pinch customers, and combining integer capabilities, we will support safe craft cognition pinch bid of mind from nan crushed up.

As for nan guidance building which supports nan improvement of businesses, we are enhancing nan world guidance building that we person been cultivating, from nan midterm business scheme 2024 to 2026, we will initiate caller glocal portfolio management, leveraging location characteristics arsenic good arsenic characteristics of each of nan premium tyre and Solutions business. As portion of this, successful nan midterm business scheme 2021 to 2023, we group 4 categories are shown here, MAIN, NEXT, STRATEGIC, and DEVELOPING. And successful 2023 we will reappraisal our business by categories successful ray of 2022 results and a 2023 scheme and talk nan instauration for portfolio management, we support – what supports our maturation is exertion and innovation. Last April, Bridgestone Innovation Park, a world hub to make caller worth done invention pinch nan conception from relationship pinch empathy to co-creation, started afloat standard operations.

We had 1,000 visitors astatine nan Open Innovation Hub successful 2022. Among these visits, 200 cases of Sprout [ph] for co-creation person been created pinch 10 of them evolving into associated research. We are driving co-creation activities successful nan outer co-creation area, constricted to associated members. Also from this year, we are utilizing this tract successful Kodaira, Tokyo wherever nan Innovation Park is located arsenic nan business abstraction for Japan business for tires. We will beforehand co-creation activities, integrating R&B, investigation and business. With regards to sustainability, which we see nan halfway of guidance and business, reenforce our inaugural crossed each businesses and firm activities.

The Bridgestone Group has been driving initiatives to unrecorded successful harmony pinch quality based connected nan biology ngo connection refined successful 2011. Building connected this, we group retired a Bridgestone E8 committedness successful March, 2022, announcing our committedness to support nan realization of a sustainable nine based connected nan belief that nan world has been entrusted to our attraction by early generations of children. From 2023, we are incorporating nan conception of avoid, reduce, reconstruct and regenerate and toggle shape from nan SBTs for quality action model into nan full worth chain. Produce and sell, usage and renew towards quality positive, successful this way, we are evolving a unsocial sustainability business exemplary that links our business pinch efforts to recognize c neutrality and a information economy.

Aiming for a regenerative business model, we are besides further expanding efforts to unrecorded successful harmony pinch nature. As 1 example, done nan guayule and earthy rubber businesses, we purpose to not only diversify renewable worldly sources, but besides lend to character planting and our forestation successful devastated areas, et cetera. Furthermore, during nan tyre usage phase, we are reducing impacts connected nature, retread and solutions. In nan renew phase, we will beforehand activities to reconstruct and regenerate specified arsenic done nan recycle business.

Regarding c neutrality, we get nan SBT certification successful January of 2023 successful a progressing activities, some for minimizing CO2 emissions and expanding our publication successful reducing CO2 emissions, including for Scope 3. This year, we will raise a ratio of renewable power for energy to much than 50%. As for CO2 emanation reduction, we purpose to trim much than 30% complete our emanation successful 2011.

We are besides promoting initiatives crossed nan worth concatenation to recognize a information economy, we are steadily expanding our recycled and renewable worldly ratio. Towards nan realization of information system successful 2012, we group a target of 100% sustainable worldly by 2050 and person since been driving pioneering initiatives crossed nan worth concatenation based connected 3 axis.

The first involves contributing to trim assets depletion done enlightened BCMA and nan solution businesses, et cetera. The 2nd is reuse and recycle, recycling resources done retread, nan recycle business, et cetera. The 3rd concerns enhancing and diversifying renewable materials specified arsenic earthy rubber and guayule. We are promoting tyre improvement that links these activities to a merchandise strategy, processing tyre exertion pinch a recycled and renewable worldly ratio of 90% and a trial tyre pinch recycled and renewable worldly ratio of 70% successful nan United States.

We are verifying specified exertion done motorsports wherever utmost usage conditions are required. What supports these firm activities is talent. The group's talent strategy is based connected nan thought of allowing divers talents to radiance done nan dispersed of individual occurrence and confidence, while aiming to heighten firm worth done nan creation of added worth aligned pinch nan firm strategy. Reinforce talent finance and summation added value.

In bid to create this virtual rhythm of worth creation, we will spot talent productivity arsenic a 5th world guidance KPI and commencement proceedings from this twelvemonth readying for implementation from nan midterm business scheme 2024 to 2026. In 2023, we scheme to summation talent productivity by 25% versus 2019. We will besides grow talent finance globally successful 2023. Especially successful Japan, we will commencement various initiatives specified arsenic re-skilling nan training for a wide scope of labor and onsite 100 time situation programme that encourages challenges connected tract successful Japan and world SBUs successful different workplaces.

In addition, we will proceed nan betterment of use and benefits and moving situation to recognize some nan group's maturation and each employee's growth. We will accelerate various initiatives while focusing connected execution and results. As 1 of our initiatives to heighten talent and creativity, we are processing various opportunities for divers talents to shine.

For example, nan soft robotics business, which is an exploratory business that go a firm task from this year, a assortment of talent pinch entrepreneurship is gathered here. Based connected being attentive and supportive of our customer problems. One of our Bridgestone's DNA, we strive to support nan lives of each individuals done nan powerfulness of rubber.

In addition, successful a business situation wherever alteration is becoming commonplace, thorough consequence guidance is essential. We person reinforced building to header pinch world guidance consequence unaffected by alteration and group 3 privilege items: first point is geopolitical risk. The 2nd point is tyre and roadworthy deterioration particles, TRWP. TRWP is simply a consequence of clash betwixt nan tyre and nan roadworthy surface, which is basal to unafraid a safe comfortable travel pinch bid of mind consisting of a substance of tread, nan tyre aboveground and nan roadworthy pavement material.

As a starring company, we will lead initiatives to analyse their biology impact. We will proceed continuous attack including nan promotion of agelong life products and linkage pinch nan solutions business. The 3rd point is cyber incidents. We are strengthening world cyber information and establishing basal measures. Finally, regarding strategical resources we enables a strategy. We scheme ¥290 cardinal of strategical resources for 2023, ensuring nan equilibrium of assets allocation betwixt nan premium tyre business, solutions business, sustainability and talent.

A full of ¥570 cardinal is projected to beryllium invested during nan mid-term business scheme 2021 to 2023 period. While examining strategical maturation finance successful alignment pinch nan 2030 semipermanent strategical aspiration, we will build Bridgestone’s unsocial instauration for maturation centered astir nan premium tyre business.

Also, we will proceed investments successful strategical business to build Bridgestone’s mobility ecosystem. Until now, Bridgestone has executed proactive investments towards nan adjacent stage, moreover successful times of economical recession based connected our DNA aliases challenging spirit, we expect location will besides beryllium various changes successful nan business situation successful 2023, however, we will proceed laying foundations for nan early pinch an fierce attack and challenging spirits.

That concludes my updates regarding advancement connected our mid-term business plan. This year, we will proceed to accelerate our translator focusing connected execution and delivering results. We admit your continuous support. Thank you very overmuch for your attention.

Naoki Hishinuma

Thank you. So that was nan position by our CEO, Mr. Ishibashi. Now to move connected to nan position by Mr. Hishinuma, Global CFO to coming financial results for fiscal 2022. Thank you, Global CFO and Executive Director Naoki Hishinuma to coming financial results for fiscal 2022 arsenic good arsenic financial projections for fiscal 2023. This is my schedule today. Basically nan attraction connected financial, immoderate further accusation arsenic good arsenic further specifications connected immoderate of nan cardinal numerics.

To commencement pinch business and financial capacity for fiscal 2022, please return a look present consolidated financial results for fiscal 2022. Here I would for illustration to attraction connected profit attributable to owners of parent. On nan year-on-year basis, gross and adjusted operating profit some accrued connected nan different hand, profit attributable to owners of genitor decreased versus anterior twelvemonth to ¥304 cardinal owed to nan booking of gains connected nan transportation of U.S. building worldly business successful nan anterior twelvemonth and others.

Profit attributable to owners of nan parent, nan shape discontinued operations arsenic a consequence of reviewing nan taxation effect and others connected transferring anti-vibration rubber and chemic solutions successful businesses ended astatine ¥5.1 cardinal losses. Both of these businesses completed transfers successful nan 3rd 4th isolated from for immoderate consequent closings.

Moving connected to nan overview of nan capacity successful nan aforesaid fiscal 2022, let’s attraction connected nan bottommost half of this slide. For nan rider car and ray motortruck tires successful nan replacement marketplace slowdown successful request from nan 3rd 4th onward was witnessed successful Europe and North America. However, pinch nan continuation of nan premium strategy, we were capable to summation nan income contempt this slowness, which nan premium tires for which request was comparatively strong.

On nan OE tires since nan 2nd quarter, nan tyre income – year-on-year summation owed to improved successful conveyance accumulation conditions astatine automobile companies and accrued year-on-year connected a afloat twelvemonth basis. Truck and autobus tires successful nan last 4th successful Europe and North America request decelerated. However, connected a afloat twelvemonth basis, income successful Japan, North America and Europe stay beardown pinch North America successful peculiar showing a beardown summation complete 2019. OR tires, mining tires income declined owed to suspension of exports to Russia announced successful March was compensated for successful different markets resulting successful an summation successful nan world marketplace share.

Moving connected to business situation passim of fiscal 2022, some USD and Euro appreciated against Japanese Yen compared to this erstwhile year. Raw materials, earthy rubber prices fell sharply from nan 3rd 4th onward. Crude lipid prices declined from nan peak, but we’re still good supra nan erstwhile year’s level dragging profits therefore.

For energy, power costs astatine plants roseate sharply amid precocious crude lipid and earthy state prices again pushing down profits. Tire demand, OE accumulation astatine automobile companies began to retrieve successful nan 2nd half request for tires besides connected nan showed signs of betterment starting successful nan 3rd quarter. Replacement market, nan economical slowdown, peculiarly successful nan U.S. and Europe gradually became evident successful request for tires is loud.

However, request for premium segments specified arsenic high-rim diameter, aforesaid rider cars and premium brands and TBR successful North America was comparatively coagulated and besides North American replacement market, nan income for TBR 115%. This besides accrued nan important gross successful tyre imports from Asia.

Next connected to tyre income and maturation for fiscal 2022. PSR/LTR world income capacity was 1% of nan anterior twelvemonth income accrued therefore, connected nan different hand, motortruck and autobus tires world income was 99% somewhat little than 1 twelvemonth earlier. For ORR ultra-large size 107% to nan anterior year, ample 110% and smaller than mean size 105% each going very good successful peculiar nan profitable ultra-large mining tires and ample mining tires, nan income was maturation and summation was rather phenomenal.

And pinch nan advent of premium strategy, rider car supra 18 H-rim diameter premium tiers income and they proceed to turn connected nan – successful nan replacement marketplace moreover present summation of 10% aliases complete nan 2019, which was nan twelvemonth earlier nan Corona pandemic 37% summation indeed.

Analysis of adjusted operating profit for fiscal 2022 ¥88.3 cardinal important increase, Russia accumulation export suspension, China lockdowns, America’s cyber incidents and those was 1 of factors were location connected nan different – connected 1 hand, connected nan different value makes measurement positives wherever location aliases astir covering negatives and arsenic specified arsenic earthy worldly input costs specified successful inflationary conversion costs that were and/or operating expenses but besides by nan tailwind from nan FX marketplace summation successful adjusted operating profit.

Now capacity by segment, Japan, Americas, Europe, Russia, Middle East, India and Africa, each accrued year-on-year substantially connected nan different manus successful China and Asia-Pacific owed among others up 2 lockdowns successful China, nan driblet successful profits. For nan Japan segment, mining and building tires, nan income were expanded and nan stock summation was executed and coupled pinch nan FX effect some gross and operating profits and grew smoothly awesome contributions.

Inflationary impacts specified arsenic for earthy materials and power costs was difficult to antagonistic by higher trading prices specified that successful nan world OE business profitability has been pressured and truthful it’s been successful Japan and Asia person nan wide tyre operations. Consolidated financial results by merchandise for fiscal 2022 successful nan tyre business. Passenger car and ray motortruck tyre arsenic good arsenic motortruck and autobus tires year-on-year summation successful nan apical statement past to connected a profit was recorded. Therefore margin, nan earthy worldly costs surge successful inflationary inclination were location and nan OE business profitability became much terrible and successful either respect nan year-on-year alteration was there.

On nan different hand, however, for specialties conception comprising mining, aircraft, agriculture and motorcycle tires, highly profitable mining and building tires truthful good arsenic good arsenic nan tailwind from nan FX market. So nan separator connected nan afloat twelvemonth ground became 23.4% so of nan overmuch higher 1 twelvemonth earlier.

Now moving connected to nan diversified products and business successful nan continuing operations. Continuing from nan anterior year, nett of affirmative and nett profits were recorded. Balance expanse and rate travel hydrates for fiscal 2022. Total assets grew ¥386.9 cardinal from – connected nan anterior twelvemonth fiscal twelvemonth extremity astatine ¥4,961.8 depreciation haven’t pushed upthis number. Total equity ratio accrued 2.3 percent points from nan fiscal twelvemonth extremity anterior twelvemonth scope 59.8%. Financial has continued to improve. Full twelvemonth free rate travel was ¥69.5 cardinal outlay of free cash. Cash travel from investing activities includes ¥115.7 cardinal expenses associated pinch nan transferring to diversified businesses. Other than that, it would person successful nan affirmative free rate flow.

Now I conscionable meant items and losses from discontinued operations starting pinch accommodation items, impairment losses and nonaccomplishment and reevaluation and inventory is comprised, nan losses related to Russian business astatine ¥18.4 cardinal and based connected rhythm of equipment and bicycles and immoderate centrifugal powerfulness assisted, bicycles will grounds expenses of ¥16.4 cardinal was booked. So each successful all, accommodation items full was ¥41.3 billion. Losses from discontinued operation, chiefly successful this 3rd 4th transportation of 2 diversified businesses completed successful nan 3rd 4th pinch booking of losses ¥5.1 cardinal losses.

Now moving connected to nan projections for fiscal 2023 connected nan consolidated basis. Projections are astatine shown here, gross ¥4,150 billion, which is simply a 1 percent constituent summation versus nan anterior year, adjusted operating profit ¥510 billion, 6% summation year-on-year. Adjusted operating profit separator is projected to beryllium 12.3%, which is simply a 50 ground constituent betterment from nan anterior year. From continuing operations, profit attributable to owners of genitor astatine ¥340 billion, connected nan aforesaid basis, ROIC and ROE are projected to beryllium 10.5% and 11.4% respectively was improving from nan anterior year.

Business situation assumptions for fiscal 2023, rate yen appreciation, earthy worldly and power was continuing to nonstop profits. Inflation specified arsenic power and labour costs suppliers, which are accepted arsenic higher input costs for our institution to salary aft thorough discussions pinch nan suppliers. So it’s portion of our presumption successful fiscal 2023. Tire demand, OE request is expected to retrieve and for nan replacement successful tyre demand, although, location are differences by region, a coagulated betterment is expected globally from nan 2nd 4th onward.

By nan way, North America TBR replacement and request is shown to beryllium 89% successful nan car anterior twelvemonth and please beryllium alert that owed to normalization of tyre imports from Asia, which summation importantly successful 2022 it appears astatine this level. Premium tyre request is expected, and into inclination comparatively strong. For fiscal 2023, tyre income maturation projections successful nan increment of 5%, betwixt nan last 4th 2022 and nan first 4th 2023, full request will soft and according to projections and assumptions. However, nan 2nd 4th onward robust maturation is expected.

On nan afloat twelvemonth basis, therefore, each crossed year-on-year accrued nan implant nan sales. For nan rider car, nan precocious diameter tyre is supra 18 inches. The alleged premium tires, we proceed to beryllium strong. So connected a afloat twelvemonth basis, double-digit successful year-on-year summation is projected for mining tires, mineral request will beryllium beardown and truthful our income will proceed to beryllium beardown arsenic well.

To proceed looking astatine study of adjusted operating profit for fiscal 2023. For earthy materials, ¥109 cardinal negative. This includes our acceptance of inflationary connected nan people of power and labour astatine our earthy worldly suppliers. In this fiscal twelvemonth 2023 continues successful antagonistic factors specified arsenic earthy worldly input costs, inflationary and nan conversion costs and operating expenses will beryllium negatives.

However, those will beryllium offset by trading value and mix. So that moreover here, summation of ¥27.4 cardinal successful adjusted operating profit. Focus connected premium domains and strategical value guidance and past it will beryllium executed, not to mention disbursal and costs restructure reform. And truthful without rate effect, ample summation successful profit astatine ¥78.4 billion. Segment projection, Japan, Americas and China, Asia-Pacific projected having into summation successful bottommost gross and nan profits successful Europe, Russia, Middle East, India and Africa summation successful revenue, alteration successful profit. America’s conception adjusted operating profit separator will amended by 18 business points to go 13.4% precocious profitability indeed.

Lastly, fto maine talk connected nan taxable of shareholder returns. At our company, we comprehensively measure factors including business results, financial positions for nan applicable fiscal period, mean word net focused, finance plans and rate flows. Based connected these conservations, nan institution strives to unrecorded up from nan – to nan expectations of our shareholders by striving to execute continuous summation of dividend costs magnitude done a unchangeable consolidated payout ratio 40%.

Based connected this policy, for nan fiscal twelvemonth ended December 31, 2022, nan institution plans to summation a year-end rate dividend of ¥90 per share, an summation of ¥5 per share. So this will make a full rate successful dividend of ¥175 per share. For fiscal 2023, nan institution plans to salary a rate dividend of ¥200 per share, which is an summation of ¥25 per share. Of course, we will proceed to strive to execute continuous and unchangeable summation of dividend costs amount, frankincense returning to our shareholders.

That is it from myself. Thank you very much, indeed.

Shuichi Ishibashi

Thank you very much. So that was nan position by CFO, Hishinuma. Let america move connected to questions and reply session. So to begin, I would for illustration to first telephone upon Mr. Kakiuchi from Morgan Stanley Securities.

Question-and-Answer Session

Q - Shinji Kakiuchi

Thank you. Kakiuchi from Morgan Stanley Securities. My mobility number 1 refers to your consciousness of nan manufacture situation arsenic good arsenic your position connected business conditions because 3 months agone connected nan juncture of a Q3 presentation, I thought you portrayed a nuance hinting astatine nan alternatively terrible request to travel successful nan caller fiscal year. However, coming I heard that connected a changeless rate basis, successful tyre business operations unsocial pushing up gross by 4.4%. Not basal to opportunity that it is wholly optimistic, but possibly nan situations arsenic it turned retired were better. Maybe nan anticipation of nan inventory adjustment, which went rather smoothly and Europe ever immoderate much robust waste retired than you had expected, aliases possibly nan request has been getting amended than you had expected. So – aliases it whitethorn beryllium that you are very, very assured successful your premium strategy and your stock is increasing. So would you conscionable springiness america your position successful nan sense?

Shuichi Ishibashi

Thank you for that question. This Ishibashi speaking. Indeed, nan last quarter, past fiscal year, nan first 4th this caller fiscal year, nan request is successful nan tyre state, peculiarly past year, remembering Europe. The situations were assumed to beryllium very severe. Therefore, nan North America, we thought that it was to beryllium nan script of soft landing. Now, nan full consciousness that I person for nan manufacture is that driblet of Europe was not arsenic terrible arsenic what we erstwhile thought. It’s terrible indeed, nan last 4th past year, nan first 4th peculiarly truthful successful nan TBR operations it’s very, very severe.

And speaking of Europe towards nan extremity of nan fiscal twelvemonth and we had nan ostentation and inflating nan way inventory, truthful successful that respect we are going to clear retired aliases to decorativeness nan information of inventory adjustments arsenic stated by nan impermanent accumulation done pinch adjustments arsenic well. So nan first 4th location will beryllium nan completion of nan inventory adjustments successful Europe. North America TBR business besides successful nan 2nd half of past year’s business was very tight for supply.

As you know, we person 2 awesome brands Bridgestone and Firestone pinch a peculiar accent connected nan Bridgestone brand, which meant that for nan Firestone branded tires, this proviso could not drawback up pinch nan shortage. We tried to support that globally, but still was not enough. So nan 2nd half past twelvemonth and for nan motortruck autobus tyre cognition North America, we kept connected saying that nan bottleneck is so and nan proviso shortage of bully to sell. Of course, from Japan and Asia pinch nan sourcing arrangements we supported arsenic overmuch arsenic possible.

However, successful nan 3rd 4th and last 4th of erstwhile fiscal year, location was a shortage of goods. In nan meantime, nan 3rd tyre – 3rd tier and 4th tier, nan inputs – imports went into nan marketplace of North America. So nan Firestone domain, nan 2nd tier, nan statement of operations that location was encroachment by newcomers successful nan 3rd tier, 4th tier importers. In nan meantime, we did proviso trucking autobus tires from Japan and Asia.

However, because of nan timing delay, nan deliveries did not scope North America until it was nan extremity of past year. Now nan inventory has been accrued aliases inflated and trying to trim that now. My position is that – this is my view, nan first 4th successful this fiscal twelvemonth nan 3rd tier, 4th tier tyre inventories will proceed to decrease. In nan meantime our ain proviso conditions are getting better. Meaning that my consciousness is that successful nan 2nd 4th and beyond what Bridgestone and Firestone, nan brands they performed almost strongly.

The different time we had North American trader gathering held. This is for commercialized tires. And truthful that was an juncture for america to corroborate our resolve. First of all, having to connection apologies for nan shortage of proviso successful past twelvemonth and of course, we are now recognized and has confronted by North American dealers, they request 3rd tier and 4th tier businesses and past they person inflated inventories.

So they first person to created retired and past will go nan train for Bridgestone and Firestone tires from nan 2 expanded business operations. So that is nan wide travel that we expect and nan travel that we would besides expect pinch respect to customers arsenic well. So that’s 1 position that I person for Europe and North American TBR business.

PSR, nan first 4th it’s dipping a small bit. However, nan down inclination successful Europe arsenic it turns retired is not arsenic terrible arsenic we had anticipated truthful that moreover successful nan first 4th it’s terrible but still it’s comparatively amended than what we had anticipated. North America, last 4th past twelvemonth was very challenging. However, pinch our capacity pinch respect to nan high-rim diameter, nan alleged Premium Tire segment, we were capable to unafraid nan volume.

Total volume, however, pinch respect to nan Premium conception we were arsenic successful from nan capturing business opportunities, profit contributions arsenic well. And successful this regard, my consciousness is that it is going to go amended and amended beyond nan 2nd 4th pinch rising demand, truthful nary inventory issues. So high-rim diameter tyre businesses will turn and request will enactment strong.

Finally, ORR tires, mining tires location was very beardown request past twelvemonth that we were capable to summation our stock and I expect that nan continuation of robust demand. And it is going to beryllium champion of nan business for us. From nan position of an summation successful nan stock to marketplace successful Europe and North America, rider car high-rim diameter tires backmost successful 2021, 2022 and 2023 and we will person that connected nan fiscal 2022 past twelvemonth that we proceed to summation our stock and for this year, this fiscal 2023 I expect that erstwhile again this twelvemonth we’ll summation this high-rim diameters. This twelvemonth will summation successful Europe and North America. The aforesaid for mining tires, to stock summation this year.

Shinji Kakiuchi

Thank you. Thank you, Mr. Ishibashi. This fiscal twelvemonth nan yearly CapEx scheme exceeds ¥400 billion, truthful arsenic a percent of nett it is 10%. It’s a emblematic benignant of percent that we thin to spot and pinch increasing businesses conscionable from nether numerics. But listening to you carefully, truthful I would for illustration to attraction connected – that I’m starring into my 2nd question. For this twelvemonth you planned nan trading price, nan positive ¥253 billion, truthful I conjecture it combines nan OE, ORR and mining tires arsenic well, and possibly connected nan further value increases successful nan Japanese market, truthful successful peculiar successful Europe and North America, are you reasoning assuming that you summation a definite prices successful those markets that isn’t going to use you this year, connected apical of that, this twelvemonth you are going to adhd further adjacent hacking prices further. So is that correct?

And besides for nan past 2 fiscal periods that a trading value and nan mixed ¥578 cardinal aliases earthy worldly connected nan input costs hunt of ¥344 cardinal complete nan past 2 years. But what astir an point specified arsenic water freight and nan power costs, because fundamentally I understood that you are connected nan attack from occidental antagonistic earthy worldly input costs connected nan trading prices, but what astir nan others?

Shuichi Ishibashi

Thank you. Thank you for that question. Let maine respond pinch nan second portion of what you said. Raw worldly input costs such, it’s not only that, because power costs are – very phenomenal successful Europe, of course, Japan arsenic well, successful a lawsuit of Japan weaker Yen it’s different facet pushing up power costs, labour costs Europe and peculiarly successful North America, nan wages are going up for sharply and nan earthy consequence successful Japan arsenic well.

On apical of that, our partners who are suppliers to us, they are successful very pressured nan situations themselves, suppliers very important partners. They thief us, they person been supporting us. So this is nan business and nan benignant of attack that we would for illustration to return pinch them. Of course, we will look astatine businesses arsenic security, but it is nan win-win situations, which would service arsenic nan base. So, we would for illustration everyone to judge him nan worth of our products, which past will beryllium passed connected to trading prices, which past moreover and to beryllium accepted and understood by customers. This is nan communal attack passim nan world.

Now to specific, I’m judge that our CFO, Mr. Hishinuma, we talk aft myself, but for nan replacement tyre business, BH connected nan rider car tires connected nan motortruck and autobus tires and it’s besides mining tires. As I say, successful each nan different ways costs person been increasing, and these person to beryllium countered solidly. So that intends erstwhile again successful FY 2023 we person to proceed to hike trading prices. We person to.

Now different constituent astir nan OE business, past twelvemonth was a very challenging year. The OEMs and nan car assemblers were besides connected nan full states themselves, and this a facet of staggering timings. They pinch fishy to nether nan timing of earthy worldly input costs specified and nan timing astatine which it will beryllium reflected successful nan formula. So, we are having continuing to person conversations separately and pinch connected nan car companies, motortruck companies, building nan missionary manufacturers, and of course, it’s very difficult from clip to time, but inclusive of this timing accommodation manufacturer. We should beryllium capable to person them – for our trading value summation requests.

Naoki Hishinuma

Hishinuma speaking. According to fiscal 2023 scheme trading prices, ¥253 cardinal is nan inclination of increase. About 20% aliases a small little than 20% refers to nan alleged RMI contractor agreements pinch OE companies and aliases rising for look pinch mining operators. This truthful mixed and this look based and nan information accounts for a small little than 20% of total. And different than that we person what we are to do successful nan replacement business. Now saying this among others Latin America, nan rate effect has to beryllium taken to consideration, which besides will beryllium countered connected nan by trading value increases. That’s it from myself.

Shinji Kakiuchi

Thank you, Mr. Hishinuma. So whitethorn I corroborate that your presumption isn’t that successful nan fiscal twelvemonth 2023 we will proceed to hike trading prices successful nan replacement conception is that correct?

Shuichi Ishibashi

Yes, that is so.

Naoki Hishinuma

Mr. Kakiuchi, convey you. Thank you very much.

Shuichi Ishibashi

Let maine adhd something. In North America, we already made nan announcement of nan value increases backmost successful January and this so we person been trading rather steadily successful this regard.

Operator

Thank you. Next is Mr. Sakaguchi from Mizuho Securities.

Tairiku Sakaguchi

Thank you, Sakaguchi from Mizuho Securities. I person 2 questions. One is connected your year-over-year forecast; adjusted operating income is projected astatine ¥510 billion. Could you remark connected risks and opportunities? You person kindly explained trading situation and your income activities earlier, but successful position of mix, you are projecting a affirmative effect of ¥40 billion. But should OE business returned, I’m acrophobic location could beryllium a downside, but you are projecting sizable affirmative impact. And I return it that you person assurance successful HRD tires and premium products performing strongly, but fixed that location still are galore uncertainties, could you elaborate connected risks and opportunities comparative to nan projected adjusted operating income of ¥510 billion? That’s my first question.

Shuichi Ishibashi

Thank you for your question. In that sense, arsenic risks, 1 anticipation is nan costs energy, and different costs are expanding successful Europe and location could beryllium further summation besides successful Asia, successful Thailand and successful different countries for example, request business is alternatively challenging and that mightiness person an impact. So these are imaginable consequence factors. In position of opportunities, arsenic was mentioned earlier, soft landing of system successful North America, that could beryllium an opportunity. Also successful emerging markets specified arsenic nan Middle East, India and elsewhere, maturation mightiness further accelerate and those could beryllium immoderate opportunities for this fiscal year. And regarding nan mix, OE versus replacements for this fiscal twelvemonth successful position of volume, OE maturation is expected to beryllium a small higher, but still not overmuch different successful position of volume. So, we are not assuming this to beryllium a awesome antagonistic factor.

Let maine adhd successful position of risks. Of course, geopolitical consequence is nan astir important arsenic mentioned earlier. And for Europe, we judge Europe to beryllium aliases Europe to do amended than our assumption, but summation successful power costs and recession should they advancement much than we anticipate. That could go a consequence successful Europe. As for China, we expect immoderate betterment aft bottoming retired past year, but location is simply a consequence present arsenic well. In position of opportunities arsenic CFO, Hishinuma mentioned, nan level of soft landing successful North America is simply a factor. Some group opportunity I’m excessively optimistic, but I deliberation location is simply a bully chance that moreover pinch nan soft landing, fixed our beardown instauration including nan marketplace stock summation potential, I judge we tin beryllium nan winner.

Earlier I showed you nan portfolio included successful nan existent metro business scheme and 1 of nan 4 categories is adjacent areas expected to thrust earnings. Next included successful present are South America, which is really getting stronger and India and nan Middle East. We spot imaginable successful these markets. So location are further opportunities here. Yes, immoderate uncertainties successful China, but successful Asia Pacific, we tin expect further opportunities. Of course, North America and mining will beryllium awesome pillars. But successful addition, arsenic nan adjacent areas successful these regions, we tin expect further enhancement. So that overall, we tin person a amended equilibrium and diversity, amended consequence diversification. That’s what we person successful mind.

Tairiku Sakaguchi

I see. Thank you. My 2nd mobility pertains to HRD tires. 98% successful nan Q4 sales, a flimsy diminution year-on-year. Now I deliberation it could beryllium explained by nan erstwhile twelvemonth being strong, but really astir quarter-on-quarter from Q3 to Q4? You’re expecting income summation this twelvemonth coming peculiarly from summation successful marketplace share. Can you elaborate connected nan factors for income summation projections for FY 2023, particularly marketplace stock increase? What measures do you expect to carnivore fruit?

Shuichi Ishibashi

We do not disclose marketplace share, but successful North America from 2021 to 2022, our marketplace stock improved by adjacent to 1 point, moreover including nan 4th separator moreover pinch beardown Q4 successful 2021. And for this fiscal year, we expect to summation nan marketplace stock by different point. At this constituent successful time, we expect nan operation of marque powerfulness and merchandise powerfulness and nan transmission powerfulness will support nan beardown business for HRD tires for rider cars.

We besides expect to securely seizure nan request successful nan aft income marketplace arsenic products that person been supplied to OEMs. We’ll move into nan attraction phase. We envision this wide strategy aliases cycle. As you tin spot present connected nan slide, HRD tires are mounted connected much and much caller cars. And arsenic we person a ample marketplace stock successful North America, we expect request successful nan aftermarket to follow.

Security capturing that request is captious and that requires beardown merchandise powerfulness and marque power. Most important is nan transmission power. Our equity stores and nan family channel, we person highly beardown transmission to thief america seizure nan request and it’s not conscionable our family. We are communicating intimately pinch various retailers person shared knowing connected merchandise lineup plans. Clearly defined merchandising scheme pinch intelligibly defined position for example, Bridgestone products, Firestone products and others respectively.

And retailers do not alteration this scheme frequently, for illustration connected a monthly ground and they waste accordingly why because products successful different positions person different expected roles. This position for higher separator and that position for measurement summation for example, that’s really retailers think. And successful it our RDM [ph] tires person intelligibly defined position pinch summation of caller retailers including wide merchandisers. We are to guarantee a unafraid position successful nan merchandise lineup. That’s really we expect to summation nan marketplace share. Of people for that, we request to heighten our merchandise capability, which is so improving arsenic galore information suggest. The truth that we tin do that while raising prices suggests we are seeing nan coagulated instauration being built some successful position of brands and channel.

Tairiku Sakaguchi

I see. Thank you. So we tin expect nan marketplace stock to proceed to increase, correct?

Shuichi Ishibashi

Yes. Well, alternatively than nan stock continuing to increase, we will activity to raise nan marketplace share.

Tairiku Sakaguchi

I see. Thank you.

Operator

Thank you. Next is from SMBC Nikko Securities, Mr. Maki, please.

Kazunori Maki

Thank you. Maki from SMBC Nikko Securities. My first mobility pertains to value and volume, which was concisely touched upon earlier. Regarding price, you raised nan trading prices successful nan U.S. successful December and your French competitor and different competitor did nan same. Whereas this clip astir we don’t spot a akin move. They are not following. So tin you elaborate connected nan inheritance to nan latest information of value revisions? Is it that you tin spend to raise prices because you are successful nan premium area and because of beardown competitory edge. Obviously, it isn’t an industry-wide movement. So are location differences successful zones wherever you tin raise prices and wherever you cannot.

Also looking astatine your operating profit variance study waterfall floor plan value effect is alternatively strong. Volume effect is besides projected to beryllium alternatively strong. Now successful nan lawsuit of your French competitor, measurement effect is kept alternatively mean while expecting to maximize profit done pricing it seems. So my mobility is tin you prosecute some measurement and price? Is location not a consequence successful doing so?

Shuichi Ishibashi

Well, I cannot remark connected what payers aliases competitors are doing. In our case, arsenic mentioned earlier, we are factoring successful partners and suppliers and accrued power costs, labour costs and others. And based connected that, by leveraging our brand, merchandise and transmission powerfulness and capabilities, we instrumentality value revisions done dependable effort to beryllium nan worth to our customers. We will proceed pinch that dependable effort. In fact, that enabled america to summation some measurement and value past year, while immoderate of our peers did not spot measurement increase.

As acold arsenic Bridgestone is concerned, while Q4 saw a decline, we accrued measurement connected an yearly ground together pinch higher prices. I deliberation this was imaginable because of nan coagulated foundation, which is not going to illness this year. In fact, nan instauration will proceed to beryllium enhanced. For example, regarding nan unit web successful nan U.S., we are making fierce investment.

As mentioned earlier, we are making strategical investments, not conscionable finance successful premium tires, finance into retread arsenic good arsenic retail. So we will prosecute value and measurement both. And successful position of volume, we don’t intend to summation measurement successful nan commodity area alternatively we will beryllium pursuing some higher value and higher measurement successful nan premium zone. This assumes marketplace stock summation arsenic nan base. So should we spot measurement decline, we will effort to unafraid nan value level and reconfigure nan business. So successful that consciousness Bridgestone and nan French competitor possibly sharing nan akin reasoning arsenic you indicated, but we would for illustration to prosecute both.

Kazunori Maki

Thank you very much. My different mobility is connected nan solution business. In nan guidance income for nan solutions business is to beryllium astir ¥1.2 trillion aliases a small little than 30% of full income arsenic I cipher nan ratio. But I deliberation it was astir 20% successful nan past. I apologized, if my calculation is incorrect but it appears to person gone up rather a bit. What are immoderate changes compared to nan erstwhile twelvemonth for this benignant of increase?

For example, really overmuch maturation is expected successful nan retread business aliases possibly what changes are expected successful nan unit business. Would you beryllium capable to stock nan breakdown? Also pinch a strategical finance expanding importantly compared to nan past twelvemonth would you beryllium capable to stock pinch america wherever and really you scheme to fortify finance for nan adjacent midterm business scheme and what benignant of system you person successful mindful truthful successful nan seeds for nan future?

Shuichi Ishibashi

It is existent what you person mentioned Mr. Maki. The figures connected Page 24 really nan figures for solution, retail, work web which includes nan tyre business. In nan past, successful nan midterm business scheme for 2021, nan tyre business was excluded from nan unit business including nan equity shop and franchise. However, this clip successful nan 2030 semipermanent strategical aspiration, we decided to look astatine nan unit business much firmly.

Since tyre is 1 of our unit business and while manufacturers waste tires to nan unit business, nan unit business is nan last constituent of interaction pinch nan customer trading premium tires. The magnitude is astir ¥400 billion, truthful location is simply a different wherever these figures are included nan ¥400 billion. We are presently examining various ways to decently coming portfolio figures and solution business figures for nan midterm business scheme 2024.

In this context, nan ¥900 cardinal of nan ¥1.00 [ph] trillion yen is for unit service. Of nan ¥900 billion, ¥400 cardinal is for nan tyre business and ¥500 cardinal is for attraction and services. So ¥900 cardinal is simply a unsmooth fig for nan unit business. The remaining ¥300 cardinal is for retread business and solutions related to nan tyre business. Even though little than half of ¥300 cardinal is for unit business and nan remainder is for nan mining solutions and for craft aliases aviation solutions related to tyre business.

There are besides tyre package programs specified arsenic costs per mile and mileage programs and they adhd up to nan remaining half each constituting ¥150 billion. And nan mobility solutions they see Azuga and Webfleet. They are worthy astir ¥30 billion. The remaining ¥300 cardinal aliases truthful for nan diversified products and businesses pinch astir ¥300 billion. In a nutshell that is simply a portfolio arsenic specified of nan ¥3 trillion for nan tyre and ¥2 trillion for solutions that I've mentioned successful semipermanent strategical aspiration. We person travel to nan level of astir ¥1.2 trillion astatine this point. Regarding strategical investments this year's strategical finance is first of each focused connected premium tires and we will make this patient connected nan world basis. Let's show nan descent which shows nan specifications connected nan finance for tires.

Yes, this is it. This is nan finance for nan creation of nan accumulation building for nan premium tires, for nan rider tires, accumulation accommodation and HRD, and past accumulation capacity accrued past their finance successful [indiscernible] and Thailand for motortruck and buses and for rereads and tires for mining, which will beryllium mostly successful Japan. We are besides making finance successful nan area of motorcycle tires, precocious capacity motorcycle tires which are besides successful nan premium niche. These are nan areas pinch awesome strategical investment.

The 2nd is rereads, which is besides 1 of a awesome finance area and solutions including reread and unit is besides 1 of nan large item. And IT infrastructure investment, this is going to beryllium a ample finance successful fact. In Japan various companies are now moving connected nan cliff consequence measures for nan 2025 integer cliff and moving to found amended coagulated IT structures including nan measures against cyber-attacks. Considerable resources are being invested globally to build nan IT structure. This is mostly really nan investments are being considered. We are presently sowing seeds successful various ways specified arsenic soft robotics arsenic an example. In nan mobility solutions that I mentioned earlier, we will proceed to sow seeds successful areas specified arsenic various supports for EVs.

Although this is not a ample sum of money. And because solution businesses aliases rereads and retails are area of precocious certainty, they will service america nan awesome pillar for nan midterm business scheme of 2024. And for different items arsenic I person already explained, we will proceed to further reappraisal and study them towards determinations successful June this year. As I mentioned earlier, we will besides analyse which areas are acceptables and which are not successful not truthful successful position of business exemplary specified arsenic successful nan area of costs per mile and mileage sales. So nan finance is somewhat suppressed astatine this clip successful those areas. Before we spell connected to nan adjacent shape of investment.

Kazunori Maki

Thank you very much. The magnitude of retread astatine nan opening of nan position was astir ¥150 billion. I deliberation location were much than ¥100 cardinal aliases possibly ¥130 aliases truthful cardinal successful nan erstwhile twelvemonth arsenic well. So do you expect to spot awesome maturation aliases speeding up nan maturation successful this area this year?

Shuichi Ishibashi

Well I deliberation it'll beryllium a small little than ¥150 billion, a small diminution to beryllium precise but this is astir nan level that we expect. The basal premises to grow income successful Americas; North and South America wherever while present successful Japan trucks and buses are successful a very, very difficult situation. Naturally carrier aliases shipping companies are facing utmost difficulties successful their business conditions. We are trying to support them successful various ways done solutions business specified arsenic reducing full cost, sustainability and CO2 emissions. We judge that caller tires on will not lick nan issues. Therefore we are quickly expanding our accumulation capacity investments for retread tires successful Japan. We are supporting various carrier shipping companies pinch a operation of caller and retread tires. So though North and South America are very, very large, we besides expect much from retreads present successful Japan to follow.

Kazunori Maki

Thank you very much.

Operator

Thank you very much. Now I would for illustration to inquire Mr. Sakamaki from Daiwa Securities to coming his question. [Operator Instructions]

Shiro Sakamaki

Well, convey you very much. I americium Sakamaki. I’ve heard from section dealers successful nan United States that nan value gaps betwixt Tier 1 and Tier 2 brands person widened truthful overmuch that nan consumers are nary longer consenting to judge it. Price title has already started successful Tier 2 and arsenic a result, I perceive that immoderate will opportunity trading down is already happening. Under circumstances Michelin has announced nan scheme to prioritize trading value pinch a simplification successful volume.

I consciousness that it is rather difficult to spell for both, but wherever do you spot nan room aliases opportunities to execute some targets? When you look astatine nan outer environment, it seems a small difficult. I mean for illustration successful January nan macro statistic show that prices for tires has really fallen since December. I americium wondering if there’s thing different, thing that you have, which allows you to execute nan results of nan prices and nan measurement for illustration you are indicating. So nan spread betwixt your scheme and nan dealer’s sound that I hear.

Shuichi Ishibashi

Well, I don’t deliberation location is simply a mismatch of what you perceive successful nan marketplace and what we plan. As I mentioned earlier, we person a very beardown transmission successful nan United – successful North America. We person an highly coagulated trader web successful position of nan rider tires aliases user goods. We person very coagulated unit outlets numbering 2,200, which we person been strengthening since nan 1990s, erstwhile I was successful North America. So pinch these 2,200 retailers and coagulated family transmission and mixed to that location are discount tires, stores and independent retailers and truthful on. This is simply a definite differentiating constituent pinch nan French company. The truth that nan ratio of our family channels a very coagulated transmission is very high.

I think, that is simply a strength. I judge that ratio for nan French institution successful this area is low. The quality is that successful a highly volatile marketplace for illustration this. I judge that location should beryllium differences resulting not only nan French institution but different companies arsenic well. Unless you person a patient grips connected nan coagulated transmission and person a bully merchandising scheme and merchandise lineup, results varies and go very unstable. If nan institution is only successful nan area of sell, successful a volatile market, they will consciousness nan nonstop effect from nan marketplace successful position of volume.

Dealers and retailers people look astatine nan extremity customers and, but they request to make profits. If they only connection inexpensive T products, unit prices will autumn and nary matter really agelong nan wholesale value whitethorn be, moreover if nan separator is x percent, nan businesses cannot run connected percentages. So you request to gain absolute dollar successful bid to prolong your business. And successful bid to gain nan dollar aliases nan profit you request to transportation products, brands that has a unchangeable marketplace and easy to sell.

And nan logic why nan marketplace is unchangeable for Bridgestone is that pinch equity stores and Bridgestone’s family channel, we person unit value positioning and we person a uniformly clear merchandising which tin beryllium maintained and that leads to unchangeable marketplace and it does not collapse. When 1 cannot maintain, specified arsenic positioning, it illness it. Since, it is people difficult to make profit astatine nan unit level pinch summation since of instability. So brands that are comparatively stable, brands that are easy to sell, brands that person connected to car manufacturers, brands pinch beardown merchandising power, they are soundly sold astatine our 2200 nonstop family dealerships.

Dealers evidently are nan ones who determine connected nan location price, and they do waste a merchandise astatine a value somewhat beneath that of nan Bridgestone equity stores. And successful those cases, nan value level successful equity stores will service to unafraid unchangeable marketplace value level. Of course, different manufacturers will person different position aliases views connected this, and location are immoderate who conscionable keeps connected trading their products astatine a debased price. That whitethorn beryllium good for them, but that is not nan benignant of business we do. One cannot do business pinch only inexpensive prices and inexpensive tires. In American tyre business, cheaper tires spell done fierce title astatine that level, lowering nan value further and further.

While nan full price, wholesale value continues to decline, nan unit value will not ever spell down that much, making it tougher and tougher for nan manufacturers. The unit value itself is fundamentally divided into best, better, bully and fighting price. The fighting prices, present is debased to statesman with, truthful moreover pinch definite magnitude of margin, it is really reliable successful position of dollars to gain profit. They cannot support connected doing business for illustration that. They request it. They request astatine definite level because they person half of nan market. Some retailers are only trading those inexpensive tires. Others whitethorn chiefly waste awesome brands, but they are really connected nan mean half and half.

So this is nan business building that prevails successful nan United States and nan channels and nan networks that we person created and nan truth that nan worth are shared together pinch these channels and networks to entreaty to nan worth we tin connection to our customers arsenic partners are very effective.

We will together beforehand Bridgestone’s worth to our customers and they bargain our products erstwhile they are convinced of nan worth offered by Bridgestone. I deliberation this benignant of narration is very important. I don’t cognize astir nan different manufacturers, but that is really we get to win-win moving alongside pinch our customers. But really I ever talk astir win, win, triumph first customer, past partners and dealers, and yet Bridgestone. I judge that this measurement of reasoning has helped america build a coagulated instauration that will not illness moreover erstwhile times get reliable aliases erstwhile nan business get moreover tougher. There are much supports for us. Thank you very much.

Operator

Thank you very much.

Editor: Naga



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