Bridgestone Corp Ord

Everyone, thank you very much indeed for gathering on the occasion of the presentation of the financial results for the first quarter 2025 by Bridgestone Corporation. Introducing the members to you. Global CEO and Representative Executive Officer, Shu Ishibashi. Global CAO, Global CSO, Yasuhiro Morita. Global CFO, Global Financial Division Head, Naoki Hishinuma. So the three executives are to represent the Limbred Stone Corporation. I would like to first call upon Shu Ishibashi, Global CEO, to take you through the summary of financial results for first quarter 2025, as well as the fiscal 2025 guidance. Hello to everyone. I am Ishibashi, Global CEO at Bridgestone. Today, I would like to present a summary of financial results for the first quarter 25 and fiscal 25 guidance. First, I would like to summarize the first quarter of the year. This year, as new management priorities, we include The impact of the US tariffs and the outlook remains uncertain globally. The impact will differ for each region, country, and market, but also to assume changes in business structure, we will promote the business management by turning changes into opportunities. Bridgestone has positioned 2025 as the year of emergency and crisis management. In response to the new business priorities, we believe its importance will be further deepened as reinforcing business quality. First quarter results, revenue approximately ¥1 trillion, adjusted operating profit approximately ¥110 billion, adjusted operating profit margin 10.5%. Although the year-on-year decrease in profit was recorded, it was in line with the plan announced in February 2025. Excluding one-time factors, profit increased slightly from the prior year. Net profit from continuing operations include restructuring and rebuilding the costs for its second stage as adjustment items to recall the decline from the prior year. On the sales front, sales expansion and high value added products such as passenger car, high rim diameter tires progressed and the sales mix continuously improved. The strong premium tier business base is being maintained and strengthened. In addition, profit contributions from the restructuring and rebuilding come to the second stage, which began in the second half of 2024, have started mainly in Europe and the United States. In addition, the steady promotion of global business cost reduction has created more than expected the benefits. In the first quarter, there was about 17 billion yen of contributions supporting our business performance under difficult circumstances. Details are provided by key management priority area. The European business, which had been a challenge, with a focus on quality and steadily improved, although it's still in the process of doing so. Both revenue and profit increased year on year. The premium tire business is at the 5% level of adjusted operating margin and has a thorough premium focus, particularly on passenger car tires for the aftermarket use. In the trucking, bus, and retail businesses, we aim to turn the deficit into profitability for the full year. Also, our retail operations. The business rebuilding that was initiated at an early stage, including the integration and simplification of the organizational structure, has contributed to the company's business performance. North American operations. Profitability was secured mainly in the commercial trucking business, which has a strong business foundation and profit increased year on year. Meanwhile, in consumer tires, the acceleration of business rebuilding has started. I will explain the details later in the four-year forecast. In addition, the business restructuring and rebuilding at the second stage that has been underway since the beginning of the year, including the optimization of the organization and teammates, is gradually contributing to the company's performance. Next, I would like to discuss the Latin American business. While Argentina was able to improve its adjusted operating profit margin to the 11% level owing to damage control, the Brazilian business posted larger-than-expected losses. Along with further strengthening the auto rebuilding of transforming the shape of the Latin American business, implemented team management capability building to promote the rebuilding of the Brazilian business. Long Cove is a thorough understanding of the Latin American business, assigning human resources at the top who can lead a rebuilding based on the Gemba to Gemba, and by strengthening support for each function from Japan, the U.S.-Japan team is promoting rebuilding and restarting. Specialty Tayu Solutions business. Sales remained strong in mining aircraft and motorcycle Tayus. However, Impact of the sales price revision scheme due to raw material price and exchange rate fluctuations in mining tires and a significant decrease in profit resulting in deficit of agricultural tire business was a drag to the performance. Adjusted operating profit margin of 20% or higher maintains a highly profitable structure of the segment. Next, I would like to explain the progress of our activities in 2025. In 2025, we are putting the highest priority on defense and pursuing offense activities as the two wheels. As I said at the beginning, due to major business structure changes, such as the impact of U.S. tariffs, the significance of year of emergency crisis measures has been enhanced. Thus, it's becoming increasingly important to focus on so-called to do what you set out to do and stick to it. In the second stage of business restructuring and rebuilding in the second stage, which is our defense, we will further strengthen it in 2025. Already in the US, Europe and Bridgestone West, the closure of retreading company plant in Lancashire version And as announced in April at two plants in Spain, we have initiated the annual continuing discussions to reduce the production capacity of the truck and bus tires. In addition, throughout Europe, with a focus on business process improvement, we are promoting further simplification of the organizational structure. In North America, back in January, the company announced the closure of its La Verne plant, ATV tire plant, while simultaneously reducing the workforce in corporate, sales, and operations functions, and further announced capacity and workforce reductions at its Des Moines plant, which produces tires for agricultural machinery tires. In Latin America, we are also rebuilding the building organization and reducing fixed costs. In addition, Bridgestone East in Japan and Asia has integrated and simplified its organization. We will speed up the simplification of the multi-layered organizational structure of the Japan-Thailand business and the rebuilding of diversified products in the business. In offense activities, accelerating premium focus and global business cost reduction activities. continue to strengthen our approach to premium car models, prestige, OEs, and premium EVs. We are steadily expanding the installation of enlightened products in new vehicles. We are also promoting the expansion of Enlighten products for the aftermarket use in order to capture the recurrent demand. With its core strengths in Dantotsu products, the company is continuously increasing the sales ratio of high rim diameter tires and premium tire brands. In addition, we will accelerate steady activities to reduce costs in the global business. We expect the effect to be about 55 billion yen for the full year of 2025. This is the pace at which we will achieve the target of the 2024 NBP, a cumulative total of approximately 100 billion one year ahead of schedules. BCMA expects a full year effect of 1.5 billion yen. mainly from development and production cost reductions. In addition, for the 2027 Mid-Trend Business Plan, we will share modules globally taking on the challenge of global modularization. This will spread the effect to the entire value chain, including raw material procurement. We plan to accelerate our contribution to business performance from 2026 onwards.

By business portfolio, premium tire, the core business achieved an adjusted operating profit margin of 13%. The solutions business, the gross business, achieved an adjusted operating profit level of 146% of the previous year's total, 170% in the retail business, and 120% in the strategic business of commercial B2B solutions. On the other hand, diversified business is in the red, and we urgently need to strengthen and accelerate the rebuilding of this segment. Finally, I would like to explain a fiscal 2025 guidance. Despite the direct impact of the U.S. tariffs, we have not changed our fiscal 2025 guidance of the 505 billion yen of adjusted operating profit. We maintain a dividend forecast of 230 yen per share. In addition, we will continue to strengthen our capital policy of acquisition and cancellation of Treasury stocks as initially planned to optimize the consolidated equity ratio. Despite high uncertainties regarding U.S. tariffs, based on the assumptions as of May 12, we expect a direct impact of about 45 billion yen on adjusted operating profit by the end of 2025. We will counteract this impact through a combination of measures we will be taking. For us, the impact of U.S. tariff in terms of unit of passenger tires will be export to the U.S. of the product manufactured in Japan only accounting for 10% or so. In terms of global sales, number of tires affected by the U.S. tariffs in our global sales volume is about 4%, assuming that the tariff on Mexican and Canadian profit will be under the grace period. However, as a management risk that has not been factored into our earnings forecast, we estimate the impact of the economic slowdown in the United States to be about 220 billion yen level on an adjusted operating profit basis. The forecast is based on the assumption of a decline in the U.S. GDP growth rate compared to the February plan. However, we have not incorporated this into our forecast due to the large uncertainties that exist in terms of risks in And in impact, we will, however, implement measures swiftly with high sensibility, including the risks of economic slowdown in global markets. aside from that of the United States. We will combine various measures to counter the direct impact of our pregnancy in 45 billion yen. First, we will carry through and further strengthen our defensive and offensive activities. We will continue to strengthen our steady global business cost reduction activities and thorough focus on Next, we will streamline global business structure and leverage our competencies as a global company, combining them for mitigation measures. We will streamline in global business structure through restructuring and rebuilding, which is of the second stage, and we will leverage competencies as a global company by optimizing global SCM and procurement. turning changes into opportunity. In particular, in the United States, we will strengthen our business in terms of both sales and production. Since Bridgestone 3.0 Third Foundation, we have always been conscious of the management policy of turning changes into opportunity. With these activities, etc., we believe we can further strengthen our global business quality towards growth with quality looking ahead to 2026 and the 27 MBP. Bridgestone has been strengthening its resilient foundation by promoting local production for local sales structure. Currently, local production for local sales ratio in the United States is approximately 60 percent for passenger tires and about 70 percent for truck and buses and ultra-large oral tires. In Americas, which includes North and South America, the ratio are approximately 90% for passenger and 80% for truck and buses. We will continue to maintain and improve these ratios. In addition for difficult and high-value added tires, our strategy is to produce in Japan and win globally. We will complement the global local production for local sales structure in Japan, which is at the core of monozukuri or manufacturing. As part of strengthening the U.S. business, we will make some small investment to optimize the balance between processes at the Aiken plant, which manufactures passenger tires and promote productivity improvement and maximum utilization of existing facilities, including at Wilson Plant. We will gradually start increasing production from 2025, and by 2027, we will establish a system to increase production by approximately 2 million units. Similarly, at our production bases in Mexico and in Canada, we will promote increased production by improving productivity, and maximizing the use of existing facilities. With the exception of natural rubber, the ratio of locally procured raw material is at a very high level of approximately 80 to 90 percent. We will continue to leverage our strengths as a global company to pursue global optimization of our supply chain in response to changes and geopolitical risks. In order to strengthen the U.S. business, we will further accelerate our consumer business rebuilding and multi-brand strategy in anticipation of the market structural change. Bridgestone brand, we will maintain our premium focus and build a sustainable premium brand, expand enlightened equipped products, and expand strategic customer channels. At the same time, we will strengthen the utilization of the Firestone brands in order to turn structural changes in the market into opportunities. We will move forward with Firestone revitalization in anticipation of increased maintenance demand due to the increasing age of vehicles in the United States and growth in demand for tires in the Tier 2 and Tier 4 zone ahead of schedule. We will re-emphasize collaboration with Indy 500s and other events improve brand strength, and aggressively introduce new products. From 2026, Enlighten products will be expanded to the Firestone brand and to strengthen Dantotsu products. To this end, we will shift Japanese development resources to the United States to speed up the process. In addition, we will invest in sales to expand Firestone Complete Auto Care equity retail market and to expand our services, as well as to strengthen collaboration with the Firestone credit card business. We will accelerate rebuilding by comprehensively strengthening our brands, products, and channels. In other countries and regions, we will respond to changes in their respective markets and build and execute strategies accordingly. In Latin America, we will focus on business rebuilding, particularly in Brazil for the time being. In Europe, we will transform the shape of Europe business after completing the restructuring and rebuilding of the second stage, aiming for the future growth. In high market share markets such as in Japan, Thailand, and Indonesia, where influx of low-end products is expected, we will strengthen defense of the family channel. In addition to the Dantotsu reinforcement of the Bridgestone brand in the best area, we will strengthen the better and good areas as well. In India, we will continue to promote a premium and mass strategy in passenger tires as a gross market. In China, we will strengthen our premium passenger business in conjunction with OE and RIP based on the complete within China. The OER mining tire business has a built-in resilient business foundation in the United States with high rate of local production for local sales in the United States. and the low ratio of imports into the United States from global sales. Based on this foundation, we will continue to expand our Dantotsu products, master core, and solutions, and continue to achieve growth with quality. As the year of emergency and crisis management in the second half of 2025, we will move towards growth with quality in growing markets, such as the U.S., by addressing changes in the country-specific market structure triggered by mitigation measures against the impact of U.S. tariff. We will then aim to achieve growth across the entire global Bridgestone group in the 2026 and in 27 MBP. I would like to ask and thank you for your continued understanding and support. Thank you very much for your attention.

global CEO, summary of the Q1 results, as well as the guidance for the fiscal 2025. Now to call on our global CFO and executive director in charge of global finance. Here is Naoki Hishinuma to take you through the financial results for the first quarter fiscal 2025. My name is Hishinuma and I'm in charge of finance. This is my agenda for the day. So let me start with business and financial performance for the first quarter 2025. Consolidated results for the first quarter 2025 showed a year-on-year decline in revenue and profit with adjusted operating profit margin landing at 10.5%. The factors behind the year-on-year change in adjusted operating profit will be explained on the next page. Excluding one of factors such as gains on sales of assets which occurred in the prior year and the carryover effect of a temporary deterioration in conversion costs due to adjustments to production in the final quarter last year, the result was slightly higher compared to the prior year. Profit attributable to owners of the parent, 75.9 billion yen. In North America, Latin America, Europe, and other regions, we steadily promoted the second stage of rebuilding to improve profitability for the future and recorded related expenses, resulting in a decrease in profit compared to the prior year. The breakdown of the adjustment items will be explained later. I will now explain the factors behind the year-on-year change in adjusted operating profit. In addition to the sales mix improvement and steady global business cost reduction activities, we steadily promoted the reform of our business structure through rebuilding. Due to increase in raw material input costs and the negative impact of the UPI, the adjusted operating profit for the first quarter of 2025 was lower than in the prior year. Segment performance. The Japanese segment recorded gains on the sale of assets in the prior year, while in the first quarter of this year, the diversified product and business and sports and cycle business saw a decrease in profit compared to the prior year. That suggested an operating profit decrease year-on-year. In the three overseas segments other than Japan, business cost reductions and the effect of business rebuilding contributed to an increase in profit, and improved profitability year-on-year, even in the business environment where raw material inflation persisted. I would like to explain our business performance by product. In passenger car and light trucks, we continued to expand sales of high-room diameter tires for the aftermarket use and the increased ratio of sales of those products to total sales, but the profit margin declined slightly due to the high raw material prices. Sales of tires for trucks and buses continued to grow and profitability improved, mainly in the North American market. Specialties. The tire business for agriculture machinery saw a significant decrease in profit and the red ink emerged due to a decline in sales caused by sluggish demand, resulting in a reduction in profit compared to the prior year. On the other hand, in the tire solution business for mines, Sales remained strong despite the negative impact of high raw material prices. Sales of aircraft tire use solutions also increased to realize 21.9% profit margin. Diversified products and businesses to be explained on the following page.

In diversified products, sales and profit declined in the hydraulic hose and crawler business due to a decrease in sales volume against The backdrop of lower demand for construction and agricultural machinery, the profit margin also declined, and the business ended in the deficit. In the sports and cycle business, while domestic gold business was strong, impact of lower sales in the United States was significant, resulting in the decrease in both sales and profit. In the cycle business, unit sales increased year on year, but the cost was significantly affected by the weak yen, resulting in an operating loss. Diversified products business in America has continued to face severe business environment, but the profitability of the business for new vehicles improved and profit increased compared to the previous year. Now for the adjustment items. The first quarter loss was 22.6 billion yen with a main breakdown as is shown here on the slide. We are accelerating the second stage of restructuring and rebuilding, including the expenses relating to the La Verne plant closure expenses. announced in January this year, and we are recording the rebuilding expenses mainly in North America, Latin America, and Europe. The following is a summary of the financial position balance sheet and the cash flow. The total asset decreased to 5 trillion 396.3 billion yen from the end of the previous year partly due to the impact of the stronger yen. The monthly sales of cash and cash equivalent was 1.7 months down 0.2 months from the year of the previous year. of the end of the previous year and is steadily moving towards a target level of 1.5 months. Inventory of merchandise and finished goods has been reduced excluding the exchange rate impact over the same period of last year as a result of continuous and thorough lean inventory control. Free cash flow was 91.3 billion, an increase of 60.4 billion compared to the previous year due to the implementation of strictly selected investment. in addition to the improvement of operating cash flow compared to the previous year. Regarding the capital policy announced in February, we are steadily proceeding with the acquisition of treasury shares and utilization of the debt. I will now explain the fiscal 2025 guidance. As the CEO explained earlier, we will maintain a February guidance and aim to counter the direct impact of the US tariffs. On the other hand, we have not included the risk of slowdown due to tariffs in our earnings forecast because of the uncertainties of the impact and outlook. We will reflect this in our earnings forecast at an appropriate time. We expect to maintain the dividend at 230 yen per share even if the risks of economic slowdown becomes apparent, and will continue to implement the capital policy announced in February as planned. This concludes my presentation. Thank you very much for your attention.

That was Mr. Hishinuma, our global CFO, to talk on the subject of the Q1 performance. We now move on to the Q&A. For the questions and answers session, we would like to first take questions from the media representatives to be followed by the analyst questions, the receiving questions from those analysts chosen in advance by the company. From Bloomberg, Inajima-san, please. Inajima from Bloomberg. I hope you can hear me. Yes, we are able to hear you. Thank you. Just one question. You talk about the Aiken plant and the investment schedule, the timing, the magnitude, and whatever details that you can share already. That's it. About the Aiken plant, To have a bit of balance among processes. So it is really a modest size investment, less even than 1 billion yen so that we can have a better balance among processes, the benefit income and a better productivity. Hiring some work on the force members. So that's that. Over the three years, Aiken and Wilson, the production improvement call is there. So existing capacity, we will be fully utilized so that we can accomplish the additional production of 2 million tires. As we did already in the current fiscal year, this year, more than 500,000 tires also we will enjoy as the benefit. Thank you. Mr. Inajima from Bloomberg, thank you. So moving on to Sasaki-san from Robert Hochi Shimbun. Sasaki is my name. I hope you can hear me. Yes, we are able to hear and hello. Thank you for your explanations about diversified business. Page 12. of the materials. To the left of the circle, the revenue is 37.6 billion yen. This is the OP at 300 million yen, with the OP margin at minus 0.7 percent. So, what is the overall prospect that you have from this, the chemistry and industrial products in particular, but the whole diversified product? three four year business expectation so for the diversified business, they're turning the business into the positive profitability on a four-year basis. That is the main objectives that we have. And I must refrain from quoting any exact numbers, but certainly and surely our expectation is to make this business profitable. But in order to be positively profitable, you must have certain factors that you've identified already. Well, the top line will be severe, the cost reduction, the fixed cost reduction, the sales mix improvement, the steady accumulation of those benefits that will enable us to accomplish the target. Thank you very much. For the Q1, for the chemical and industrial products, what has been the overall trend? in the Q1 period. Q1, I'd say the hydraulic hoses, the quarter business, those are the, because of this luggage event coming from the agriculture machinery and other machinery users, it was tough. And then you say that the four-year profitability will be accomplished, assuming that this is a mortgage environment. Yes, as I said, the cost reduction, the sales mix improvement, selling price improvement, the study progress of all of those actions will yield us the result. Thank you very much. Thank you.

Thank you very much. From Nikkan Kogyo newspaper, Mr. Mahashi. Thank you. I am Mahashi from Nikkan Kogyo Shinbun. Thank you very much for this opportunity. I may have missed your presentation about the tariff. I have a question. regarding the tariff. In the U.S., you are intending to enhance your production. Are you thinking of potential review and change in the sales price of your tires? As I mentioned earlier, I believe that there would be a long-term impact of 45 billion yen. But in order to overcome that, we will be taking various measures and we have been taking measures as pleasant as was mentioned earlier. We are going to be rebuilding and we are going to strengthen ourselves and we are going to even improve our supply chain. So we have been doing a lot of different things. As for the price, at this point of time, we have not made any decision. Well, of course, price is going to be a important area for consideration, but for the time being, not so. Thank you very much. Thank you very much, Ms. Wasse. From Nikkan Jidousha newspaper, Ms. Uchida. Thank you. I'm Uchida. Can you hear me? I would like to also ask a question regarding tariff on page 16. I think you talk about the global impact and the second stage of rebuilding and what you are contemplating there. Do you have anything that is new to add to what you have already announced in February as for the second stage? There are various activities globally which is being disclosed, information provided. But as for the details, I think we only announce them as decisions are made. Can you show them? And for the first quarter, here we announced the two Spanish plants in Europe, La Voie plant closure in North America and reduction in the production capacity in Des Moines plant. So when we make the decision and the decision is reached, we do make announcements. There are many other, in the east and in the west, various plans which are being considered at present. And under this very challenging environment, there are some that are under discussion as additional measures, but they are very sensitive items. So when the decisions are made, we will make announcement. But there are many, many things that we are considering, and there are many things that are becoming more concrete, and we will be taking actions as is determined. Would this answer your question? Thank you very much.

Thank you, Uchida-san. From Nikkei newspaper, Ota-san. Yes, from Nikkei. My name is Ota. Is my voice audible? Yes, I can hear you. Hello. My question to you, again, referring to U.S. tariffs, not having to do with automobiles, but, you know, aircraft in the U.S. There's the U.S. administration contemplating the possibility of the tariff leaving on aircraft and various components. You have the aircraft and the tires and other components to build and assemble aircraft. What about the possible impact that you would feel as relates to your aircraft in the tire business? Morita-san, to answer, aircraft. At present, we are scrutinizing the details. So when we say 45 billion yen magnitude of the impact, this is still abstract. We need to make it much more exact with higher accuracy. That's what we're doing precisely right now. Thank you. Thank you, Mr. Ota from Nikkei newspaper. Now, we would like to move on to the questions from the analysts. who have been chosen by the company. Again, in the interest of time, only one question per analyst. Please cooperate. As I call your name, and I will unmute your microphone. If you are able to show your face to us, please turn on your camera and start speaking. Let us start with Mr. Sakaguchi from Mizuho Securities today. From Mizuho Securities, this is Sakaguchi speaking. Thank you very much for the relationship over time. The U.S. business environment and your position in the U.S. business market, the tariff impact, you kept on saying how you're going to counter that. But then again, you said that there's nothing already decided about the possible increases. However, I see that some of the automobile OEMs are starting to announce the price changes. So what is your sense as to changes in your business environment? And I understand about your pursuit of global, local production for local sales. Maybe you will try to enlarge your share of business in the U.S. market. When you say that you would turn challenges into opportunities, what about the possibility of enhancing your presence in the U.S. marketplace? What prospect that you may have? And when you say you react to the pressure coming to you from the tariff, do you have some things that you've decided already? This will further the analysis will be much appreciated. The point is well taken. For the consumer business, what I said was that we are going to enhance our business and we will reconstruct, rebuild our operations. When saying consumer tires, there is the tier one, Bridgestone, French company, the brand. And then there's a set of OEMs or companies who are quite familiar with local production for local sales. Tier 2 companies, some producing locally in the U.S., but much more reliant on the imports. Tier 3 and Tier 4, most of the bulk portion of the products are imported into the U.S. market. either do not have the local production capacity in the U.S. at all, or even if they do, it's quite limited. So of late, Tier 3, Tier 4 companies, their demand level has been getting stronger and stronger. That's something that I have been saying, meaning that what about Tier 4, So even if tariff isn't going to be applied, it's not going to be so severe. And I do not understand how it is going to affect them in terms of the CPI. But our sense is that possibly the Tier 4 priorities will enlarge their presence. However, Tier 3 and Tier 2, our overall read is that it is going to become more difficult for them to preserve the process. Since the Americas, since 1900, we have that Firestone brand. They're produced in the US. They saw the value of the firestorm, the brand, the gearing towards the tier two. That's very promising. And we have the company owned and company operated distributors trading the Firestone branded products. All in all, we have been trying to identify opportunities to enhance the recognition of the Firestone brand. So the tier three and tier two, we would like to take in as much opportunity that we have into our camp. Tier one, that's the sweet of the so-called done-totally products. We have no reason, we have to change our course. So always being mindful of the market and the possibilities of changes. We all have the capture business opportunities. The fitting to the OEM vehicles, the expecting on the recursion demand, recursion demand to be captured in no brand name as much as possible. So that means a sales expansion as always. See, the U.S. market is such that as we have two plants in Aiken and Wilson, I talked about plants that we have for both of those factories, how the available capacity is going to be utilized to the full. I just visited those local plants. We will save the size of investments but the benefits of the stronger output. I understand, I believe that we will be able to do that, not by spending, but by making very large investments. We should leave the position where the premium-focused, high-rim diameter tires only, all branded the Debris Stones to be exported or imported into the investment market from Japan. So it is the combination of all of those tactics so that in the new and changed environment, our purpose will be to enhance our market position, that's all consumer tires. Trucking bus tires, Canada and Mexico, how it is going to be resolved, the USMCA's decisions are going to have impact. But our understanding is that until June also, they will continue to be free of tariffs. It may last for the entire calendar year. Or to be more conservative, they decided in the month of July, the tariffs may start to be levied. So that will become part of that 45 billion yen magnitude of the annual impact. This will track the tariffs on the first year. That is where we focus. We have been focusing on the top tier, where our position has been very strong. We will continue to appear in the Bridgestone brand, somewhat supplemented with the Firestone brand. So all in all, it's in tier two, tier three, and therefore you can simultaneously do your business in the U.S. I hope I answered adequately. It was very clear. Thank you very much.

Thank you very much, Mr. Sakaguchi. Next, we will move on to Mr. Maki from SMBC Nikko Securities. Thank you. I am Maki. Thank you. I would like to ask you about the results in general. Regarding the first quarter, How much of a gap is there from what you had anticipated? I believe that it was improving. Therefore, I would like to ask you for your impression. As for the full year, you talk about the countermeasures against the tariff, et cetera, and the fighting against the challenging environment. Where do you think that you will sort of settle down? We talked about the expanded sales of firestone or maybe a potential sales price increase and cost reduction, which might be accumulated. And on the cost side, maybe the raw material cost may come down somewhat. So when you consider all of these factors, what do you think may be a quantitative opportunities you have ahead of you? Mr. Hisunuma will respond. Now, at the end of the first quarter, what was it against the plan? The conclusion is it is in line in general as compared to the internal plan. There is not much of a divergence, but cost reduction impact were ahead of the plan. As for the exchange rate, it was 153 as compared to the 145 yen that we had anticipated. So, what declined was the performance in Brazil in Latin America, and also in the diversified business there, we were somewhat behind. what we had anticipated. So there were positive areas as well as some areas that we fell behind. But generally speaking, we are more or less in line with what we had planned. If I may add, as for opportunity, the 45 billion that we need to sort of counter, We will try to make these changes into opportunities. We will increase the production and sales in the United States in order to achieve that. And in Europe, we will have a premium focus. And in the replacement, we are doing pretty well at present. So we have high hopes for that. So among the premier focus in globally, I believe that replacement in Europe will work out well. And trying to make ourselves more lean, yes, what we are doing that globally, and there are some areas that I cannot at this point talk about, but on top of that, we are accelerating that and that would have good impact on the cost and we will be able to strengthen our quality. And at the end, as always, we will do a business cost reduction very much in line with Bridgestone for design and for the procurement. And in combination of all the factors, we have been able to achieve more than we had anticipated. That will have a good impact. So the negative of $45 billion, And in addition, there may be a potential slowdown which we may have to deal with. There are plans A and B and C that we are possibly looking into. So, we will actually develop a plan to counter this in the area where there are higher certainties. That is what we are doing at present. Thank you. They are countermeasures to overcome the 45 billion as you have just described. And if the tariff comes down more than you had anticipated, so you will be able to actually see the impact of the good results and maybe potential price, the 45 billion As for MCA, this is a rather conservative assumption. So by the fluctuation of the tariff, there may be changes in the measures that we take, or there may be difference in the price that we set. But we will improve our quality of our business. That kind of activity will remain no matter what. And especially for the consumer goods, we will enhance business in the United States and they will remain. So we are anticipating a major structural change in the consumer goods. And of course, that may be impacted somewhat by the fluctuation in the tariff, but the basic approach will not change. So we will steadily implement those measures. Thank you very much. I am sorry to go into such details, but when I looked at the bottom line, the structural change cost is not reflected enough in the first quarter. I believe that there may be a higher figure if you think of that, maybe 100 billion yen per year. Is that going to be changing? Yes. We have actually used all of the amount that was allotted for the year. As it is clear of the decision, we will actually disclose them. There is a possibility that it may go up compared to what you see here. Thank you very much.

Thank you, Mr. Maki. Let us move on to Mr. Yoshida from Citigroup Global Market. Thank you. Yoshida from Citigroup Global Market. Hello. The footprint of manufacturing plants, what is the significance of the 25% tariff rate? because the production costs locally have been going up, with particular emphasis on the worker costs. And if there's going to be 25% to be levied, what you said is that not making large-scale investments, you will make sure that available capacity will be used up to the brim. If you're going to do that and 25% of the tariff is going to be there, how would you position the impact of the 25% of the import of the tariff? Do you, from the perspective of the site-specific records, inclusive of the impact of the U.S. tariff, would you make comparisons? Thank you. I think I understand. The production plant records base, as well as the different charges and so on, we ran those analyses. pairs for the site. And what is going to be tariff percentages? Is it going to be 10% or 25% and so on? For instance, if it is going to be the tariff rate of 25%, how that will impact the competitiveness of our plants. Akin plants and Wilson Coats, these are typically the highly costing plants, and they're both producing consumer-needed products. even though we understand that those on the plans are um they did cost heavy um there was the 25 percent of the tariff rate and it is going to the more on the sort of neck and neck as to know which is better and then the other have the more on the income the permissible than not and they also have the aspect uh affected further by the uh the pricing so i cannot really simplify the case but Say for truck and bus tires, we have Laverne plant, which already has been announced to be closed down. That Laverne plant has been an old and expensive plant that didn't run. Now, our plant is to ship or import the La Verne products from Brazil to North America. Even with the 25% import on the tariff on the store, the Brazilian plant and the importing into the U.S. from Brazil will be cheaper than continuing to produce those products at the La Verne. Waring plant, that's the leading-age plant with its capacity. In the U.S., the market where the worker charges are high, the productivity has been high, the efficiency has been super. So it's that sort of a plant that we have at Wilson. Wilson is the plant producing consumer tires, but it was the OEM, the customers, that making the tires. Each OEM who is very demanding specifications and requirements, and we're trying to boost their strengths even further. So per plant and per country, we have to analyze, visualize, and to identify what is going to be the maximum potential for each of those sites. And what would happen, what would be the magnitude of impact for the outputs coming from those plants if the higher tariff is going to be levied? So really constantly we're running those analysis. Thank you very much. Thank you, Mr. Yoshida. Now the final question.

Mr. Sakamaki of BOA Securities. Thank you. I am Sakamaki. Can you hear me? Yes. Hello. A similar kind of question, I'm sorry, but I would like to confirm about the profitability. You talked about the $45 billion impact of the tariff. When you looked at the sales of last year, I think $45 billion is about 2% to 3%. And I think you talked about the 4% and 6% Canada and Mexico by others. And if you did have the similar kind of price increase, you might have some other impact. And you said that you are trying to rebuild in advance of your plan. And maybe the annual cost of maybe 100 billion may be used in advance. And maybe you can have a higher impact of rebuilding earlier. I know that you cannot go into details, but Mr. Ishibashi, to what extent are you expecting from these kinds of rebuilding efforts? Now I will talk to Mr. I will have the impact of the benefit of building. In the figures for February, we did talk about $40 billion impact. for 25 and we are now scrutinizing the impact and we are now starting to see with the build on improvement maybe five to six billion increment to what we had announced earlier so i think that is about the area and for next year we will increase so maybe further that is on top of what we had expressed. To be more specific, we do have about 100 billion that is under plan, but only a part of it has already been announced externally. And when we make decisions and we take decisions, announcement will be made. But in addition to that, we will implement certain things and in 26 we will try to improve further the quality of a business and that is at the basic press premise so while we improve the quality we will strengthen ourselves and we will aim to move towards a bit gross in america and in india we will move towards Growth with quality, we will start with America. And in January, I actually made a business trip to America, and I visited all our customers, and we actually looked at various developments that are underway. And I believe in the second half of this year, results will actually be realized. The same is true for India. Europe, we do still need to improve the quality significantly. And in the latter half of the 26, we may start to see some growth. So, depending on each area, there will be some differences and emphasis will be different. So, and depending on what kind of development we see in the area of U.S. tariff, we will have to modify various approaches we take. for different region and for different country. That is what we are doing at present for year 26. We need to strengthen our quality and we need to expand our sales, which are necessary. So that is approach that we will for sure take. Depending on the tariff situation, decision may be different. We will continue to pursue the improvement of the quality regardless of what kind of tariff that may be implemented and we do need to make these changes into opportunities to improve the quality and we do need to expand our sales in the United States. That is very important and those kind of approaches will never change. So that is what we can say at present and I hope to you do understand our position as such. Thank you very much.

Thank you very much, Mr. Sakamaki. Now, everyone, this is time for us to close the Q&A. And with that, we are going to close the Q1 results presentation with Q&A hosted by Bridgestone. Thank you very much for your attendance today. It is now adjourned.