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Operator: Ladies and gentlemen, thank you very much for listening to the earnings call hosted by Bridgestone Corporation. Let me introduce to you the members from Bridgestone. Global CEO and Representative Executive Officer, Shuichi Ishibashi; Global CAO and Global CFO, Yasuhiro Morita; Global CFO and Global Financial Division Head, Naoki Hishinuma. Three executives from Bridgestone will explain the matters. First, I would like to begin by asking Global CEO, Shuichi Ishibashi, to talk on the summary of the financial results for Q1 2025 and the FY2025 guidance.
Shuichi Ishibashi: Hello everyone. I am Ishibashi, Global CEO. Today, I will provide an overview of the financial results for Q1 2025 and our full-year guidance. Bridgestone has designated 2025 as the year of emergency and crisis management. Amid a global environment marked by the heightened uncertainty due to factors such as US tariffs, we are advancing our management strategy by anticipating the business structural changes on a country and market-specific basis so that we can turn changes into our opportunities going forward. H1 performance saw the revenue of over JPY2.1 trillion, adjusted operating profit of approximately JPY235 billion, and an adjusted operating margin of 11.1%, representing an increase compared to the prior year. The impact of US tariffs in Q1 was minimal due to the maritime transportation and inventory lead times. Results are in line with the plan announced back in February 2025. Net income from continuing operations includes business rebuilding costs booked as adjustment items, resulting in a decrease compared to the prior year. In terms of sales, strong sales of tires for passenger cars, trucks, and buses, as well as mining and aircraft premium tires, and improvements in the sales mix continued. Additionally, the effects of the second stage of business rebuilding have begun to contribute to performance, primarily in Europe and the US. Global business cost reductions have achieved results exceeding the plan, contributing approximately JPY35 billion in profits during Q1 and steadily supporting performance under challenging conditions. We will continue to carry through what we have decided to do. Starting from H2, we will start growth with quality for markets to grow. We will provide detailed explanations by area of management priority. The North American business achieved profit increase across the entire premium tire segment. The commercial truck and bus replacement market business, which is a strong business foundation, continued to expand sales ever since Q1 and improved profitability. Looking ahead to H2, we anticipate a decrease in low-priced imports due to US tariffs and an increase in demand for major brands. We will leverage both the Bridgestone and Firestone brands to capture further sales expansion opportunities. In the consumer tire business, we are accelerating business rebuilding and multi-brand strategies for Bridgestone and Firestone. While the progress is gradual, results are beginning to emerge. Progress on these initiatives will be explained later. Next, regarding Latin American business, which is a key management issue. Argentina has improved its adjusted operating margin to 12%, while the business in Brazil continues to face significant losses exceeding our expectations. Since May, we have refreshed our management structure, prioritizing the improvements in management and operational quality, and have improved operations based Genbutsu-Genba. A global team is driving initiatives to enhance productivity and reduce costs, and we were able to slightly reduce the loss margin in Q2 compared to Q1 when we hit the bottom. Going forward, we will continue to focus on rebuilding from production to sales and aim to achieve profitability by the final quarter. The European business has strictly adhered to the principle of focusing on quality. We have steadily focused on business rebuilding and achieved YoY profit growth for the second consecutive quarter. In the truck and bus tire business, we implemented measures such as optimizing production facilities and achieved breakeven levels in Q1, excluding retread. The retail business also continued to achieve YoY profit growth and narrowed its loss margin. Both truck and bus tires and retail tire operations aim to achieve sustained profitability for the full year. In the passenger car tire business, we achieved both higher revenue and profit compared to the prior year, continuing to expand sales focused on high rim diameter tires. The premium tire business, as a whole, achieved a profitability level of approximately 5%. By the end of 2025, we will thoroughly complete business rebuilding. In the next phase, we will strive to achieve growth with quality. The Asia Pacific, India, and China business, our second home market. We achieved a solid operating profit margin of 12% after adjustments and reported an increase in operating profit compared to the prior year. Consumer tire business in India, positioned as a growth market, achieved expanded sales and increased market share in the premium segment of high rim diameter tires compared to the prior year. Additionally, Thailand is strengthening its business rebuilding efforts and improving profitability. The specialty tire and solutions business maintained robust sales in mining and aviation, sustaining a high profit structure with an adjusted operating margin of 20%. Furthermore, B2B solutions are steadily expanding through co-creation with customers. However, rising raw material prices, time lag in price adjustments linked to raw material, and exchange rate indices for mining tires, and significant declines in profits and losses for agricultural machinery tires, have dragged down performance, resulting in a YoY decline in profits. Next, I will explain the progress of our defense and offense activities for 2025. Our defense involves business rebuilding, which is the second stage. Bridgestone West has consolidated European retread production facilities, reduced production capacity of European truck and bus tire business, closed the La Vergne plant in the United States, and optimized workforce across various functions in North America. Bridgestone East has announced the transfer of shares of a domestic logistics subsidiary and the transfer of the in-house carbon black business in Thailand and Mexico. We will continue to review and implement measures for 2025, including streamlining the multilayered structure of the Japanese tire business and rebuilding of diversified product business. At the core of our offensive strategy is the expansion of our Dan-totsu products. Without Dan-totsu products, there can be no growth with quality as our guideline. We are enhancing the Dan-totsu products power globally. In 2025, in the premium tire segment for passenger cars in North America, we launched two models of Turanza equipped with ENLITEN in Q1 of the year. In September, we plan to launch a new Alenza product. Firestone also launched the new Affinity AS, all- season Affinity, in April. In India, we launched a new product last year that led to a sales increase in 2025. In Japan, under the premium tire brand, Regno and the winter tire, Blizzak, we will launch new Dan-totsu products to improve the sales mix, and expand sales and market share. In the truck and bus tire segment in North America, Japan and Europe, we expanded Dan-totsu products by launching new products equipped with ENLITEN in 2025, expanding our product lineup. We would strengthen our business in collaboration with retread and fleet business expansion. We are continuously pursuing and strengthening steady global business cost reduction to support performance. For the full-year of 2025, we anticipate an effect of approximately JPY61 billion over the previous year. Cumulatively, from 2024, the overall effect of these activities is projected to reach around JPY136 billion, which is one year ahead of the target of approximately JPY100 billion set in the 2024 midterm business plan. In BCMA, we are focusing on improving production costs through the Genbutsu-Genba approach. We anticipate an annual effect of approximately JPY1.5 billion over the previous year. In 2026, we will expand the benefits to procurement and logistics, accelerating the increased contribution to performance. Turning to markets to grow. In our US business, we are anticipating changes in market structure and are promoting consumer tire business rebuilding. The Bridgestone brand will maintain its premium focus and will link the expansion of Dan-totsu products and strategic customer channels to drive growth. Regarding the Firestone brand, in the better and good plus segments, where we anticipate changes caused by US tariffs, we aim to expand our presence. Firestone is a traditional American brand founded in 1900 and celebrating its 125th anniversary in August 2025. Under the theme, since 1900, we would strengthen collaboration with the US indie series motorsports and other initiatives, enhance brand strength, and promote the enhancement of Dan-totsu products, including the launch of new products. Starting in 2026, we plan to expand new products equipped with ENLITEN. Regarding channels, we are advancing the development of new family channels. The Firestone brand channels have 2,200 outlets nationwide. Firestone Complete Auto Care equity retail network and Firestone family channel dealer’s ratio exceed 80%, which is a key strength of our company. In Q2, the direct retail sellout of the Firestone brand expanded YoY, and we will comprehensively reinforce the Firestone brand for H2 of 2025 and beyond. For commercial B2B solutions, with mining and aviation solutions at the core, we are expanding our offerings based on co-creation with our customers. In the mining sector, we deployed our Dan-totsu product, Bridgestone MasterCore, to approximately 130 mines and driving the expansion of our solutions through the Genbutsu-Genba approach. In aviation solutions, as a new co-creation initiative, we launched a new solution with Cebu Pacific Air. For the first time, we have officially launched our proprietary individual tire management system, EasyTrack, supporting the efficiency and accuracy of tire inventory management. Going forward, we'll continue to expand our solutions by fusing real and digital capabilities and amplifying the value of Dan-totsu products, while increasing its contribution to the company's business performance. This is Q1 of the financial results summary by business portfolio, reflecting these activities. The premium tire business achieved adjusted operating profit margin of 13.5%. The solutions business, which is our growth business, continued to improve profitability. It achieved a 145% increase in adjusted operating profit over the previous year, an improvement of an adjusted profit margin of 2.2%. In breakdown, commercial B2B Solutions saw an adjusted operating profit increase of 149% YoY. Retail and services also saw an increase of profit driven by improved European retail operations, an increase of 143% over the previous year. On the other hand, the diversified products business maintained profitability but continues to face significant challenges, strengthening and accelerating business rebuilding efforts are now urgent priorities. Finally, I shall give you the FY2025 guidance. Assuming that we counter the direct impact of US tariffs, there is no change in the fiscal guidance announced in February, with an adjusted operating profit of JPY505 billion and profit from continuing operations of JPY253 billion. The dividend per share forecast remains at JPY230. Capital policy is being implemented as originally planned. Regarding US tariffs, while uncertainty remains high, the impact on adjusted operating profit due to direct effects was estimated to be around JPY45 billion in the May guidance. But based on our latest assumptions as of August 5, this has been revised to approximately JPY25 billion. In Q1, the impact was minor due to maritime transportation and inventory lead time, but H2 is expected to see an impact across the board. In response, we are advancing additional business rebuilding measures, as well as optimizing global sourcing. In addition, we've started compiling and implementing strategies tailored to each country and market in response to changes in business structures. At the same time, in H2 of 2025, we will reinforce commercial business, rebuild the consumer tire business in the United States, and promote premium and mass strategy in the Indian consumer business, expanding sales of mid and small tire ORICA solutions. We will begin growth with quality in the markets to grow. In the Asian market, we will further strengthen our solid business foundation to adapt to changes. In our home market, for the Japanese REP, we will expand sales centered on our Dan-totsu products, while enhancing sales power through the Genbutsu-Genba approach. We would thoroughly defend the family channel by reinforcing the best, better, and good categories. Additionally, we will pursue steady global business cost reductions, business rebuilding in Europe, and other additional rebuilding initiatives, and carry through what we have decided to do, turning changes into opportunities. Meanwhile, given the ongoing high level of uncertainty in the business environment, we are also anticipating risks and opportunities. These factors are not incorporated in our fiscal guidance. As for risks in our May guidance, we reflected a potential economic slowdown in the US economy and anticipated an indirect negative impact of around JPY20 billion on adjusted operating profit. This estimate has been scrutinized based on the latest US GDP growth rate and other factors and revised this to approximately JPY10 billion. Additionally, we view delay in business rebuilding of diversified products business as a risk factor. Of course, we will closely monitor changes in the business environment and take appropriate measures promptly. Regarding opportunities, we will primarily focus on further accelerating the initiatives we have previously outlined, and we would strengthen our business quality to counter risks. I've summarized our performance for Q1 and our outlook for the full year. First, in 2025, the year that we have designated as emergency and crisis management, we will carry through what we have decided to do and launch growth with quality starting in H2 so as to evolve into a strong Bridgestone that can thrive in turbulent times. I kindly ask for your continued understanding and support. Thank you very much for your attention.
Operator: That was Mr. Ishibashi, our Global CEO, on Q1 results and the guidance on the full-year basis. Next, we move on to Global CFO, Mr. Naoki Hishinuma. to talk on the financial results for Q1 FY2025.
Naoki Hishinuma: Hello, everyone. I am Hishinuma, In Charge of Finance. This is my agenda today. I will now begin with an explanation of the consolidated financial results for Q1 2025. For Q1, 2025, consolidated revenue decreased YoY, while operating profit increased. The adjusted operating margin improved by 0.6 percentage points YoY, landing at 11.1%. Net income attributable to the owners of the parent amounted to JPY115.5 billion. We have steadily advanced the second stage of business rebuilding aimed at reinforcing business quality while recognizing approximately JPY70 billion in related expenses as adjustment items. However, due to factors such as the recognition of approximately JPY63 billion in gains from the sales of fixed assets in the prior year, the net income decreased YoY. I will now explain the factors contributing to the YoY change in adjusted operating profit. Cost increases due to rising raw material prices, particularly natural rubber, and inflation, as well as reduced profits in the Brazil business and the UPI for the inventory, were offset by improvements in selling prices and product mix, steady progress in business rebuilding to reinforce business quality, and the effects of global business cost reductions, resulting in a YoY increase in adjusted operating profit. Consolidated financial results by segment. In the Japan segment, sales remained steady, particularly in mining tires, resulting in an increase in revenue. However, the segment was impacted by reduced profits in the chemical and industrial products business and the sports and cycle business, as well as the effects of the strong yen and overseas export transactions, resulting in YoY decrease in profits. In the three overseas segments outside Japan, business cost reductions, along with business quality reinforcement through business rebuilding, contributed to the increased profits compared to the prior year, even in the business environment where inflation in raw materials and the costs continued. Profitability also improved. In the Americas, the North American truck and bus tire business contributed to increased profits and improved profitability. Europe increased sales of passenger car tires for the aftermarket segment, particularly high rim diameter tires, and improvements in the sales price mix contributed to improved profitability. Performance by product. Passenger car and light truck tires saw sales of aftermarket tires remaining at the previous year's level, but the decrease in sales volume of original equipment tires led to a decline in revenue. With the higher raw material costs, the segment reported a YoY decline in profit. However, the expansion of premium tires, such as high room diameter tires, and the increase in the weightings in the overall sales mix continuing profit margin of over 10%, are on par with the prior year. Truck and bus tires saw continued sales growth centered on North American retail tires, resulting in an increase in profits compared to the prior year. The effects of business rebuilding are also emerging gradually. The specialty segment saw a significant decline in sales volume of agricultural machinery tires, resulting in a YoY decrease in profits. Sales of mining tires remained steady and B2B solutions expanded, though the impact of rising raw materials were there. Overall, the specialty segment maintained a high profitability of 21.2%. Diversified products business to follow. In the chemical and industrial products business, sales volume dropped over the previous year in the hydraulic hose and [inaudible] business, due to a decline in demand for construction and agricultural machinery, leading to a decline in both sales and profit. In the sports and cycle business, while the domestic golf business remains steady, reduced sales in the United States significantly impacted the top and bottom line, resulting in a decrease in revenue and profit. In the cycle business, although the sales volume exceeded the previous year's level, the impact of the rising COGS due to the exchange rate led to an operating loss. As for the diversified products business in the Americas, despite the continued challenging business environment, profitability of business for new cars improved. This is the adjustment items. The total up to Q1 restructuring business rebuilding costs of approximately JPY70 billion were accounted for. The main breakdown was, including the La Vergne factory in the United States and other expenses for business rebuilding in Americas, South America, and Europe. Turning to balance sheet and cash flow highlights. Total assets decreased to JPY5.4811 trillion, compared to the end of the previous year, partly due to the yen's appreciation. The ratio of cash and cash equivalents to monthly sales is temporarily high at the end of Q1, due to the impact of fundraising in April. We will continue to promote lean management to achieve the year-end target of 1.5 months. For finished products, a continued lean inventory management and excluding the FX impact, saw a reduction over the previous year. Free cash flow amounted to JPY158.2 billion, with an improvement of operating cash flow over the previous year and selective investment, increased by JPY49.4 billion YoY. Regarding the capital policy announced in February, we are steadily advancing share buybacks and debt utilization. The share repurchase program has progressed to approximately 47% as of the end of July, in line with our plan. Turning to the 2025 fiscal guidance. As previously explained by our CEO, the full-year guidance remains unchanged from the figures announced in February. The dividend forecast also remains unchanged at JPY230 per share. Even if risks, such as economic downturn in the United States that hasn't been incorporated in our guidance materialize, resulted in a risk of about JPY10 billion impact, we plan to maintain the dividend of JPY230 per share. We will implement the capital policy. This concludes my presentation. Thank you for your attention.
Operator: Let us have the questions and answers. First, let me start with Mr. Maki from SMBC Nikko Securities.
Kazunori Maki: Maki from SMBC Nikko. I have two points that I should like to raise here. First of all, the truck and bus tire business. It's been a while since you had such positive numbers to report in the US. The last minute demand before the US tariffs would start to take effect. Would you analyze the reasoning behind the good performance in the truck and bus tires? Or are there any concerns? Is it okay that I ask?
Shuichi Ishibashi: Well, rather than going into the second question, let me answer the first question. You basically are asking about our North American business. Last minute demand before the US tariffs was enforced. That did not happen. It's business as usual. North America, as a whole, as I explained, truck and bus tire business, with such that new tires, retread national fleet, maintenance service, we have a very strong package of offerings. Whereas last year and the year before last, did not really give us the best anticipated results. It is turning around so that we are starting to enjoy the better performance. Customers are coming back to us, and the growth of our business exceeds the market growth. Also, the structural changes of the market I talked about, for the truck and bus tires, the major brands and non-major brands, for the major brands, the demand started to increase in Q1. In H2, we anticipate the trend to become even more preeminent. The tailwind will continue to blow for us as we continue in the truck and bus tire business in North America. Also, non-major. The ratio between the two does not really change. Of course, in the sense of the level of US tariffs, we feel it more clearly. However, we really do not anticipate changes in the structure. Rather, between Tier 2 and Tier 3, between those tiers, there probably will be changes, which will become more noticeable in H2. The overall weighting of the composition between the different tiers may not change. But between the Tier 2 and Tier 3, that is where the changes will become much more noticeable. That is the tiers of our strength. Regardless of whichever tier, there are particular competitors who are really holding into the particulars of the particular tier that they focus on. We are aware of that. Be it commercial tires or the consumer tires, it's been a while, but the good performance was there in Q1. Those trend will continue in H2. Now, in H2, North America, whatever will be the operating profit margin, either constant or a little bit better than in Q1 is our sense. The truck and bus tire business will continue to perform strongly. For the consumer tire business in H2, that is the segment where we will put further emphasis to grow. I would like to ask Mr. Hishinuma to share the numerics.
Naoki Hishinuma: Right. Basically, as the CEO explained, the market conditions as such, the business, the rebuilding is continuing. We talked about the beginning of the good benefits from rebuilding the efforts, whose benefits will become bigger in H2 than what we experienced in Q1. Okay. The truck and bus tire business environment changes, be it US tariff, I guess there will be certain trigger points that we should move the members. I talked about the ratio changes between members, nonmembers, or the different tiers. Really, the total number of truck tires in the market, such as in the North America, is gigantic. It's within the gigantic the base of automobiles. Also, each company has its own areas of strength and areas to adapt.
Kazunori Maki: I think I understand. As you move on to the 2026 midterm business plan, what factors do you have in mind? The tire business or diversified products business, there are different sets of factors, and the structural changes and the rebuilding efforts are starting to yield well. You said that the benefits will accrue even more largely in H2 than in Q1. Then, what about next year? Is 13% or whatever will be around about the percentage that you have in mind? Company Representative I don't think I am prepared yet to quote any particular numerics. But the final year of the 2024 midterm business plan is next year, and we have been making various efforts to make better the business quality to enhance the business quality. Then, the North America and Europe business rebuilding have been attended to. For solid Asia, Brazil, the diversified products, there are remaining issues to be tackled. For the business in Brazil, our expectation is that it will become improved to the breakeven level by the end of the final quarter. But [inaudible] view is that as 2024, 2025 years were spent with the deployment of resources for business rebuilding next year, which is the final year of the current round of MBP, we will enjoy the good fruits of that. Then, we move on to the next round of MBP. It is not only the defense, but also of offense as well. The kind of products and services, which will be a good match to our aspiration next year, we will be there. Then, North America and in Europe, India, mining and aircraft premium tires, towards the end of next fiscal year, we believe that we will start to see the growth with profit. Right now, they're still attending to the needs for business rebuilding. Going beyond that phase, what to do, specifically, we have to work it out. That's the overall landscape to make it better, obviously.
Operator: Now, turning to Mr. Sakamaki of BofA Securities.
Shiro Sakamaki: My name is Sakamaki. I have a question about the changing market structure. Looking at the material of Mr. Hishinuma, in Q1, the NDCs linked to an increase in profit is the majority to counter the tariff, is what you said. What specifically do you plan to do to counter the tariff? Because the price increase may be more modest than your competitor, so you produce locally and sell locally. Are you adapting better to the changing market structure? How specifically are you going to counter US tariffs? If you can do that well, do you think you can expand the market share? What do you anticipate by countering the US tariff’s direct impact? Company Representative I'm sorry, Mr. Sakamaki. About pricing, I cannot really disclose in detail. There are various reasons, especially in relation to the European business. I cannot be specific about pricing, but the market situation and market environment is carefully monitored to take action. Of course, we are always carefully balancing pricing with the volume. Firestone branding starts with better zone to good plus of Tier 2, so to cover this better and good plus, we can have volume here. We are going to increase the Bridgestone brand and the Firestone brand. In Q1, the Bridgestone brand for consumer tires, well, talking about the Firestone brand, it is increasing dramatically. I anticipate that this would grow even more in H2. For truck and bus, in Q1, for both Bridgestone and Firestone, the volume has increased. It’s exactly what our CEO had stated. I hope this answer would suffice.
Operator: From Morgan Stanley MUFG Securities, Mr. Kakiuchi.
Shinji Kakiuchi: Yes, Kakiuchi from Morgan Stanley MUFG Securities. Listening to you, you covered a broad front about the North American passenger car tire business, with a particular emphasis on Firestone brand. It sounds quite interesting because, obviously, you feel encouraged. You see a strong prospect going forward for that brand, and you introduced some numbers to us as well. Can you become a little bit more specific, where in particular you feel particularly encouraged about the prospect of the brand? Is it the product? Is it the relationships with your customers? I'm sure that you cover the wide spectrum of the factors. As you move towards next year, what particular areas would you focus more? Company Representative Firestone revival, if I may. Since H2 of last year, we've been working on that. The US national dealer meeting I attended was in the US, and I met with quite a few dealers indeed. We had active interactions. I made a commitment to them saying that, yes, we're going to do it. As to the directly owned and operated the family channel, those stores are doing quite well, much better. I met with them as well. The new modality of business, we can work with them. In all regards towards the better level of customer satisfaction, everyone is working. The Firestone network is going to be ignited so that per store, the revenue and profitability will be boosted. At the same time, I would like to increase the total number of directly owned and operated stores that's in the US family channel stores. We need the new products, not ENLITEN yet, but Firestone, the Affinity is the new model tire, which is going to be deployed. Inclusive of what we can look to for next year, those are all the opportunities with Firestone. 80% of the Firestone business comes from the family channel. Why not focus on the family channel, the stores, to make them stronger? As they become much stronger, the brand gets stronger, and the Indie car, that's a very strong opportunity. The Indie 500 and the US Trade America, there is a closer tie between the two. As I go to many places, I listen to those linkages, linkage ideas and arrangements more and more. I talked about the national family channel stores and the need for the new products, step-by-step, and the Indie 500. Also, please do remember that Firestone is enjoying a 125-year anniversary. That's a big celebration. The business zone is going to be covered by Bridgestone, but better, good growth. I believe that Firestone is going to have opportunities there. That is what we mean by turning changes into our opportunities going forward.
Shinji Kakiuchi: Okay. Why Firestone so much? Is that perhaps because you feel that, that is the brand there are certain missing pieces still? Company Representative Yes. Actually, last summer, I had a sense of urgency because that is when I started to feel that the relationships with dealers were perhaps starting to wane a little bit. That made me think that, first of all, we need to gain the trust of those family dealers. The new product in April, that was fine, but not sufficient. One after another, those dealers need Firestone branded new products. The same for Bridgestone. We have to expedite. We have to enhance the speed of the launch of new products. In R&D as well, we are allocating more and more resources to the R&D operations. US after all, is a growing market, so new products, the channel relationships, and leaders, whatever that we can do, we should.
Operator: Now, Mr. Sakaguchi of Mizuho Securities, please.
Tairiku Sakaguchi: Thank you very much for your support. My name is Sakaguchi of Mizuho Securities. Adjusted operating profit of JPY505 billion. That is the fiscal guidance. How confident are you to realize this? In implementing various measures, what do you think are effective? I think there are some measures that don't have enough effect. In Q2, JPY45 billion was a direct impact coming from the US tariffs, and you said that this would counter implementing this direct impact. This has been reduced to JPY25 billion. If you have continued implementing measures against this JPY505 billion of adjusted operating profit, there may be an accumulated effect that you have realized. Or maybe the impact coming from tariffs are now getting smaller. What is the certainty of this achievement of the fiscal guidance? The point is with the better market structure, I believe the profit would be able to cover a higher volume of business. What do you anticipate? Company Representative JPY45 billion of direct impact coming from tariffs was reduced to JPY25 billion, and the major impact will be coming in H2. Changing the tariff rate means that the terms of competition is going to change. With the changing terms of competition, there would be a change in the business environment. We are not the only company to take measures to counter this direct impact of JPY45 billion. We have to adapt to the changing market structure and implement a series of measures. Therefore, this JPY25 billion direct impact, of course, this would be countered, but this requires measures that would be most appropriate for the changing terms of competition. About the level of certainty, as mentioned earlier, OR, the tires, mining tires, and APIC, Asia and India have this solution that is growing very smoothly. In North America, it is improving finally. Truck and bus, for H2, the consumer tires would improve further. Last year, the European business had a very tough situation, but we promoted business restructuring. On an annualized basis, the European business outcome would be better. However, Brazil and diversified products still have challenges. Therefore, we have to really offset the negative impact coming from these challenging businesses so that we are committed to this adjusted operating profit in our fiscal guidance. I talked about risks and opportunities towards the end of my presentation. For opportunities, in addition to what you see on the screen, we are accumulating various positive impacts coming from various business units. A possible economic slowdown in the United States is unforeseeable. Even if this would materialize, we are accumulating effects on various aspects of our business so that we can surely counter these negative impacts.
Operator: Now, let us change gears. We would like to take questions from media reporters. Yamamoto-san from [Diamond]. Yamamoto Yamamoto speaking from [Diamond]. Numbers were covered in your presentations, as well as the questions by analysts, I was able to have deepened understandings. Qualitatively, you did not suffer from business losses. The US tariff impact, it seems that you're confident enough that you'll be able to counter the tariff as a source of the pressure. To carry out what you have decided to do and to counter back and so on, you seem to use particular explanations of the phrasing. I feel that you probably have the implied meaning there to the internal members within the organization or to the market? Company Representative Back in 2020, we were hit by COVID-19. For the first time in 69 years, we suffered from business losses. In the subsequent two years, we were able to accomplish a V-shaped recovery. Then came 2023, 2024, when in North America and Europe, what happened with the targets that we aspired for, they fell short of our executions. The business performance was the level of JPY480 billion or so, it is not reaching the level that we advocated. We've been through those experiences to remind us of the fact that it's in North America and Europe that we have to be able to carry out a much more reliable business execution so that we can generate JPY500 billion of adjusted development profit. Now, the management and the operational quality and the focus on Genbutsu-Genba, all of those expressions that we always used in the Bridgestone Corporation, the meaning and significance were starting to weigh a little less. I felt that that was critical. Every associate still feels that there is a sense of the commitment and e responsibility, so long as the associate belongs to this overall organization. All the more, we have to be worthy of showing the value to the market. The value to the market means that as long as there are customers in the market, we expect Bridgestone will be able to deliver to their needs. Now, we have an accumulation of the various legacy aspects. Nowadays, these days are turning into decisions to close down the plants. 2026, 2025, we have been through different phases. We are at the second phase now so that we will be able to fare well into the negative legacy from the past. Only after we do that, then we will be able to truly move on to the bright future. In order to well to the past negative legacy, everyone who is a member of this global team and organization has to recognize that and has to commit himself herself to that. Those are the reasons why I've been using the particular slogan red.
Operator: Mr. Kawahara of Nihon Keizai. Kawahara My name is Kawahara of Nihon Keizai Shimbun. I have a question. In the previous fiscal presentation, as measures against the US tariffs, I think you said that you would increase the production of tires by 2 million units. I think the direct impact numbers had been revised downwards. Did you change the measures in the United States? Company Representative Well, Bridgestone, historically, produced locally and sold and consumed locally. For the US tariffs this time, I believe we are one of the companies with a minimal negative impact. The enter process imbalance is to be rectified, and we are to increase the production of tires by 2 million. That is unchanged. This requires productivity improvement. The cost would be reduced, the business quality can be improved, and we can reinforce our principle of producing locally and consuming locally. Therefore, this would allow us to improve the business quality. I believe this is a very important step.
Operator: Mr. Kawahara, thank you for your question. With this, we would like to close off the Q&A session. Ladies and gentlemen, thank you very much for attending this presentation meeting for the financial results of Q1 of FY2025. Thank you very much for attending the presentation meeting. The meeting is adjourned. [END]