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Operator: Welcome to the announcement of financial results for Fiscal 2025 by Bridgestone Corporation. Thank you very much for taking the time out of your busy schedule to join us. First, I will introduce the speakers. Global CEO and Representative Executive Officer, Yasuhiro Morita; Executive Vice President, Representative Executive Officer, Bridgestone East CEO; Nobuyuki Tamura; Global CFO, Global Finance, Naoki Hishinuma. These are the 3 speakers. First of all, Global CEO and Representative Executive Officer, Yasuhiro Morita, will give you the presentation first.
Yasuhiro Morita: I'm Morita, Global CEO. Thank you very much for taking the time to join us today despite your busy schedules. First, I will provide an overview of our full year results for fiscal 2025 and our business plan for fiscal '26. Amidst a rapidly changing business environment, including the impact of U.S. tariffs, we positioned fiscal '25 as the year of emergency and crisis management following the 24MBP Roadmap. We focus upon defensive activities such as business rebuilding and business cost reductions, concentrating our efforts on strengthening our fundamentals. We positioned fiscal 2026 as a crucial year for transitioning to growth with quality, building upon the foundations established thus far and intensifying our offensive activities. We will readily advance our progress, ensuring the reliable execution of key planned initiatives to evolve the entire group into a group-oriented organization. Our aim is to reclaim the position of world's #1 by our 100th anniversary in 2031. I will now explain the full year results for fiscal year 2025. By swiftly responding to changes in the business environment, such as the impact of U.S. tariffs and focusing upon global optimization and reinforcing our business quality, consolidated global revenue reached JPY 4,429.5 billion with adjusted operating profit at JPY 493.7 billion. This represents a year-on-year increase of 2% or JPY 10.4 billion. Profit attributable to owners of parent reached JPY 327.3 billion, an increase of 15% or approximately JPY 42 billion year-on-year. This growth was driven by the increasing adjusted operating profit combined with reversal effect of uncertain tax positions. Dividend is projected to be JPY 230 per share, representing an increase of JPY 20 compared to the previous year. The impact of U.S. tariffs reduced profit by approximately JPY 25 billion. However, through a combination of measures, including optimizing supply chain management, we were largely able to minimize this effect. Business rebuilding were largely completed as planned. Business cost reduction activities also generated effects of approximately JPY 72 billion in fiscal '25, contributing to improved profitability. Next, a summary by major region. First, North America. Due to sluggish demand, sales declined by 3%, but the adjusted operating profit margin improved by 1.5 percentage points year-on-year to 11%, resulting in increased profits. This was driven by rebuilding and reorganizing effects, including optimizing truck and bus tire production basis and fixed costs alongside steady progress in the PS multi-brand strategy and the TB tire solutions business. Next, South America. Profit declined year-on-year, barely achieving breakeven. This was due to the expansion of low-end imports and adverse impact of lower conversion cost efficiency caused by decreased exports to North America. We will continue our efforts to improve profitability. In Europe, the adjusted operating profit margin reached 5.5%, an improvement of over 2 percentage points from the previous year. We achieved profit growth alongside strengthening our business foundations. This was driven by cost optimization through business rebuilding, primarily in the truck and bus tire segment, improved profitability in the retail business and enhanced product competitiveness in passenger tires. In Asia, Oceania, India and China, revenue decreased by 2% due to regional currency effects and the impact of sales strategies prioritizing profitability for TB tires. However, adjusted operating profit reached 11.5%, maintaining a robust business structure through a rebuilding of the Thai operations and the steady growth of the Indian business. Regarding business rebuilding, we have tackled challenges head on and made steady progress throughout the 21st and 24th MBPs. During Stage 2 implemented in 2024 through 2025, we advanced the rebuilding of our tire operations in U.S. and Europe. diversified product business and in-house manufacturing businesses alongside streamlining our operational structure in Japan and Asia. This phase was largely completed as planned. We will now transition into a growth phase while maintaining the robust business structure strengthened through these initiatives. Next, I will explain fiscal 2026 business plan. First, regarding our management policy, as I mentioned at the outset, this year marks a crucial transition from business rebuilding to a stage of growth with quality. If we rush, act hastily or pursue unrealistic growth, we will risk undermining the robust business foundation we have built. Therefore, the entire group will carefully align the pace of this transition. We will establish a solid growth foundation within this year and united as one company striving towards regaining the position of world's #1 by our 100th anniversary in 2031. Our key growth priorities will center on 3 pillars: delivering attractive and competitive products and manufacturing excellence, strengthening our global portfolio, our core competitive advantage and enhancing our brand power. Through this, we will achieve growth with quality. I will now outline our approach to each key challenge. First, attractive and competitive products and manufacturing. As a rubber and tire manufacturer, this is naturally our most vital element and occupies a central position in our growth strategy. Building upon our robust technological capabilities, we will achieve growth by focusing on strengthening product appeal and manufacturing prowess through continuous new product launches while also enhancing our distribution channels. In fiscal year 2026, we plan to launch over 25 new passenger tire products globally, approximately double the average of recent years to expand sales. For truck and bus tires, we will also plan to launch over 10 new products. Alongside the continuous development of an attractive product portfolio, strengthening our manufacturing capabilities through productivity enhancement measures such as BCMA will be key to future growth and competitiveness. Achieving these goals necessitates further strengthening our global technological foundation. We are preparing to introduce a new executive structure effective 24th of March, whereby 4 of the 7 executive officers will be technical specialists. Chief Innovation Officer, responsible for materials and advanced technology development, chief Product Officer responsible for Product Development and Chief Manufacturing Officer responsible for manufacturing. These 3 executive officers will report directly to the global CEO, together with the West CTO, who oversees the technology centers in Akron U.S.A. and Rome for Europe. These 4 executive officers will solidify our global technological foundation. Business responsibility will remain under the dual executive structure of the East CEO and West CEO. Together with myself, all 7 executives will unite to lead the Bridgestone Group. Regarding resources, we plan to increase resource allocation in a disciplined manner with both R&D expenditure and CapEx exceeding the levels of the past 2 years. Next, portfolio management. In line with the direction set out in the 24MBP, we are advancing improvements to our earnings base through portfolio strengthening for each business, product and segment. We will maintain this direction in the 2026 business plan as well. This chart shows the profit growth rate for the 2026 business plan with fiscal '23 set as 100. By business, we are transforming from a single product sales to solution-based business. By product portfolio, we are further strengthening our traditionally robust TB business foundation. By segment, we are making steady progress in significantly improving the profitability of our European operations and achieving solid profit growth in Asia and India, which are driving group growth. This year, we will continue to advance the strengthening of our business portfolio in line with the 24MBP steadily executing our plans to establish a growth structure underpinned by quality. The third pillar, reinforcement of brand power will be promoted globally with a focus on motor sports activities. In the United States, an important market for our business, we are continuing to strengthen our activities as the exclusive tire supplier for the Firestone brand in the traditional INDYCAR series, which boasts an average audience of over 1 million viewers per race. In Japan, we will continue to actively promote activities such as Super GT. Furthermore, from the latter half of this year, we will be returning to the FIA World Championship for the first time in 15 years since F1 and to participate in Formula E as a sole tire supplier. Based on the premise of supplying safe and reliable racing tires even under extreme conditions, we will work together with our employees, customers and partners to develop tires with a low environmental impact and optimize our supply chain, thereby promoting sustainable racing activities and enhancing our brand power. Based upon the above, guidance for the fiscal year 2026 projects increased revenue and profit with sales revenue of JPY 4.5 trillion, adjusted operating profit of JPY 515 billion and net profit of JPY 340 billion. We will focus upon growth, particularly in the replacement tire segment, while steadily realizing the effects of ongoing business cost reductions, enhanced productivity improvement activities and business rebuilding. The impact of U.S. tariffs is projected to reduce profits by approximately JPY 55 billion for the full year. While some effects cannot be directly offset, we will strive to achieve the planned increase in revenue and profit through global supply chain optimization and group-wide cost reduction activities. Regarding dividends, as planned in the 24MBP, we will increase the amount by JPY 10 per share compared to fiscal '25, amounting to JPY 125 per share after the stock split. In fiscal 2026, we will continue to place great importance on maintaining harmony with all of our stakeholders, guided by our mission of serving society with superior quality, we will continue to contribute to all stakeholders, employees, shareholders, customers, partners and suppliers and local communities and the society through sustainable growth. I sincerely ask for your continued support throughout this year. This concludes my presentation. Thank you very much for your kind attention. Next, Global CFO, the person in charge of Global Finance, Naoki Hishinuma will talk about the business results of FY '25 and the financial guidance in FY '26 as well as the capital allocation.
Naoki Hishinuma: I am Hishinuma, in charge of Finance. I will mainly explain the financial figures. FY '25 full year consolidated results of revenue, JPY 4,429.5 billion, adjusted OP, JPY 493.7 billion and profit attributable to owners of the parent, JPY 327.3 billion. Excluding FX impact, revenue and profit increased year-on-year and adjusted OPM improved by 0.4 points to 11.1%. Against November plan, we achieved increase in both revenue and profit and met our target. ROIC improved by 0.2 points year-on-year to 8.3%. In addition to the increase in adjusted OP, improvement in the cash conversion cycle through leaner product inventory also contributed to ROIC improvement. I will explain the breakdown of adjustment items later. Analysis of adjusted OP versus previous year. We offset profit declines from higher raw material costs and realized inventory through price and mix improvements and largely offset U.S. tariff impacts through various measures. Through business rebuilding and global business cost reduction, we strengthened our business quality and delivered year-on-year profit growth despite yen appreciation headwinds. Results by segment. All segments achieved higher profit and profitability. In Japan, revenue increased due to expanded replacement tire sales domestically and steady performance of ultra large ORR. With higher sales volume and improvements in price and mix, the profit increases and profitability improved by 0.4 points. Americas. In North America, through expanded replacement TB tire sales and improvement in business quality through business rebuilding, profit increased year-on-year with better margin. In Latin America, the segment finished in the black overall. In Brazil, although performance improved year-on-year in the second half through rebuilding and operational improvements, the business environment remains tough. In EMEA, performance continued to improve, driven by expanded sales of premium tires, mainly HRD in the replacement PS market in Europe, along with steady progress in business rebuilding. Results by product. For PS and LT tires, although expansion of premium tires such as HRD and product mix improvement continued throughout the year, profit declined year-on-year due to the cyber incident in North America and the struggles in Latin America. For TB tires, replacement tire sales in North America remained steady. The effects of production base reorganization, mainly in North America and Europe materialized, resulting in year-on-year profit and big margin improvements. In specialties, while sales of ultra-large ORR remained steady and B2B solutions expanded, profit declined due to lower AG sales and timing impacts from raw material index price adjustments for ORR. We continue to secure high profitability exceeding 20%, supporting overall consolidated performance. In the diversified products business, we continued steady improvements. Although this year included a onetime gain from asset sales, the profit increases year-on-year and even excluding this effect. Next, results by business portfolio. Given the tough situation, the tire business secured an adjusted OPM of slightly less than 13%. The Solution business, which is a growth business, achieved increase in revenue, profit and profitability. In particular, Commercial B2B Solutions achieved a profit margin exceeding 11%. Adjustment items. For the full year, adjustment items resulted in a loss of JPY 112.5 billion. Key breakdown is as shown. We recorded business rebuilding-related expenses mainly in Europe, North America and Latin America and have largely completed business rebuilding as planned. BS and cash flow status. Total assets increased slightly from the end of the previous year to JPY 5,747.7 billion, partly due to FX impact. Inventories of goods and finished products decreased from the previous year-end through continued and thorough lean inventory management. Free cash flow was an inflow of JPY 45.5 billion. While executing growth investments, we improved operating cash flow through tighter working capital management, delivering JPY 141.7 billion year-on-year increase in cash inflow. Regarding the capital policy announced in February, we completed the planned share buyback and debt financing as scheduled. All of acquired shares have been fully canceled. Next, FY '26 guidance. For FY '26 guidance, revenue, JPY 4.5 trillion, up 2% year-on-year. On adjusted OP, JPY 515 billion, up 4% year-on-year. We expect adjusted OPM to improve by 0.3 points year-on-year to 11.4%. While continuing to strengthen our business quality, we will shift toward growth with quality. Next, I will explain the analysis of adjusted OP for FY '26 versus previous year. We expect year-on-year profit growth by offsetting inflation and U.S. tariff cost increase through improved raw material price and mix spreads, business rebuilding returns and the business cost reduction and growth with quality. Regarding operating expenses, beyond inflation-driven cost increases, we will strategically allocate resources, including for brand enhancement to accelerate growth from FY '27 onwards. Next, guidance by segment. We aim for higher revenue, profit and profitability across all segments. In our second home market, APIC, we plan higher revenue and profit through expanded replacement tire sales in Thailand, Indonesia and India. In the Americas segment, we will accelerate replacement tire growth, deliver year-on-year revenue and profit growth and lift the margin by 0.6 points to the 10% range. In the EMEA segment, we plan continued profit and margin improvement following last year by steadily capturing business rebuilding effects in Europe and continuing to strengthen business quality and expanding replacement PS tire sales and mix, we plan a 2-point margin improvement. While we plan increases in revenue and profit for FY '26, I will also explain the comparison with FY '26 targets in the 24MBP. Revenue fell short due to environmental changes such as reduced demand and increased low-end imports. 13% adjusted OPM and 10% ROIC targets were not met due to internal and external factors, including U.S. tariffs, inflation, Latin America and the deterioration in the diversified product business. Even under such circumstances, we continue to thoroughly implement the business cost reduction and business rebuilding to strengthen our business quality. Regarding shareholder returns, we expect to implement dividends as planned in line with the target level of JPY 250 per share. In response to changes in the business environment and the revision to our initial CapEx plan to achieve our desired midterm BS, we will execute the share buyback flexibly, JPY 150 billion in FY '26 and JPY 450 billion in total over the 3-year period from FY '24. Finally, the financial strategy and shareholder returns. Capital allocation overview. sources of capital allocation, in addition to cash inflows from strengthened earning power, we will utilize cash reserves and borrowings, planning approximately JPY 2.4 trillion over the 3-year period from '24 to '26 under the 24MBP. Regarding allocation, while prioritizing sustainable growth and corporate value enhancement through growth investments, there is no change to our capital allocation policy of maintaining an appropriate financial strength and enhancing the shareholder returns. Although the 24MBP initially assumed JPY 1.4 trillion in growth investment, we have disciplined our investment selection in response to changes in the business environment. As a result, surplus cash has been allocated to shareholder returns and capital policy in accordance with our capital allocation policy. There is no change to our target cash reserves of approximately 1.5 months of monthly sales. This is a capital policy supporting sustainable corporate value enhancement. We believe expanding the ROIC and the spread and the equity spread through balance sheet management enhances corporate value, and we will, therefore, improve our capital structure to achieve both soundness and efficiency centered on what is Bridgestone like. There is no change to our policy of setting our desired midterm equity ratio at around 55% and steadily and gradually moving toward it. While maintaining steady capital efficiency improvement and considering further growth investment opportunities, we have decided on JPY 150 billion share buyback and disciplined debt financing. We will steadily and gradually move toward our desired peers. Finally, regarding dividends. There is no change to our policy of targeting a consolidated dividend payout ratio of around 50% and pursuing stable and continuous dividend increases to enhance shareholder returns and maintain appropriate capital levels. The annual dividend for FY '25 is JPY 30 per share as announced last November, an increase of JPY 20 year-on-year. For FY '26, JPY 125 per share, an increase of JPY 10 year-on-year on a post-stock split basis. On a pre-split basis, JPY 250 per share, an increase of JPY 20 year-on-year, in line with the FY '26 plan in the 24MBP. We will continue striving for stable and continuous dividend increase and further enhance shareholder returns. That concludes my explanation. Thank you very much for your kind attention.
Operator: That was a presentation made by Morita and Hishinuma about the performance of fiscal 2025 as well as the plan for 2026. Now we'd like to start the Q&A session. As for Q&A session, first of all, we are nominated the certain analysts from securities company. So we would like to receive questions from them first. And then we will open the floor for the questions from media. Now from Citigroup Securities, Yoshida-san, Mr. Yoshida, over to you.
Arifumi Yoshida: This is Yoshida from Citigroup Securities. One question is related to your growth strategy. So to become the #1, world's #1 to regain the position of world's #1, what would you like to do? In 2026, you mentioned that you're going to increase the number of new products. I understood that. Firestone revitalization, India, what is your idea for these fronts? The share buyback amount has been reduced. So meaning that you are going to allocate more to the growth strategy. So towards the growth, you are going to seize more for the growth expansion. What would you like to do for the future going forward? So this is my question.
Yasuhiro Morita: Thank you very much for your question. As for our growth strategy at the core, well, we are a manufacturer. So product and manufacturing are our focus. When it comes to manufacturing excellence, it has many different assets, but to produce good products at a lower cost. That is the gist of what we do. As for products, we have the Dan-Totsu technology, and we would like to deliver the higher quality products to the consumers. And we have a technological capability to enable that, and we are going to enhance our technologies going forward. When it comes to manufacturing capabilities, recently, including Firestone, multi-brand is our approach from a premium to the lower end of the product lineup, we are encompassing all these layers. And without these approaches, we are not able to achieve growth. So cost competitiveness is the key and our focus in augmenting our product lineup. When it comes to cost competitiveness, earlier, our technological response and the renewed the management structure focusing upon technology, materials and development and production, manufacturing. So these are our 3 focus points. We need to work on them all. Otherwise, we are not able to achieve growth. And covering all the 3 areas as one, all the materials development and the production, of course, even today, we are working across all these areas, but we need to enhance this collaboration. So the materials and the product development and the manufacturing, we assigned the executive officers or the officers in charge of these 3 and place them directly under me so that they will be able to produce something good at the lower cost at the speedy fashion. So that is the intention of our review of the executive structure. So good products have to be produced at the #1 cost competitiveness. We still have room for further improvement. And when it comes to investment, R&D, CapEx, how to produce good products at the lower cost, we would like to focus upon that point more so that we can enhance our competitiveness. And as a result, thanks to that, the markets that we have not been able to enter into will be opened up for us, and we hope to enter into those markets as well. As for regions, the North America will be the core and the center of our growth going forward. From the midterm perspective, India and global south region, gradually, we would like to enter into these markets. road map through 2031, we are working on creating such a road map. And in that exercise, market and segments are to be identified for us to compete in a competitive fashion and execute our plans. So that is the idea behind our efforts to create the plan.
Arifumi Yoshida: A follow-up question. Revitalization of Firestone from the middle of last year, you started working on that. And what is the achievement so far?
Yasuhiro Morita: Yes, particularly since the second half of last year, revitalization of Firestone in North America has been our focus, and we have been able to grow the business. I refrain from giving you the specific numbers, but the growth over last year, particularly, it has been visible since the latter half of last year and the next year. Well, we would like to keep this going and the premium growth for Firestone is the core focus. And likewise, for Firestone, we hope to grow the business. So what we did last year has actually generated results in the second half, which will be continuing in this fiscal year as well.
Operator: Next, Morgan Stanley MUFG Securities, Mr. Kakiuchi, please.
Shinji Kakiuchi: Morgan Stanley, I'm Kakiuchi. This year's guidance difference referring to the Slide #26, this year's plan, operating expense, negative JPY 71 billion in your explanation, inflation and resource allocation towards the FY '27. So having an intention to achieve the growth, and I can understand that, but at the same time, we're building and cost reductions despite those efforts, but you will have the operating expenses an increase. So could you give me the breakdown of the JPY 71 billion?
Yasuhiro Morita: This year's plan, I will explain more in detail. And Mr. Hishinuma will explain about the operational expenses. JPY 497 billion to JPY 515 billion is a targeted profit increase. As a single item, the biggest one is the volume, JPY 35 billion. Volume growth, production volume to be increased. That's the center of our growth. So that's incorporated in our plan. And price and mix combined JPY 36 billion, while the price increased and volume to be increased as well. So the growth with quality, given the situation of having shifting toward a favorable situation, we try to increase both the price and the volume. So we have the strong will to attain this given target. And necessarily, the sales expenses are incorporated as well. Of course, we have to factor in inflation, but with a strong will, we came up with the plan. That's the grand policy. Mr. Hishinuma, could you explain about the details of the operating expenses?
Naoki Hishinuma: As pointed out, operating expense towards next year, JPY 71 million negative. As Morita said, for growth, strategic expenses are largely included. I hope you can understand this. And as for the substance, brand enhancement, IT for productivity improvement, it's a necessary investment to be made. That's included as well. In addition to that, the volume is expected to increase. So the variables to be increased as well. In addition, in FY '25, we disposed asset partially. And we've got a reversal to some extent that causes the operating expense increase. But the biggest factor is in the inflation. So the rebuilding will be the major contributor and for offsetting increase. So the volume increase lead the variable cost increase, and we allocate a higher resource for the future growth. I hope this answers to your question.
Shinji Kakiuchi: Understood. Your guidance, Mr. Hishinuma has been in a position consistently but Mr. Morita as a CEO, you are for you, it's the first time for you to come up with the plan. So is there any difference in the structuring the guidance?
Yasuhiro Morita: As for the guidance, I discussed with my predecessor, Mr. Ishibashi. And by the summer last year, we formulated the basic plan. So due to the change of leadership, that does not cause a change of the plan. In MBP, we will shift towards the phase of the growth of the quality. So we will make sure to achieve the growth in volume as well as the price and mix. But having said that, the operating expenses, we've got rebuilding activities. So we intended to squeeze a bit. But in order for us to attain the volume growth and brand enhancement, there are necessary resources to be allocated.
Shinji Kakiuchi: And additional follow-up. As for the processing fees has risen negatively even though we see some positive effect out of the rebuilding? That's the question.
Yasuhiro Morita: This is a plan. The conventional the material and the product in the development, the simple volume growth will not be helpful for the processing and the fee decrease because we are under inflationary environment. And unless we increase in investment, we can't produce high-quality products. So under the new organizational structure, material development, manufacturing, each technology level to be increased and those 3 are combined to make an overall design. That's the finding on our side. So with that, based on the finding, we launched a new organizational structure effective from March this year.
Operator: Next, from Mizuho Securities, Mr. Sakaguchi, over to you.
Tairiku Sakaguchi: This is Sakaguchi from Mizuho Securities. And I'd like to ask you one question. Well, capital policy in your explanation, you strike a balance with the growth strategy. And I'd like to make one confirmation. Dividend will be JPY 250 before stock split, meaning that you are going to achieve the MBP target. But when it comes to payout ratio, 46%, which is lower than 50% target and the JPY 150 billion of share buyback, the midterm, the equity ratio of 55%. So I know that this has a longer time horizon. But to look at the landing and thinking about the profitability, you could do more. And until the 31st of August, that is the time you set for share buyback. So the additional activities is also the possibilities. You're mainly talking about the growth strategy and investment. But are they going to make some difference when it comes to capital allocation? Could you please explain more on this point?
Yasuhiro Morita: Yes, Hishinuma will respond.
Naoki Hishinuma: So JPY 150 billion of share buyback program that will be conducted and by striking balance with the growth strategy. And 55% equity ratio for midterm perspective, that is the target we have not changed. But by maintaining this trend, we are going to keep the balance with the growth investment. And with that in mind, we set these numbers. And as I explained last year, when it comes to the liquidity, we are going to manage and keep it for the 1.5 month equivalent. So that is the way we are going to manage the cash and liquidity. So by allocating the resources to the growth investment, if we have the excess cash and liquidity, then the additionally, we may consider increasing the return to the shareholders or use it for the share buyback. And the 31st of August due date, so the buyback will be completed, and we are going to cancel the shares. We do not have any particular specific plan by them. But as I mentioned earlier, we are going to make investment for the growth and the growth investment. And still that gives us the remainder of the cash and liquidity, then we are going to return it to the shareholders. That is our basic sense.
Tairiku Sakaguchi: And when it comes to dividend, 50% is just the indicator. And so until then, you are going to continuously increase the dividend payout amount. Am I correct?
Naoki Hishinuma: Yes. And as you mentioned, this time, this is 46% lower than our target. But last year and fiscal '25, '26, the JPY 450 billion total has been used for share buyback programs. And basically, we regard it as investment, not just the return to the shareholders, but investment to enhance corporate value by enhancing EPS, which is beneficial for the shareholders as well. So that's our thinking. And looking at the total last year, well, the total shareholder return is not something that we focus upon, but it was JPY 138 billion. And for this year, it's going to be JPY 90 for the total shareholder return. So we need to look at that as compared to the growth investment, and we try to maintain the good balance. And this is the idea for the capital policy and dividend payout.
Shinji Kakiuchi: So no major change to your policy, I understood.
Operator: Now we would like to entertain questions from the press. Nikkei Shimbun, Takahashi-san, please.
Unknown Attendee: I'm Takahashi from Nikkei Shimbun. Yes, we can hear you. Slide 14. 2026 U.S. tariff impact, JPY 55 billion. Previous year, it's been significantly increased. So based on the assumption of having a full impact on a full year basis, is that how I should read it? And business cost reduction, you will try to mitigate the impact to what extent is it not possible? So could you give me a sense of the magnitude?
Naoki Hishinuma: U.S. tariff. As you correctly understand, next year, there will be a period double. So rather than having a higher and lower tariff level, but the duration will be longer. And business cost reduction, there are the various initiatives included. So I would like to refrain from talking about the impact by each item. The key is the productivity improvement, cost reduction and digital IT utilized productivity improvement as well as an improvement in efficiency. Through that, we aim at achieving cost reduction. And as for business we're building, there will be additional benefit generated. So one benchmark is JPY 25 billion. So this year and next year, additional effect is estimated at JPY 25 billion. So through our corporate effort, we are trying to offset as much as we can.
Operator: Next, from Toyo Keizai, Mr. Hata, please.
Unknown Attendee: This is from Toyo Keizai. Can you hear me?
Yasuhiro Morita: Yes.
Unknown Attendee: On Page 11, about the CapEx, I'd like to ask you. So JPY 410 billion for this year, so you're going to spend more for CapEx. And specifically, where would you like to spend this money? And where would you like to invest in? And going forward, do you intend to keep this high level of CapEx considering the cost competitiveness enhancement? Are you going to invest more?
Yasuhiro Morita: Yes, I'd like to give you the big picture direction and Hishinuma will give you details. As for this amount, production capacity increase is not our intention. But rather than that, we would like to increase the type of products that will give us more premium and higher performance or something that's going to be difficult to produce. And that requires the renewal of the production facility or the equipment. So these CapEx items are included. And for the rebuilding direction, we spend money on retail business. And in order to grow them, we included some investment in this category, the factory productivity and the enhancement of the premiumness of the products and the retail business enhancement. So these are the ideas included in the CapEx items. If you have any additional comments?
Naoki Hishinuma: Yes. As the Global CEO mentioned, well, main items included here, for example, highly profitable. We, the mining -- we call this MASTERCORE, but the large-sized tires for mining applications, well the CapEx for such a production is the main point of CapEx increase. And in the U.S., mainly of the retail stores and the store investment, store enhancement. And another item is HRD, high rim diameter and the conversion investment, so to speak, to introduce more high room diameter products is another focus. And IT investment is also included as a big portion of this amount. So these are the breakdown of the CapEx amount.
Unknown Attendee: And regionally, are there any focus or region? You mentioned about the retail stores in U.S. Is that the focus?
Naoki Hishinuma: Yes, half of the profit is generated in the U.S. So relatively, resource allocation, well, is also spent on the proportionately larger in the U.S. And for MASTERCORE and the EA items, investment in Japan accounts for a larger portion.
Operator: Next, Diamond. Mr. Yamamoto, please.
Unknown Attendee: I'm Yamamoto from Diamond. Can you hear me?
Yasuhiro Morita: Yes, we can hear you.
Unknown Attendee: On the 24th of March, new effective new executive structure. That's my question. The 3 technology CIO, CPO and CMO will be assigned. I was able to understand the logic, but the Vice President and the Managing Executive Officer and the position will be abolish. I think that's a reflection of the new -- the CEO's idea. So the decision-making issue so far migrating into the new organizational structure, what is the aim and purpose?
Yasuhiro Morita: Thank you. VP or Managing Executive Officer positions will be abolished. But major idea is within the global companies, Chief Officer should lead the business. G-ExCo, the Global Executive Committee is the highest decision-making body. Key members are Chief Officers. There are the difference in the responsibility assigned but the title difference does not make the difference. So that is the reason why we assigned the Chief Officers. The responsibility will not change significantly, but for the easier to understand manner, we renamed it as Chief Officers. And business matrix is CEO, Mr. Tamura and CEO Scott will have strong business responsibility. And horizontally, we have more detailed the breakdowns in terms of the function, CAO, CSO. Within the function, I was overseeing the business activities. At the bottom left, the CSO, those will be my direct report. So the 3 pillars of technology, inclusive of portfolio management, business management, 4 pillars combined. So actually, the 7 pillars in total, we've got more the flattish organizations for prompt decision-making. That's the intent of organizational design.
Unknown Attendee: In my understanding, the former, the Ishibashi CEO, the leadership, it was a very strong leadership exercised by him. But with the new President or CEO, the leadership style, is there any change or what sort of leadership style would you plan to demonstrate? If there's any clear direction in mind, please share with me.
Yasuhiro Morita: Thank you. Due to the rebuilding activities, we passed through the painful phase. And now we are stepping into the growth phase. So from Ishibashi to Morita, rather than the change in the leadership, but due to the change of the corporate phases, leadership style, should be changed accordingly. Globally, for the better business, we can adopt the bottom-up approach. But at the same time, there are some struggling business for those areas, the strong leadership may be required. So within the company, no major change. But depending on the phase of the company, I myself will change the style of leadership as well as all the chief officers will unite together in proceeding in that direction.
Operator: Next, Mr. Sasaki from Japan Rubber Week.
Unknown Attendee: This is Sasaki from Japan Rubber Weekly. Can you hear me?
Yasuhiro Morita: Yes.
Unknown Attendee: I'd like to ask you the adjusted operating profit ups and downs, for fiscal '25, '26. Page 26, well, the JPY 34.0 for the material, but the 2025, looking at the ups and downs, well, the minus JPY 26 billion for the materials. So this is quite different from the previous year. So significant increase in the -- could you please explain about this item pushing up the adjusted operating profit?
Yasuhiro Morita: Yes, Mr. Hishinuma will respond.
Naoki Hishinuma: So the changes of the raw materials and its impact on the operating profit. In 2025, mainly natural rubber compared to the previous year, natural rubber prices were higher in the market. So natural rubber, there was a negative factor for the business results back then. But in fiscal 2026, the market has -- and the prices have stabilized and it is turning positive to our business. So that is the major difference between '25 through 2026.
Unknown Attendee: Understood. And as for EUDR, it was postponed. And are there any impact of the postponement of EUDR on your business? In that sense, at the base of this major change is the changes of the pricing in the market and partly it is because of EUDR, but the majority of the impact is because of the price changes in the market.
Operator: Now the time is up, so we would like to conclude the Q&A session. With this, Bridgestone FY '25 earnings result briefing concluded. Thank you very much for your kind participation. The meeting is adjourned.