Bridgestone Stock

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.

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 '24 MBP road map. 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 TV 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 progress 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 '24 MBP, 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 '24 MBP, 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 '24 MBP, 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.

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 OR. 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 OR remained steady and B2B solutions expanded, profit declined due to lower AG sales and timing impacts from raw material index price adjustments for OR. 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. PS 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 435.5 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 '24 MBP.

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. [indiscernible] 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 '24 MBP. 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 '24 MBP 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 in expanding the ROIC [indiscernible] 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 PS.

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 '24 MBP. 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.

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 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.

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 [indiscernible] more for the growth expansion. What would you like to do for the future going forward? So this is my question.

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 the -- 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 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.

Follow-up question. Revitalization of Firestone. From the middle of last year, you started working on that. And what is the achievement so far?

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.

Next, Morgan Stanley, MUFG Securities, Mr. Kakiuchi, please.

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 FY '27. So having an intention to achieve 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?

This year's plan, I will explain more in detail. And my -- 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 prices 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 necessary, 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?

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.

Under 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?

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.

And additional follow-up. As for the processing fees, negatively for -- even though we see some positive effect out of the rebuilding -- excuse me, the question, this is a plan.

The conventional material and the product in the development, the simple volume growth will not be helpful for the processing and 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.

Next, from Mizuho Securities, Mr. Sakaguchi, over to you.

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?

Yes, Hishinuma will respond.

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 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 then. 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.

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?

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 billion 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.

So no major change to your policy. I understood.

Now we would like to entertain questions from the press. Nikkei Shinbun, Takahashi-san, please.

I'm Takahashi from Nikkei Shinbun. 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 the how I should read it? And business cost reduction, you try to mitigate the impact, to what extent is it not possible? So could you give me a sense of the magnitude?

U.S. tariff. As you correctly understand, next year, there will be a [indiscernible] 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.

Next, from Toyo Keizai, Mr. [indiscernible].

This is [indiscernible] from Toyo Keizai. Can you hear me?

Yes.

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 of competitiveness enhancement? Are you going to invest more?

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 for -- 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?

Yes. As the Global CEO mentioned, well, main items included here, for example, highly profitable. 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 rim 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.

And regionally, are there any focus or region? You mentioned about the retail stores in U.S., is that the focus?

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 [indiscernible], investment in Japan accounts for a larger portion.

Next, Diamond, Mr. Yamamoto, please.

I'm Yamamoto from Diamond. Can you hear me?

Yes, we can hear you.

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 and Executive Officer and the position will be abolished. I think that's a reflection of the new CEO's idea. So the decision-making issue so far migrating into the new organizational structure, what is the aim and purpose?

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 -- 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. Well, 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 CFO and 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.

In my understanding, the former, the Ishibashi CEO's leadership, it was a very strong leadership exercise 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.

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.

Next, Mr. Sasaki from Japan Rubber Weekly.

This is Sasaki from From Japan Rubber Weekly. I'd like to ask you the adjusted operating profit ups and downs, for fiscal '25, '26. Page 26, well, the JPY 34.0 billion 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?

Yes, Mr. Hishinuma will respond.

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.

Understood. And as for EUDR, it was postponed. And are there any impact of the postponement of EUDR on your business?

In that sense, the -- 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.

Now the time is up, so we would like to conclude the Q&A session.

With this, Bridgestone FY '25, the earnings result briefing concluded. Thank you very much for your kind participation. The meeting is adjourned.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

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.

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.

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.

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.

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.

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.

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?

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.

Next, Morgan Stanley MUFG Securities, Mr. Kakiuchi, please.

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?

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?

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.

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?

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.

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.

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.

Next, from Mizuho Securities, Mr. Sakaguchi, over to you.

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?

Yes, Hishinuma will respond.

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.

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?

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.

So no major change to your policy, I understood.

Now we would like to entertain questions from the press. Nikkei Shimbun, Takahashi-san, please.

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?

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.

Next, from Toyo Keizai, Mr. Hata, please.

This is from Toyo Keizai. Can you hear me?

Yes.

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?

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?

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.

And regionally, are there any focus or region? You mentioned about the retail stores in U.S. Is that the focus?

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.

Next, Diamond. Mr. Yamamoto, please.

I'm Yamamoto from Diamond. Can you hear me?

Yes, we can hear you.

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?

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.

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.

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.

Next, Mr. Sasaki from Japan Rubber Week.

This is Sasaki from Japan Rubber Weekly. Can you hear me?

Yes.

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?

Yes, Mr. Hishinuma will respond.

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.

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.

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.

Thank you very much for attending the presentation of the summary of financial results for the third quarter 2025 and fiscal 2025 guidance by Bridgestone. Members to be introduced. Representative Executive Officer, Global CEO, Shu Ishibashi; Global CAO, Global CSO, [indiscernible]; Global CFO, Global Financial Division Head, Naoki Hishinuma. So we have 3 presenters.

I would like to at this juncture hand over to Mr. Shu Ishibashi, who is the Global CEO and Representative Executive Officer, to give you the summary of financial results for the third quarter 2025 as well as fiscal 2025 guidance.

Good afternoon to everyone. I am Ishibashi, Global CEO. I will now explain our 9 months results for the third quarter and fiscal 2025 guidance. On a cumulative basis through the third quarter, adjusted operating profit increased year-on-year. Excluding foreign exchange effects, both revenue and profit increased.

Net income decreased year-on-year due to the recognition of JPY 76.6 billion in adjustment items, including the second stage of rebuilding expenses. The business environment remains challenging. Raw material impacts are trending towards the reduced profits. The impact of U.S. tariffs, which is minor in the first half, has expanded since the beginning of the second half.

We are countering these factors through a combination of various measures, including improving selling prices and product mix and continuing to strengthen our premium focus. Meanwhile, the U.S. economic slowdown has become apparent, significantly impacting us through slower improvement in our U.S. equity retail operations, a substantial decline in sales of truck and bus tires for new vehicles in North America, a resulting decrease in exports from Brazil to North America.

Under these circumstances, we are further accelerating the activities promoted as part of our actions in the era of emergency and crisis management. Steady global business cost reduction activities have generated cumulative effects of approximately JPY 52 billion compared to the previous year, strengthening the second stage of rebuilding measures, considering additional measures. Through these efforts, we believe we are achieving tangible results in reinforcing our business quality. Furthermore, starting in the second half of this fiscal year, we are gradually initiating growth risk quality for replacement tires.

Based on a premium focus, we are building and executing strategies across the BGF, which stands for the best, better, good and fighting categories tailored to each such category. We are also intensifying efforts to revitalize Firestone tires in North America, our most critical market. In the third quarter, we expanded sales of aftermarket passenger car tires in key markets such as North American Firestone brand, Europe and Japan and also achieved expanded sales of truck and bus tires in North America and Japan.

Furthermore, the volume increase effect and the resulting improvement in conversion costs generated an increase in profit of approximately JPY 6 billion in the third quarter alone, steadily contributing to growth. Furthermore, adjusted operating profit for commercial B2B solutions, which we position as a growth market, increased 144% year-on-year, driving growth with quality. We will now explain the details by area of management priority. North American operations recorded year-on-year profit growth. The premium tire business secured an adjusted operating margin of approximately 15%. Notably, the truck and bus tire business has a solid foundation, achieving year-over-year sales growth in the aftermarket tire segment, particularly for the Firestone brand while also expanding sales and increasing market share in [indiscernible].

We anticipate a significant improvement in profitability for the full year. In passenger car tires, the effects of rebuilding the U.S. consumer tire business and the multi-brand strategy are becoming apparent, achieving increased sales and market share for the Firestone brand in the aftermarket. Concurrently, improvements were made in the U.S. equity retail business through increased sales of major brands, continuous enhancement of customer satisfaction and the launch of new style retail outlets. This resulted in year-on-year profit growth and an adjusted operating margin exceeding 7%.

We will continue these activities throughout the full year to further improve profitability. However, as explained earlier, the slowdown in the improvement of the retail business due to the economic downturn in the U.S. and the negative impact on earnings from the decline in sales of truck and bus tires for new vehicles in North America. Furthermore, the cyber incident, which occurred in North America from August to September will also be a factor in the decline in earnings. In Latin America, we promoted business rebuilding and achieved year-on-year profit growth. We have renewed our management structure and advancing operational improvements across the entire value chain from retail and sales to production at the actual sites or the [indiscernible].

The rebuilding of the Brazilian business is also progressing as planned with profitability continuing to improve since the first quarter. However, the impact of reduced exports of truck and bus tires in North America due to the U.S. economic slowdown has been significant. And unfortunately, achieving profitability in the fourth quarter alone as we had aimed for now appears challenging. We will continue to improve operations under the new management structure, the one team.

Our European operations, which faced many challenges are undergoing transformation of the shape and achieved year-on-year growth in both sales and profits. In the premium tire business, we secured an adjusted operating profit margin of 6% with both the truck and bus tire business in areas of rebuilding and the retail business achieving year-on-year profit growth. In the truck and bus business, profitability was achieved across the entire portfolio, including new car tires, aftermarket tires and retreads. We will drive growth by introducing new products featuring [indiscernible] and strengthening our fleet business. In the retail business, we will continue to improve operations at Genbutsu-Genba and expect to achieve profitability for the full year.

For aftermarket passenger car tires, overall sales expanded significantly year-on-year by 105% with high rim diameter tires growing by 113%, leading to increased market share. We will continue to lead growth with quality in Europe. We believe that the European business will complete the business rebuilding in 2025 and the foundation for accelerating growth with quality from the second half of 2026 is taking place -- taking shape. The Asia Pacific, India and China business saw a year-on-year decline in profit, partly due to foreign exchange impacts.

However, excluding the effect of exchange rate fluctuations, including those of local currencies, it achieved solid profit growth. Furthermore, the adjusted operating profit remained at around 11%, continuing to strengthen and improve business quality. By major region, the Indian consumer goods market, a growth market, continues to increase profits and gain market share. We are strengthening Dan-Totsu products, expanding the family channel and enhancing collaborations with strategic partners, and we'll continue to pursue growth with quality going forward.

In Thailand, where rebuilding is being promoted, the effects are being to show with increased sales and market share in consumer goods. In Asia, while the market environment currently faces intense competition from low-cost Chinese tires, we will further strengthen our foundation. This will be achieved by implementing the BBGF strategy, primarily in Thailand and Indonesia, where we historically maintain high market share and by enhancing our family channel. For the full fiscal year, we anticipate securing solid sales and performance at Bridgestone's second home market. The Specialty Tire & Solutions business saw a decline in profit due to a time lag in the pricing scheme reflecting raw material prices and exchange rate indices, the rise and fall of those.

However, it maintained a high profitable structure with an adjusted operating profit margin exceeding 20%. Furthermore, in mining and aircraft tires, positioned as growth markets, we are steadily expanding and strengthening our B2B solutions. For the full year, we expect to maintain a high profit structure with over 20% margins even with a significant profit decline and loss-making businesses in the agricultural tires.

Next, I will explain to you the financial results by business portfolio. The premium tire business secured an adjusted operating profit margin of just under 14% despite challenging conditions. The Solutions business, a growth business achieved a significant profit increase with adjusted operating profit up 155% year-on-year and the profit margin also growing by 2.7 percent points over the previous year. With this segment, commercial B2B Solutions achieved a profit margin exceeding 11%, representing a margin increase of over 3% points year-on-year. The retail business also saw a substantial increase in adjusted operating profit, reaching 163% of the previous year's level, achieving continuous improvement in profitability. On the other hand, the Diversified Products business faces deep challenges, and we will accelerate its rebuilding efforts.

Finally, I will explain to you about our full year guidance. Taking into account changes since the first half results announced in August, we have unfortunately revised adjusted operating profit downwards by JPY 15 billion from the initial February guidance of JPY 505 billion to JPY 490 billion. Net profit of JPY 253 billion and the dividend paid per share of JPY 230 remains unchanged from the initial forecast. I will now explain the factors behind this downward revision. First, regarding the direct impact of U.S. tariffs, the effect on adjusted operating profit remains unchanged from August at JPY 25 billion.

While the full impact will be felt in the fourth quarter, we are strengthening our business quality through intensified global cost reduction activities and implementing additional business rebuilding measures at the second stage of such. Furthermore, we -- as previously explained, starting the second half, we are initiating growth with quality in consumer passenger and truck and bus tire business and commercial B2B solutions to improve profitability. Even in August, we anticipated deviations from the initial plan due to factors beyond tariff impacts such as deteriorating performance in our Latin American operations and diversified businesses.

However, we expected to offset these through a combination of various measures, which are progressing as planned in the November forecast. Significant changes since August, however, have had major negative impacts on full year performance. This includes a substantial decline in sales of TB OE tires in North America due to the U.S. economic slowdown, a corresponding decrease in exports from Brazil to North America and a slowdown in the significant improvement initially anticipated for the U.S. equity business.

Additionally, the impact of the cyber incident in North America, though solved by mid-September, also contributed to the profit decline. Due to these 2 changes of factors since August, we unfortunately decided to revise downward our adjusted operating profit by JPY 15 billion. This is an overall revised 2025 guidance. Adjusted operating profit is JPY 490 billion, securing year-on-year growth. Adjusted operating profit margin over 11%. ROIC around 9% level. ROE expected to be around 7% due to a negative impact from approximately JPY 100 billion in adjustments, including rebuilding costs. Net income and dividends are expected to be in line with the initial guidance, and we will continue to strengthen shareholders' returns. For fiscal 2025, we believe we have established a certain level of foundation for the growth with quality. However, regarding adjusted operating profit, unfortunately, it fell short of the guidance, resulting in the performance outlook that leaves challenges unresolved.

Looking ahead to growth from fiscal 2026 onwards, we will thoroughly strengthen our business quality, continue to solidify our foundation and lay the groundwork. For fiscal 2026 with a significant rejuvenation of the top management, we will shift to growth with quality as the final year of the '24 MBP, continuing our evolution into a strong Bridgestone, winning in the turbulent business situation. We seriously appreciate and ask for your continued understanding and support. Thank you very much for your attention.

Thank you very much. That was Mr. Ishibashi on the summary of financial results through the third quarter and fiscal 2025 guidance. To follow, I would like to call upon Global CFO and Executive Director, Global Finance, Naoki Hishinuma to present financial results for the third quarter fiscal 2025.

Being in charge of finance, I am Hishinuma. Here's my agenda today. Now I will begin by explaining the consolidated business and financial performance for the third quarter fiscal year 2025. These are the cumulative consolidated results through the third quarter of fiscal 2025. Revenue, JPY 3,234.9 billion, a 1 point decrease year-on-year. Adjusted operating profit was JPY 368.4 billion, 4% increase. The adjusted operating margin was 11.4%, an improvement of 0.6 percentage points year-on-year. Excluding foreign exchange effects, we achieved both revenue growth and profit growth. Profit attributable to owners of the parent was JPY 203.5 billion.

While steadily advancing the second stage of rebuilding to reinforce business quality and recording approximately JPY 77 billion in related expenses as adjustment items, net income decreased year-on-year due to factors, including the recording of approximately JPY 63 billion in gains on sales of fixed assets in the prior year. We will explain the factors affecting the year-on-year change in adjusted operating profit. Cost increases due to rising raw material prices, primarily natural rubber and inflation, along with the impact of unrealized inventory gains included in others were offset by improvements in selling prices and product mix steady progress in business rebuilding to improve business quality and the effects of global business cost reductions.

This resulted in a year-on-year increase in profit. Furthermore, in the third quarter, sales volume also increased and conversion costs improved in line with the volume increase. We are gradually starting to see growth with quality, starting with replacement tires. Performance by segment. In the Japan segment, domestic replacement tire sales exceeded the prior year, leading to increased revenue. However, due to factors such as the timing difference in the exchange rate and raw material index-linked price adjustments in the mining tire business, profit decreased year-on-year.

Excluding the impact of exchange rates, the segment achieved both increased revenue and profit. In Asia Pacific, India and China, rigorous lean expense management and rebuilding initiatives drove profitability improvements. Excluding currency effects within the region, profits increased year-on-year. In the Americas, the truck and bus tire business and the retail business in North America contributed to increased profits and improved profitability. In Europe, Middle East and Africa, expanded sales of passenger replacement tires, particularly high rim diameter tires contributed to increased profits and improved profitability.

In both regions, business cost reductions and reinforced business quality through rebuilding initiatives supported performance. Now I will explain the performance by product category. For passenger car and light truck tires, particularly improved year-on-year through continued expansion of premium tires such as high room diameter tires and improvement in the product mix. For truck and bus tires, sales of aftermarket tires in North America remain strong and the effects of business rebuilding gradually materialized, leading to increased profits compared to the prior year and significant improvements in profitability year-on-year. Specialty tires saw steady sales of mining tires and expanded B2B solutions. However, due to the timing effect of exchange rate and raw material index-linked price adjustments as well as reduced profits in the agriculture machinery tire business, profits decreased year-on-year. Nevertheless, profitability remained high at 20.6 percentage points, maintaining a high profit structure. The diversified product business segment will be explained on the following page.

The Diversified Products business achieved year-on-year profit growth through fixed cost reductions and asset streamlining. However, the challenging business environment persists due to continued weak demand for construction and agricultural machinery. The Sports & cycle business recorded a cumulative loss. However, within the cycle business segment, we are working to improve performance by expanding sales and reducing fixed costs, resulting in the narrowing of losses. The Americas Diversified Products business continues to face a challenge in business environment, but improved profitability in the new vehicle business led to increased profits compared to the prior year and improved profit margins.

Next is adjustment items. For the cumulative third quarter, rebuilding-related expenses totaled JPY 76.6 billion with the main breakdown as shown continuing from the first half, we recorded business rebuilding-related expenses, primarily in North America, Latin America and Europe. Financial statements and cash flow status. The total asset decreased to JPY 5,488.5 billion compared to the end of the previous fiscal year, partly due to the impact of yen appreciation. The cash and cash equivalent ratio relative to monthly sales decreased by 0.4 months compared to the end of the previous fiscal year.

We are promoting lean management towards our target of 1.5 months of monthly sales. Finished products -- for finished products, we continue to rigorously implement lean inventory management, resulting in a decrease compared to the same period last year, excluding the impact of the exchange rate. Free cash flow resulted in the inflow of JPY 243.7 billion while steadily executing growth investment, we improved operating cash flow through enhanced working capital management, achieving JPY 97.8 billion increase in cash flow compared to the previous year. Regarding the capital policy announced in February, we are steadily advancing share buybacks and leveraging debts.

For share buybacks, process stands at approximately 86% as of the end of October, proceeding according to the plan. Next, I will explain fiscal 2025 guidance. As explained earlier, we revised our consolidated earnings guidance for the full fiscal 2025, as shown on the slide. We expect revenue to increase by 1% compared to the February guidance, reaching JPY 4.36 trillion. Unfortunately, we anticipated anticipate adjusted operating profit to be lower than planned at JPY 490 billion, though we plan to secure a year-on-year increase. Net income remains unchanged from the guidance at JPY 253 billion.

The dividend per share also remained unchanged from the previous fiscal -- previous forecast of JPY 230 for the full year. I will now explain the factor affecting the revision in adjusted operating profit. The impact of rising raw material prices was offset by selling prices and product mix. Regarding tariff impacts, we were countering them with various measures. We expect to achieve year-on-year profit growth by realizing growth with quality, strengthening business rebuilding efforts and generating effects from steady global business cost reductions. Now for the segments, as revised for 2025 guidance. In the Americas segment, although profit forecast has been lowered from the February guidance due to the apparent slowdown in the U.S. economy and the impact of cyber incidents, we continue to plan for year-on-year profit growth.

In Europe, profit forecasts have been raised from the February guidance, driven by increased sales of premium tires, particularly HLD tires and steady progress in business rebuilding. Finally, we will explain the stock split. At the Board of Directors meeting today, we resolved to implement a 2-for-1 stock split. This aims to create a more accessible investment environment for investors and encouraging the expansion of the investor base. The record date is December 31, 2025, and effective date will be January 1, 2026. Please note that the year-end dividend forecast remains unchanged at JPY 150 per share as it is based on the number of shares prior to the split. This concludes my explanation.

Thank you very much for your attention.

Thank you very much. So that was Mr. Hishinuma on financial results for the third quarter of fiscal 2025. Moving on to questions and answers. From [ Digi Press, Yasuda-san ].

I hope you can hear me. So the actual performance for the full year guidance, you referred to the slowdown of the North American macro economy with a substantial impact. background factors as well as the prospect going forward, I would like to get your views further.

First of all, in our retail operations, it's affected by consumer confidence. So this is a leading factor, which seems to be aggravating faster than others. So the consumer trend are getting more and more reserved. So that, of course, is linked to the selling prices as well. But anyway, it's getting weaker. So retail operations that we have in the U.S., customer satisfaction survey and all that points to the improvement of the confidence and mood. And we started the fiscal year with a higher level of target. In comparison with that deceleration of the market, the economy as such, the improvement, yes, but not as much as we had aimed for in the beginning of the fiscal year. As regards to the truck and bus tire business, the OEM and the truck assemblers, there are quite a few of them in the U.S.

As you are aware, their respective performances, they have been trending down. And that's happening sharply and quite rapidly. Since August, the total number of trucks assembled started to decrease. And our share actually has been rising. However, the total market variable of the truck market because of the decreased assemblies is affecting us negatively. But because of the rising trend of our own market share in that particular market segment, we have not been heard any more than what we reported to you.

So the leading index that we have in that regard, and not to mention the U.S.-China bilateral relations, we cannot take our eyes off of that. The situation remains to be quite volatile. So into next year, truck assemblers, the overall trends will continue to be severe. However, the consumer trend as we expect into next year would be possibly changed for the better because of various government initiatives. That's it.

From [indiscernible] Mr. [indiscernible].

I am [indiscernible] of [indiscernible]. I would like to ask you about the currency or the exchange rate. This time, you had given JPY 148 or JPY 147 as a forecast. I think JPY 145 or JPY 150 for were what you had, but you had actually revised this and the impact on your performance as a result. And under the [indiscernible] administration, I think there is a further advance of the depreciation of yen. What is your forecast?

CFO, Mr. Hishinuma will respond to this question. The impact of the exchange rate is that weakening of yen does actually work as a positive factor for our results, maybe about JPY 2 billion, or JPY 900 million for Europe. So these are the impact from the exchange rates. As we move towards the end of the term, we are reviewing this and the impact towards the end of the year is if there is more of the depreciation of the yen, there could be some negative impact. But basically, those are the impact that we see from the exchange rate. As for the exchange rate forecast for next year and so on, the basic trend is that reflecting the difference in the interest rate, I believe that it will probably proceed as is, but the present level of the depreciation of yen. And I think maybe there will be a further advance in the weakening of the yen as compared to what we had anticipated. But I think we are now discussing as to how we could project this, but those are under discussion at present right now. Would this respond to your question?

Mr.[indiscernible] from Diamond, Yamamoto-san.

Yamamoto from Diamond Magazine speaking. I have a question of Mr. [indiscernible], Global CSO. Starting in the second half of FY 2025, growth risk quality has been upheld. But at the same time, JPY 15 billion downward adjustment in the adjusted operating profit. So we understand because of the deterioration of North America macro economy, there are reasons for that. But what is your prospect for economy going forward after you're going to be succeeding Mr. Ishibashi as the next global CEO?

Thank you for your question. JPY 15 billion downward adjustment, yes. in the final quarter, we were expecting the very dynamic recovery. However, it's not as though that actually is going to happen. So that's the major factor in the background, meaning that it's not as though in respect -- in contrast with the first 9 months period, the remaining 3 months period will get weaker. That is not the change that is there. However, it's just that the macro -- the performance recovery that we had contemplated in the final quarter alone would not happen. Now as to gross risk quality, we -- it's not just the pursuit of the volume just for the sake of volume enhancement. But the quality, the growth with quality is very important so that we will be better -- more -- even more appreciated by those customers who will purchase our tires. So quality aspect is very important. So mitral downward adjustment, yes, still, we do consider that we will continue to have the -- just the same strong force of growth. particularly North American after the market, not to mention the trucking bus market. The third quarter results were quite good. And we continue to carry forward with the same momentum to the end of the fiscal year, which will go into the next fiscal year as well.

From [indiscernible]

[indiscernible] For 2026, your forecast, I believe that there are quite a bit of rebuilding in place. And what would be some of the impacts from the U.S. slowdown, et cetera, to your plan? I believe that you are able to expand your profit, but what is the most recent forecast?

As for the guidance for the 2026, we are now having a discussion. And this will be the last year of the MBP '24. So we will be moving towards the target for this '24 MBP. And we are now trying to see what kind of impact there. When we had formulated '24 MBP, we did not anticipate the Trump tariffs or the major transformation in Latin America. Therefore, while we counter those difficulties, we hope to be able to overcome them. And as in the second half of this year, we would like to implement growth with quality, especially for the replacement tires for the passenger and truck tires.

There are -- we are seeing some new developments, and we hope to be able to come close to what we had anticipated and forecasted, and we'll make efforts. In February next year, Mr. Morita will provide you with the performance results and also the prospect for next year. So please wait until then.

We would like to move on to the questions from the analysts. [Operator Instructions] First, from BofA Securities, Mr. Sakamaki.

I am Sakamaki. I would like to ask this one question. Well, for the third quarter, what do you think was your actual operating profit as compared to what you had looked at?

And for the fourth quarter, when you look at the variations, the operating cost seems to be a major impact factor. There may be some buffer there, although you are not concerned that much, but I think you had declined a little bit or I could revise it downwards a little bit. But maybe when it comes to the end, it may not have been as bad. Mr. Ishibashi mentioned the aim to fulfill the target for the MBP.

What kind of results can we expect? I think that prices are being reflected well and are going as impact as planned. So are you just being conservative in sort of lowering your figures? Or what is your anticipation? Does it really have an impact for the next quarter as well? The results for the third quarter, we felt that there would be a lot of different tariffs, and we wanted to counter those tariffs. And while doing that within our organization, I believe that there was a positive result, and I think we did well under those situations.

However, as mentioned here, there are a lot of headwinds. And in the fourth quarter, as we move towards the fourth quarter or actually, we are already feeling it from the third quarter, I think those headwinds will be stronger. OE tire situation for the truck and buses or the retail -- in the retail business, the number of decline in the customer count are already being seen.

And for the cyber incident, there is an increase significantly of the back orders. And the reason for that is the production had stopped. And although the retail or the sales continued, production had to be suspended. Therefore, there is increase in the back order, and there is a loss on the part of the business, which actually happened. And -- right now, we have not been able to fulfill or cover all the back orders. As we move towards the fourth quarter, this will continue.

Therefore, it's not that we have a good buffer and anticipating this lower number. JPY 50 -- JPY 505 billion is something that we are really looking at. Therefore, we really wanted to achieve this. So therefore, we are very unhappy about this. So including the passenger and for the TV, there are many, many good things that are happening. There are growth and the retails are being improving. And for the passenger and TV replacement, we are seeing improvement.

So there are many, many improvements seen, but Latin America or diversified products and the impact of the cyber incident and the truck and bus OE in North America, they are actually sort of dragging us down. And we are calmly trying to evaluate this situation. And I think we need to be accountable. And as a result, we had come up with the numbers that you see here. We still have 1.5 months. And for the tires, snow tires, maybe in Japan and in European countries, we hope to be able to do much better and people are actually working hard towards that end. And maybe HRD in Europe will do a better job. So we are making efforts continuously to be closer to the JPY 505 billion. But for the time being, maybe JPY 490 billion is something that we can be committing ourselves to as we become accountable. And based on this, we will formulate our budget. And next year is the last year of the '24 MBP.

There are various targets that we had set. And as mentioned at the very beginning, there is an impact of the terrorist by Trump and also the impact of Latin America situation, which were not actually incorporated in the '24 MBP. But we do have various very positive activities, initiatives that many people are making efforts on, and we hope to be able to pursue them so that we can create a budget that will sort of match or become as close to as possible with what we had anticipated and much effort is being made. We will decide on the next year's budget in December, and Mr. Morita will announce them in February along with all the plans, solid plans that we have, and I hope you will be able to wait for the announcement then.

Moving on, I would like to call upon Mr. Yoshida from Citigroup Global Markets Japan Inc.

Excuse me. For the North American segment, the third quarter profits were good. So would you analyze that? I'm sure you already covered the positive and negative factors. So would you like to sort them all out once again? And as to the final quarter, in contrast, it seems that you are thinking that it is going to decline either year-on-year or the Q-on-Q. So what about the sustainability of this momentum in North America? I ask this because there was the pluses and minuses. Would you sort out what's really going on in North America?

Okay. Mr. Hishinuma. Okay. The third quarter.

3 months basis, what has changed year-on-year? JPY 23 billion increase in profits year-on-year, big factors. selling prices and product mix improved, volume and expense control as well. So these are on the year-on-year basis, the positive factors, which led to the strong performance in the third quarter. In contrast, for the final quarter outlook is that year-on-year negative is the cost that we project big factors once again.

First of all, it has to do with the expense situations. What I'm trying to say is that on the full year basis, the expense situation will turn out to be better year-on-year. However, for the 3 months, the final quarter alone because of the timing of the stagger, it is going to be a negative factor, and also the tariffs negative impact will be bigger in the final quarter in Q4 than what it was in Q3. But basically, the negatives can be counted back is the overall situation.

So I hope I answered it adequately.

Yes, you did. So that means that the way you start the next fiscal year would be that the level of the final quarter, the tariff impact.

So I suppose that, that is the level of the platform that you will start from for the next fiscal year. Your tariff factor and the business plans are being worked on. However, whatever happens in the current fiscal year will be countered back, meaning that simply put, it's the expense control where because of the timing factor, we will not be able to control the tariff matter in the final quarter.

I think there is a page describing tariff situations in your presentation deck.

Straight forward impact, JPY 500 million in the first half, JPY 7 billion going to the JPY 17.5 billion order in the final quarter. So as you can see, it's Q4, the various other factors there that JPY 175 billion, the number that we have to keep in mind is important. In order to mitigate those impacts, we are thinking about further refinement of the sourcing plans. But setting aside the sourcing plans that we execute, if at the same currency, the final quarter direct impact will be expected to affect us as we move into the next fiscal year, be it disclosing plans next year and other plans as well, how we can collectively counter the negative thrust growing towards us. I hope that makes sense.

Next, from Morgan Stanley MUFG Securities, Mr. Kakiuchi.

I am Kakiuchi of Morgan Stanley. In North America, I would like to ask you about the price situation for TBR and for passenger, what the U.S. situation is? And what is the overall situation for your industry? And also the production locally in your case may be serving as a positive factor. And what is the price increase for the imported tires? What is the general trend? And what is your position vis-a-vis the overall market situation?

As for the United States or North America, there are various litigations going on at present regarding price. For various price we have been asked not to make any public comments or comments in public. Therefore, I am not able to comment on that. But when we look at the market situation objectively, there is a major brand and the other brands levels. But in some area, there is price increases, and that is true. In imported products, there are increasing prices. And for the major brands, there are a certain amount of price increases. But unfortunately, I am not able to comment anything more specific or concrete regarding this matter. Regarding passenger and TBR, if you separate them, what do you think is the competitive situation for yourself, which is even more competitive?

At present, we have Firestone brand, and I have actually disclosed some information in the third quarter in the first, second and the third quarters, we have been able to increase the rate. Firestone revitalization, I think information sheet will be able to show you that. Here, you will see that this is for the passenger tires. You see that even there for the high rim diameter, it was 95, 105 and 107 as we go towards the quarters. And as a result of that, there is an increase here, growth here. When you look at your competitors, the tires with the same level of Firestones are having difficulties. We have the Bridgestone as well as Firestone tire value, and we have been able to indicate the value and show the indicate of the tires that we have. For TD, Firestone brand is growing. It may not be as much as 113, but for the Firestone for the TV, it is growing. So we can effectively utilize the Firestone brands, and we can actually appeal the value. And I think we have been able to do well in order to meet the demand of the market. Does this answer your question?

As we move towards the next year, I guess that Firestone brand will have a good impact in terms of value -- volume. The increase in the volume in the third quarter will have good impact on the productivity improvements in the third quarter. And the fact that there is an increase in the third quarter is extremely welcome factor for us. There is cost, price and the volume balance that we are looking into. And if this works out well, I think we can move on to the next stage. Does this answer your question?

Mr.[indiscernible], it's approaching the scheduled closing time. So the next is going to be the final question. Mr. Sakaguchi from Mizuho Securities.

Sakaguchi from Mizuho Securities. Adjusted operating profit, JPY 15 billion worth of downward adjustments, the revision and you identified 3 factors at play. Would you be able to quantify the magnitude for the 3 each?

And at the same time, North American truck and bus OE business and the retail equity operations, you talked about the worsening of the overall macroeconomic conditions, the requirements to embark on additional measures. And that is the cost that you contemplate, but that would be accompanied by the cost to be incurred.

First of all, the JPY 15 billion, the 3 factors at play. Cyber incident, the insurance matters due to various constraints, I cannot disclose some of the factors. However, of the 3, the biggest is the retail equity retail operations because we had looked for substantial improvements of other situations. The results are better than what it was last year. Yes. However, it was not as much as we had anticipated. So of the JPY 15 billion downward adjustments, I'd say that about 1/2 of that comes from not as robust improvements in the retail operations. And the other 2, the truck and bus, the operations and cyber incident. Speaking of truck and bus market, demand year-on-year is less by 23%. So there's a sizable impact throughout the industry. And as I said earlier, we do have the increasing the share among the truck companies and truck manufacturers assemblers. So our impact is less than what others are feeling in the industry at large. The next year, obviously, we will definitely defend and preserve our share in that particular segment of the market, meaning that our position will continue to be strong, meaning that our stance is not going to be. We will continue to support flexibly how the truck assemblies operate next year. In the aftermarket, we are generating profits. So that being the recovered, the improved situation, although it's been more harsh in the past couple of years, the trucking business is quite strong for us in the North America national fleet, retread and key brands. We do have the suite of DTs strong products.

So in sync with the macroeconomic trend, we will focus on the magnitude of recovery that our major customers will be able to accomplish in line with the movement of the macro economy. Now the U.S. is best in the L.A. area, the volume which is transported, the cross country in North America is getting smaller. So we have to watch for that. And Firestone brand increasing in volume that's selling through dealership. So mid- to smaller fleet companies, how they will operate into next year. And also, obviously, they recognize the value of the Firestone brand, which is good. That's the reason why we have been able to further improve our share position. And therefore, in sync with the national fleet, the relationships with smaller fleet operators, those are operating in the local submarkets, it's very important. If the U.S. macro economy continues to be strong and improve, then not only national fleet, but also the smaller fleet we will have the recovery positions.

And the sensitivity will be quite strong, particularly for those fleets. And at the same time, 220, the equity stores that we have catering to the needs of North American customers, those -- the indices and the conditions will be followed quite closely. Basically, our action will stay the same so that as macroeconomic conditions improve, then there will be an opportunity for us to turn to more aggressive stance. As to the cyber incident, there was a one-off factor. Next year, we certainly assume that that's not going to be repeated. So for the first 2 factors, our view is, as I described. Thank you very much accepted. So it's not as though you're going to incur any further expenses, but rather with the continuation of the same initiatives, you will be able to capture the opportunity to maximize your gains. Right. Truck and bus tires, we have already closed down the [indiscernible] plant, which used to produce truck and bus tires.

And from the standpoint of total optimization, how we can continue to produce the high end the products with the controllable adequate costs. And in doing that, we will be able to better take advantage of our strong position in the market.

One more month for you, Mr. Ishibashi, in this inhospitable external conditions, I am sure that you would continue to do your utmost until the very final day, and thank you very much for the long-lasting relationship. And next time, it's going to be Mr. Morita. I feel urged to say thank you to you.

Well, thank you very much for this relationship and your support. Through December 31, 2025, I commit to you to fulfill my responsibility. So please continue to support me until the end of the calendar year. Thank you.

Mr. Sakaguchi, thank you. So ladies and gentlemen, this is the end of our presentation today. The time is up. So thank you very much for attending today's presentation of the fiscal results for third quarter 2025 and fiscal 2025 guidance. We much appreciated your participation. The presentation is now adjourned. Thank you.