Japan’s Bridgestone Corporation during its latest earnings call, detailed its strategy to navigate current market challenges and outlined its financial performance for the second quarter of fiscal 2024. The company reported an increase in revenue but a decrease in adjusted operating income, attributing the downturn to lower sales volumes and business deterioration in Latin America.
Despite these setbacks, Bridgestone remains focused on its premium tyre segment and solutions business, aiming for an adjusted operating income of 8% or more by 2026. Cost reduction measures are expected to generate significant savings, with JPY65 billion targeted for the full year.
- It is also planning for restructuring sales and production to counter inexpensive import brands and improve profitability by 2026.
- Bridgestone expects to reduce assets by JPY51 billion by the end of 2024, with an aim to establish a lean structure by 2025 and strengthen cost reduction activities.
- A focus on premium tyres, especially high-rim diameter and ultra-high-rim diameter tyres, is central to Bridgestone’s strategy.
Bridgestone adds it is executing a strategic plan to mitigate the impact of market challenges and drive future growth. The company’s emphasis on premium products, cost-saving initiatives, and restructuring efforts are central to its strategy to improve profitability and strengthen its market position by 2026. Despite the downward revision of its full-year forecast, Bridgestone says it remains committed to its long-term goals and seeks the support of its stakeholders as it navigates a dynamic and competitive landscape.
Global CEO Shuichi Ishibashi said, “Despite the tailwind from foreign exchange rates, America’s business, which accounts for about half of global revenue, saw decline in profits with huge impact on global performance. The worsening trend from the second half of 2023 in America’s business, with decline in TB business profitability in North America and deteriorating business in Latin America, has bottomed out in the first half of 2024 and overcame the worst phase.”
He added, “We do expect recovery in the second half. On the other hand, the deterioration of the Latin American business was even worse than the worst-case scenario in the February guidance, and America’s business as a whole is expected to fall short of the full-year plan. European business continues to perform poorly and is undergoing rebuilding.”
He furthered, “Asia, Pacific, India, and China businesses, as well as specialties such as mining and aircraft tyres, reported year-on-year gains.”
Other gains were from “sales of passenger HLD tyres for replacement, steady sales of off-the-road tyres for mining vehicles, and favourable foreign exchange rates”.
In terms of global business cost reduction activities, Ishibashi said, “We are optimising the balance between sales and production, reducing fixed costs, and thoroughly exercising lean inventory management. On the sales side, we are promoting fixed cost reductions in line with the volume of goods sold. In production, we optimised our production system in line with sales in each region, especially in Europe. To improve the profitability of the TB business, we are promoting fixed cost reduction by shortening the number of operating days and suspending operations of some processes.”
By thoroughly reducing inventories for the full year of 2012-2024, the company expects to reduce assets by approximately JPY51 billion on a global basis. It will also establish a lean structure for 2025.