Mid Term Business Plan (2021-2023)

February 16, 2021

Global CEO and
Representative Executive Officer

Shu Ishibashi

Mid-Long Term Business Strategy & Mid Term Business Plan Communications
Mid-Long Term Business Strategy Framework - July 8, 2020
■ Mid-Long Term Business Strategy Framework: Whole picture
Bridgestone 3.0 “Third Foundation”

Mid-Long Term Business Strategy Update – September 15, 2020
■ Mid-Long Term Business Strategy Update: Technology Innovation
・ Technology Innovation

・ Bridgestone Innovation Park (Phase 1)
Bridgestone Innovation Gallery Opening

Year-end press conference 2020 – December 22, 2020
■ Wrap up of year 2020
■ Mid-Long Term Business Strategy Update:
Sustainability Business Framework

1st half financial results announcement – August 7, 2020
■ 1st half financial results / full-year forecast■ Mid-Long Term Business Strategy Update:Core business / Growth business
3rd quarter financial results announcement – November 12, 2020
■ 3rd quarter financial results / full-year forecast■ Mid-Long Term Business Strategy Update：・ Rebuild earning power

・ HRX* *HRX: Human Resource Transformation
Mid Term Business Plan – February 16, 2021
■ Mid Term Business Plan based on
Mid-Long Term Business Strategy Framework (2021-2023)■ Looking toward 2030

“Mid Term Business Plan Update” planned at each quarter’s financial results announcement in 2021
2/40

3/40

Build our unique business model (tire and solutions business)

C

Mobility
SolutionsB

Tire-centric
SolutionsA

Value
amplified

Tires

Create and sell “value as system”
Business providing new value through products,
tire-related data and mobility-related data

Create and sell “value”

Growthbusiness

Business providing added value through products and tire related data

Produce and sell “products”

Produce and sell high-value-added (Dan-Totsu) products at an
optimum cost and price⇒ Base of Bridgestone Business StrategyCorebusiness(spiral up)

Evolve solutions business leveraging the strengths and expertise of the tire business
4/40

5/40

Bridgestone 3.0 Journey toward 2030

Mid Term Business Plan (2021-2023) & toward 2030 and beyond– Sustainability Business Framework“Produce and sell” tire business /“value during use” solutions business: Reinforce & expand“Renew” recycle business: Start exploration“Produce and sell” tire business /“value during use” solutions business: Establish unique business model“Renew” recycle business: Commercialize“Produce and sell” tire business / “value during use” solutions business /“Renew” recycle business:
Sustainable reinvestment of benefits & value generated from each biz
6/40

Bridgestone 3.0 Journey toward 2030

New business portfolio: Support the mobility and movement of people & objects.
Create social and customer value, and gain competitive advantage“Aggressive approach” & “Challenge”
Mid Term Business Plan 1
2021
2023

Core business

Growth business

Enablers
for execution

2024-26

Mid Term Biz Plan 32027-29

2030

Rebuild earning power
Reinforce earning power
Premium business strategy
Resource
reallocation

Expand solutions business

Recycle, Soft-robotics etc.

Reinforce foundation for
financial strategy, HRX

New core business
Establish unique business model,
evolve to core businessStart in areas leveraging core competencies
Exploratory business

Mid Term Biz Plan 2

Commercialize, start generating
profits. Evolve to growth business

Tire business, Solutions businessNew growth business

Recycle, Soft-robotics business

New exploratory
business

Structure supporting healthy development and circulation of business

Evolve to a “strong“ Bridgestone capable of adapting to changes, toward becoming a sustainable solutions company
7/40

Bridgestone 3.0 Journey

Mid Term Business Plan : Evolve to a “strong” Bridgestone capable of adapting to changes“Aggressive approach” & “Challenge”
Mid Term Business Plan 1
2021
2023

Business Portfolio

Core = tire business /Growth = solution business / Start exploratory business

Promote a circular economy

Carbon Neutrality

ROIC
ROE

8/40

2027-29

Solutions business gradually becomes “core”,
exploratory business becomes “growth”

Reduce CO2 emissions to achieve Milestone 2030

Reduction of emissions
Contribute to emission reductions

Adjusted Operating Profit％

2024-26

Mid Term Biz Plan 3Contribute to a circular economy
across the value chain and the product life cycle

Improve material circularity
Maximize resource/tire value

Revenue% of solution business

Mid Term Biz Plan 2

3,010 B JPY
17％260 B JPY
8.6％
6.3％
6.8%

3,300 B JPY level
20％ level
450 B JPY level
13％ level
10％ level
12% level

Grow while adapting to changes
Increase sales in solution

Resilient and highly profitable structure

2030

Core = tire and solutions business /Growth = exploratory business /New exploratory business

Recycled & renewable material ratio

40％

Reduction of CO2 emissions :-50％

Contribute to reducing more than 5x
our emissions

Toward a sustainable
solutions company
Resilient highly profitablestructure in all businesses

Bridgestone 3.0 Journey

Mid Term Business Plan 1 Business Scenario: “Aggressive approach” & “Challenge”
2020
COVID-19 Impact

Stage

2021

2022
Recovery

Gradual recovery
Crisis management

2023

Sustainability at the core

Transformed“strong” Bridgestone

Rebuild earning power

Strategic growth investment■Tire businessCore business

Expense and cost structure reformation: Expense structure reformation (fixed cost etc.),
business portfolio and manufacturing footprint restructuring, resource reallocation
Reinforce premium business strategy (EtoE): Reinforce Dan-Totsu product strategy and sales in “premium”
Rebuild earning power

Rebuild earning power
Strategic growth investment■ Solutions business
Growth business

Exploratory business

Enablers
for execution
9/40

Expansion: Accelerate global expansion(subscription model, retread strategy, Webfleet Solutions, etc.)

Tires
Strategic growth investment■ Start in areas where Bridgestone can leverage our core competencies- Toward commercialization of recycle business and soft-robotics business■ Reinforce foundation for financial strategy - reinforce global control function■ HRX

Strategic growth investment

Solutions

Bridgestone 3.0 Journey

Mid Term Business Plan : Financial plan “Aggressive approach” and “Challenge”■ Evolve to a “strong” Bridgestone by rebuilding earning power through expense and cost structure reformationand premium business strategy
Evolution of revenue and gross profit (Excluding M&A impact)
Revenue
40,0003,790[B JPY]
35,000

3,300

3,507

B JPY level

2,994

30,00025,000Gross
profit[%]3,010

40% level

20,000

40.0%

38.0%

38.1%

37.8%

Solutions business revenue:
650
37.0%B JPY level
2019: 15％⇒2023: 20%

36.7%

10,000Tires business

36.0%

Diversified products business revenue:
35.0%
Focus
on businesses leveraging corecompetencies

Solutionsbusiness
5,000
Diversified Products

34.0%

0

2015

JPN account. standards

10/40• Increase portion ofpremium product sales
41.0%• Improve quality of business

Grossprofit %: 40％ level
39.0%
Increase to level exceeding 2015

39.5%

15,00042.0%

Revenue: 3,300 B JPY level

2019

2020

2021

2022

International accounting standards（IFRS）

2023

Bridgestone 3.0 Journey

Mid Term Business Plan : Financial plan “Aggressive approach” and “Challenge”■Toward a resilient and highly profitable “strong” Bridgestone
Adj. Operating Profit / Net Profit / OPEX / ROIC / ROE (Excluding M&A impact)
6,000

517 B JPY

5,000

343 B JPY
9.8%

4,000

Adj. Operating
Profit [B
JPY]
3,000
Adj. Operating
Profit ratio [%]450 B JPY level
13% level

14.7%
13.6%

284

2,000

Profit fromcontinuing
operations:[B JPY] 1,000

7.4%

222 B JPY
7.4%

240

5.5%

10%

260 B JPY
8.6%

level

290

B JPY level

6.3%
150

OPEX (1,000)
%
ROE

2015
25.8%

13.3％

JPN account. standards

11/40

2019
28.0%
10.0%

-23

2020
29.3%
-1.0%

2021
29.5%
6.8%

14.0%

Adj. Operating Profit:
450 B JPY level
12.0%
10.0%
ROIC: 10％ level
8.0%
Profit from continuing operations:

290 B JPY level
Reach level exceeding 2015
6.0%
4.0%
OPEX %: -2% vs. 2020

ROIC
0

Adj. Operating Profit: 13％level
Reach 2015 level

16.0%

2022

International accounting standards（IFRS）

2023
27% level
12% level

Drive expense structure reformation
Reach below 2019 level
2.0%
Continue to inject strategic resource
0.0%

ROE：Keep 12% level

Bridgestone 3.0 Journey

Mid Term Business Plan 1 Business Scenario: “Aggressive approach” & “Challenge”
2020
COVID-19 Impact

Stage

2021

2022

Gradual recovery
Crisis management

2023

RecoverySustainability at the core

Transformed“strong” Bridgestone

Rebuild earning power

Strategic growth investment■Tire businessCore business

Expense and cost structure reformation: Expense structure reformation (fixed cost etc.),
business portfolio and manufacturing footprint restructuring, resource reallocation
Reinforce premium business strategy (EtoE): Reinforce Dan-Totsu product strategy and sales in “premium”
Rebuild earning power

Rebuild earning power
Strategic growth investment■ Solutions business
Growth business

Exploratory business

Enablers
for execution
12/40

Expansion: Accelerate global expansion(subscription model, retread strategy, Webfleet Solutions, etc.)

Tires
Strategic growth investment■ Start in areas where Bridgestone can leverage our core competencies- Toward commercialization of recycle business and soft-robotics business■ Reinforce foundation for financial strategy - reinforce global control function■ HRX

Strategic growth investment

Solutions

Bridgestone 3.0 JourneyCore business: Rebuild earning power■ Rebuild earning power across the value chain (EtoE), generate strategic resources and grow
Expense and cost structure reformation

・ Business portfolio and manufacturing footprint restructuring
・ Procurement and logistics cost reformation
・ Strict selection of investment, thorough expense management

Premium business strategy (EtoE)
Marketing

R&D

Procurement

Reinforce Dan-Totsu
product strategy• Reinforce premium product strategy• Simplification and differentiation- commonality・modularity- optimize SKU (number of items)

13/40

Production
Plan

Manufacturing

Logistics

Improvementof manufacturing(reinforce structure forpremium production)• Manufacturing improvement- Maximum use of existing equipment- Improvement of productivity•“To manage manufacturing is todevelop people there"

Sales

Customer Use

3R

Reinforce“premium” sales• Wholesale/Retail price management• Reinforce premium channels（incl. e-commerce）

Bridgestone 3.0 JourneyCore business: Rebuild earning power - OPEX improvement through structure reformation
2019

2020

2021

2023

Reduction expected in 2019~2023 from structure reformation：total -53 B JPY-25 B JPY

Fixed
Cost

2019~2020 reduction

2020~2021 reduction

Reduction expected in 2019~2021 from structure reformation：35 B JPY

Operational productivity improvement
Restructuring of organization & review of wage system
Reexamination of sales promotion & brand strategy
Restructuring of manufacturing footprint, business portfolio
and integration of office facilities, etc.

-3 B JPY

2019~2020 reduction

Variable
Cost-10 B JPY

-1.5 B JPY-13 B JPY
- 8.5 B JPY- 12 B JPY-6 B JPY

Expected improvement(2021-2023)-18 B JPY

Accelerate further expense structure improvement, andreallocate to strategic resources
2020: Improved expense structure
through crisis management in response to
COVID-19 impacts.
⇒ Continue & enhance 2021 onwards

2020~2021 reduction

Reduction expected in 2019~2021 from structure reformation：9 B JPY
Consolidate/rationalize warehouse
Control unit price of logistics
Cost reduction through procurement system reform- 4 B JPY
- 1 B JPY
- 4 B JPY

Keep competitive
variable cost ratio:
2021: 7.8%⇒2023: 7.7%
*Assumption for the exchange rate (2021-2023): 103 JPY/USD

14/40

Bridgestone 3.0 JourneyCore business: Rebuild earning power - direction for manufacturing footprint restructuring■ Reinforce structure to “produce” premium products• Global optimization & improvements for maximum use of existing production capacities• Continually consider manufacturing footprint restructuring throughout the next 10 years• Planned global manufacturing footprint restructuring (incl. diversified products and material manufacturing sites):
40% reduction (by 2023) from approx. 160 sites in 2019

Bethune plant, France(Pending works council consultation)

Port Elizabeth plant, South Africa(Closed Nov. 15th, 2020)

15/40

Bridgestone 3.0 JourneyCore business: Rebuild earning power (tires) - premium business strategy / reinforce sales in “premium”■Reinforce sales of passenger car HRD* tires in line with mobility maturity/market characteristics of each region.
Take in OE-REP recursion demands, steadily drive premium strategy
Sales ratio of tires 18 inch and above(U.S. and Europe )OE** OE：Tires on new vehicles ／REP: Tires for replacement

Sales ratio of tires 17 inch and above (Emerging markets)

Expand strategy from matured
to emerging markets (especially China)

OE

REP

OE

REP

REP*

OE
2019 2021 2023

OE
OE

OE
REP
2019 2021 2023

U.S. and Europe

16/40* HRD: High rim diameter

REP
2019 2021 2023

2019 2021 2023

Total of main emerging markets(Asia-Pacific, China, L. America)

REP

REP

2019 2021 2023 2019 2021 2023
China
“Focus on premium area”

Bridgestone 3.0 JourneyCore business: Rebuild earning power (tires) - premium business strategy/ reinforce sales in “premium”■New premium – Dan-Totsu product strategy that foresees sustainability and the evolution of mobility

Reinforce and expand high-value-added products & technology that responds to the shift toward EVs and “shared”
Bridgestone’s approach placing sustainability at the core

Automobile industry: acceleration of CASE

Passenger car tires
 Expand next generation eco-friendly product line-up as new “premium”••

Acceleration of electrification toward
carbon neutrality
Numerous emerging manufacturers(ex. Chinese manufacturers) entering

Innovative next generation eco-friendly product fit for EVs and “shared”

Roll out since 2010

1st generation
Eco-friendly product⇒ 80% of all products (as of 2021)•

Higher utilization rate per vehicle fromexpansion of sharing services

Achieve both innovative light weight and driving performance--- contribute to driving distance of Evs
Next-level CO2 emission reduction + improved resource productivity

Selected as original equipment on Japanese and international manufacturer cars (incl. EV)

 Commonality ・ Modularity acceleration-- Contribute to CO2 emission reductions & improvement of resource productivity• Simplify case-belt combinations (modules) between products, differentiate through tread performance• Globally expand module application ratio: 2019 0％⇒2023 17% (in replacement tires)Light truck, Truck and Bus tires
 For commercial fleets that have high utilization rate, reinforce technology to allow safe and long-lasting use
with eco-friendly products
•

17/40

Improve and balance prevention of irregular wear and durability for long life. Technology that allows multiple retreadingBridgestone 3.0 JourneyCore business: Rebuild earning power (Diversified Products) - direction for business restructuring■ Leverage Bridgestone’s core competencies and evolve to healthy business step by step
Revenue[B JPY]
7000
6000
600

Revenue

Sports/Cycle

5000

Diversified
businessin Americas

4000
400
3000
2000
200
0

2019

Adj.
Operating Profit

-2000
-3000

1.4 B JPY*

-4000
-5000

18/40

15B JPY
330 B JPY

Diversified
products

1000

-1000

572B JPY*＊2019 financial data has been adjusted to IFRS basis.

230 B JPY

Adj.
Operating Profit[B 210
JPY]
180
15
150
12
Approx. 40% 120（vs.Y19）

9
90
6
60
30
3

2021

2023

0
-30
-3
-60
-6

-8 B JPY

-9
-90
-12
-120
-150

IFRS

Bridgestone 3.0 Journey

Mid Term Business Plan 1 Business Scenario: “Aggressive approach” & “Challenge”
2020
COVID-19 Impact

Stage

2021

2022
Recovery

Gradual recovery
Crisis management

2023

Sustainability at the core

Transformed“strong” Bridgestone

Rebuild earning power

Strategic growth investment■Tire businessCore business

Expense and cost structure reformation: Expense structure reformation (fixed cost etc. ),business portfolio and manufacturing footprint restructuring, resource reallocation
Reinforce premium business strategy (EtoE): Reinforce Dan-Totsu product strategy and sales in “premium”
Rebuild earning power

Rebuild earning power
Strategic growth investment■ Solutions business
Growth business

Exploratory business

Enablers
for execution
19/40

Expansion: Accelerate global expansion(subscription model, retread strategy, Webfleet Solutions, etc.)

Tires
Strategic growth investment■ Start in areas where Bridgestone can leverage our core competencies- Toward commercialization of recycle business and soft-robotics business■ Reinforce foundation for financial strategy - reinforce global control function■ HRX

Strategic growth investment

Solutions

Bridgestone 3.0 Journey

Growth business: Expand solutions business - Solutions business-related sales■Continue expansion of the resilient business modelGroup sales(excluding diversified products business)

2,935
B JPY

C

Mobility
SolutionsB

Tire-centric
Solutions

2,688
B JPY

3,080

B JPY level

C Mobility Solutions• Webfleet Solutions• Other fleet solutions

22 B JPY (2019) ⇒ 67 B JPY (2023)

B Tire-centric Solutions• Truck & Bus retread sales (global)

533＊

518

18％

19％

B JPY

B JPY

650

B JPY level21％

95 B JPY (2019) ⇒ 110 B JPY (2023)• New business form (not conventional tire sell-out)
Mining solutions, Hose solutions, Aircraft solutions,truck tire mileage sales, Subscription (mobox) etc.

66 B JPY (2019) ⇒ 103 B JPY (2023)• Services at equity stores

A

Tires

2,402

2,170

82％

81％

B JPY

B JPY

2,430

B JPY level

79％

IFRS based＊2019 sales data has been revised and adjusted to IFRS basis from Mid-Long Term Business Plan Update presentation on August 7th 2020.

20/40(incl. N. America retail financial services revenue)
For passenger cars and commercial fleets

350 B JPY (2019) ⇒ 370 B JPY (2023)

533 B JPY (2019) ⇒ 650 B JPY (2023)

Bridgestone 3.0 Journey

Growth business: Expand solutions business - Global expansion of subscription model■ Accelerate global rollout from Europe as the Center of Excellence
Optimize services to fit customer needs in each region, and expand to Japan, the U.S. and Europe.
No. of contracts for passenger car subscriptions
Japan

No. of contracts for truck & bus subscriptions

Expand approx. 2xJapan

EuropeExpandmore than 20x

U.S.

（2019⇒2023）

EuropeU.S.

Others（2019⇒2023）

Etc.

Y19
ACT
ACT

21/40

Y20
ACT
FCST

Y21

Y22

Y23

Y19
ACT
ACT

Y20
ACT
ACT
FCST

Y21

Y22

Y23

Bridgestone 3.0 Journey

Growth business: Expand solutions business - Global expansion of fleet solutions■Deploy Webfleet Solutions` system and expertise globally from Europe as CoE

Look at each market`s characteristics, and expand with potential strategic partnerships and M&A
Aim to establish global leading position

No.1 position

830K

Utilize European experiences and expertise

Vehicles (2021)•

1,100K•

Vehicles (2023)

Webfleet Solutions Global Expansion

Aim for leading position in each market,
plan 2~3x increase in contracted vehicles

Consider business expansion with possible strategic
partnerships and M&A
Maximize synergy with tire-centric solutions

MexicoChiliSouth Africa

22/40

Australia

Bridgestone 3.0 Journey

Mid Term Business Plan 1 Business Scenario: “Aggressive approach” & “Challenge”
2020
COVID-19 Impact

Stage

2021

2022
Recovery

Gradual recovery
Crisis management

2023

Sustainability at the core

Transformed“strong” Bridgestone

Rebuild earning power

Strategic growth investment

Group into 4 categories for execution, according to region/business characteristics/mobility maturity■Tire businessCore business

Expense and cost structure reformation: Expense structure reformation (fixed cost etc.),
business portfolio and manufacturing footprint restructuring, resource reallocation
Reinforce premium business strategy (EtoE): Reinforce Dan-Totsu product strategy and sales in “premium”
Rebuild earning power

Growth business■ Solutions business
Expansion: Accelerate global expansion(subscription model, retread strategy, Webfleet Solutions, etc.)

Exploratory business

Enablers
for execution
23/40

Rebuild earning power
Strategic growth investment

Tires
Strategic growth investment■ Start in areas where Bridgestone can leverage our core competencies- Toward commercialization of recycle business and soft-robotics business■ Reinforce foundation for financial strategy - reinforce global control function■ HRX

Strategic growth investment

Solutions

Bridgestone 3.0 JourneyCore business & Growth business: Restructuring with resolve - 4 categories for execution
Continue reinforcement/expansion

Expand solutions business based on our strong corebusiness, accelerate value amplification
Resources

N. America Tire/Solutions biz

Proactive investment

Profits

Maximize• Reinforce premium business strategy• Expand solutions business

Mining Tire/Solutions biz• Master manufacturing, business structure reformation• Reinforce tire-centric solutions

Japan Tire/Solutions biz

Contribute to global strategy

Build framework for strategic synergy andcontribution to group global
Resources

Europe Tire/Solutions biz

Limitedinvestment

Profits

Build foundation(stabilize profitability)• Tire business: Reinforce premium business strategy• Solutions business: Drive & reinforce global expansion*Basis for global strategy regarding: sustainability, regulations,
MaaS, OEM (Passenger cars, truck and bus)

Aviation Tire/Solutions biz
24/40• Expand solutions business

Aim to become “MAIN”
Start contribution to group
Resources

Step-by-step investment

China Passenger Car Tire biz
L. America / India PS /Asia-Pacific / Middle East
Tire biz

Profits

Build foundation• Reinforce premium business strategy• Lay foundation for solutions• Reinforce premium business strategy

Aim to become “NEXT”
Stabilize profitability
Resources

China Truck & Bus Tire biz
India Truck & Bus biz
Russia / Africa / Tire biz

Minimalinvestment

Profits

Build foundation(break away from deficits)

・ Rebuild business・ Reinforce premium business strategy

25/4026/40Bridgestone 3.0 Journey toward 2030

Mid Term Business Plan (2021-2023) & toward 2030 and beyond– Sustainability Business Framework“Produce and sell” tire business /“value during use” solutions business: Reinforce & expand
Renew” recycle business: Start exploration“Produce and sell” tire business /“value during use” solutions business: Establish unique business model“Renew” recycle business: Commercialize“Produce and sell” tire business / “value during use” solutions business /“Renew” recycle business:
Sustainable reinvestment of benefits & value generated from each biz
27/40

Bridgestone 3.0 Journey

Sustainability Business Framework■Our environmental activities to contribute to a carbon neutral society & circular economy.
Setting goals for the Sustainability Business Model■ Carbon neutrality• Realize carbon neutrality
across the value chain andproduct lifecycle■ Circular Economy• Improve material circularity• Maximize resource/tire value

28/40

2021-2023

Consolidate foundation and clarify roadmap towards carbon neutrality

Optimize manufacturing footprint & business portfolio, enhance renewable energy use,
explore new energy. Contribute to CO2 emission reduction and gain
competitive advantage through eco-friendly products & solutions businessTransition to a circular business model.
Explore and commercialize recycle business

Enhance and expand recycled & renewable resources & expand retread business.
Maximize value through light weight, durable,
wear-resistant Dan-Totsu product + Dan-Totsu solutions

～2030

～2050

-50％

Carbon neutrality

Recycled & renewablematerial ratio:

100% sustainable
material

Reduction of CO2 emissions :Contribute to reducing morethan 5x our emissions

40％

Bridgestone 3.0 Journey

Sustainability Business Framework - Efforts toward building the Sustainability Business Model■Develop our core business and growth business and start exploring recycle business, with sustainability at the core
Produce&
Sell

Sales (products)

Raw material procurement ~ Production•••

Global Sustainable Procurement Policy
Guayule research, efforts for practical use
Renewable energy usage•••

Management of water resources
Reduction of production loss
Promote smart factory•••

Respond to accelerating EV shift (OE approach)
Enhance and spread fuel-efficient tires
Expand next-generation eco-friendly products•

Enhance durable truck & bus and light truck
tires that also prevent irregular wear to allow
multiple retreading

Use
Solution• Multiple retreading of durable case tires that
also prevent irregular wear
• Optimization of customer fleet operations• Wear/endurance prediction• Repair• Subscription

Recycle

Renew

29/40

• Technical seeds• “Tire to Rubber” and “Tire to Raw Material” recycling
technology that ensures high quality and less energy• Explore eco-systems and business models forcommercialization

Premium Retread

Propose optimal tire operation
Retread customized to customer use/needs

Bridgestone 3.0 Journey

Mid Term Business Plan 1 Business Scenario: “Aggressive approach” & “Challenge”
2020
COVID-19 Impact

Stage

2021

2022
Recovery

Gradual recovery
Crisis management

2023

Sustainability at the core

Transformed“strong” Bridgestone

Rebuild earning power

Strategic growth investment■Tire businessCore business

Expense and cost structure reformation: Expense structure reformation (fixed cost etc.),
business portfolio and manufacturing footprint restructuring, resource reallocation
Reinforce premium business strategy (EtoE): Reinforce Dan-Totsu product strategy and sales in “premium”
Rebuild earning power

Rebuild earning power
Strategic growth investment■ Solutions business
Growth business

Exploratory business

Enablers
for execution
30/40

Expansion: Accelerate global expansion(subscription model, retread strategy, Webfleet Solutions, etc.)

Tires
Strategic growth investment■ Start in areas where Bridgestone can leverage our core competencies- Toward commercialization of recycle business and soft-robotics business

Strategic growth investment■ Reinforce foundation for financial strategy - reinforce global control function■ HRX

Solutions

Bridgestone 3.0 Journey

Exploratory business: Exploratory areas and enablers for start-up■ Start new journey toward a “sustainable solutions company”
Mission“Serving society with superior quality”

VisionContinue to provide social value and customer value as a sustainable solutions company toward 2050

Mid-Long TermBusiness Strategy

Placing sustainability at the core, create social & customer value, and gain competitive advantage

Areas forexploration

Areas where leveraging Bridgestone can leverage our core competencies/ areas for potential synergy with core and/or growth businesses/ areas contributing to achieving SDGs
/ areas for synergy with our Sustainability Business Framework
RecycleEnablers for
execution•

Organization

31/40

Etc.

Consolidate organization for execution as Global CEO’s project.
Global coordination with Japan as central hub. Drive based on co-creation with various partners- Recycle Business Preparation Office (Feb. 1~)- Soft-robotics Business Preparation Office (Planned for July. 1~)

・Strategic
resources

Soft-robotics (rubber actuators)••

Possible M&As and strategic partnerships
Corporate Venture Capital Fund - Bridgestone Sustainability Fund (Launch planned July. 1)

Bridgestone 3.0 Journey

Exploratory business: from interaction with empathy to co-creation, a global hub to create new value（ Phase 1 ）Mini test course (2021~)

Innovation center (2021~)

Demonstration and testing facility to test
ideas generated in B-Innovation
using actual vehicles

Encourage internal and external exchange,
drive open innovation through interaction,
co-ideation, co-R&D and co-creation

A gallery dedicated to Bridgestone's
history and innovation initiatives
and future vision

Real × Digital

Co-creation
32/40

Co-R&D

Co-ideation

Interaction with empathy

Bridgestone 3.0 Journey

Exploratory business: Recycle business - explore technical seeds
1

New natural rubber
resources(Sustainable Material)

2

Rubber Technology

Reduce raw material usage

3

Rubber technology

Tire to Rubber

New materials fit for recycling

Rubber that can be easily reprocessed byadding heat, compared to conventionalrubber mixed with sulfur which is hard to
reprocess.

Fuel efficient / long life high performance rubber(Double network, etc.)

Linkage that can be desorbed with heat,
while maintaining strength(Reversible cross-linked rubber)

Guayule4

Tire to Rubber & Tire to Raw material

Recycle technology

5

Tire to Tire

Retread technology

Technology to renew tires to rubber / raw materials

 Produce recycled rubber
 Produce chemical raw materials and carbon(through pyrolysis)

Multiple retreading, etc.

Explore and commercialize recycle technology that ensures high quality, CO2 reduction
and resource circulation in “Tire to Rubber”, “Tire to Raw material” areas
33/40

Bridgestone 3.0 Journey

Exploratory business: Soft-robotics business■ Leverage Bridgestone’s core competencies. Aim to create social & customer value, and gain competitive advantage
Bridgestone’s core competencies

Social / customer issues

 Expertise and technology
in “Mastering rubber” “Mastering contact”

 Declining birthrate &aging population
 Needs for contactless• AI sensing rubber controlling soft movement• Rubber actuator supporting soft movement• Soft functional materials that support safety & peace of mind

(COVID-19 impact)

 Work automation

 Synergy with existing businesses, leverage assets“Mobility & movement of people and objects
with safety & peace of mind”[Manufacturing] Leverage existing assets[Business model] Synergy with core & growth business models(OE/REP – solutions – recycle)

Co-creation / Innovation
Soft-robotics••

A “soft robot” that can work with people
Support mobility & movement of people and objects
with safety & peace of mind

Examples of soft-robots leveraging the characteristics of rubber actuators
Soft-robot arm /hand

Mobilesoft-robot arm
Automatic charging→ Adapted to EV needs

Accelerate commercialization as an exploratory business

34/40

Bridgestone 3.0 Journey

Mid Term Business Plan 1 Business Scenario: “Aggressive approach” & “Challenge”
2020
COVID-19 Impact

Stage

2021

2022
Recovery

Gradual recovery
Crisis management

2023

Sustainability at the core

Transformed“strong” Bridgestone

Rebuild earning power

Strategic growth investment■Tire businessCore business

Expense and cost structure reformation: Expense structure reformation (fixed cost etc.),
business portfolio and manufacturing footprint restructuring, resource reallocation
Reinforce premium business strategy (EtoE): Reinforce Dan-Totsu product strategy and sales in “premium”
Rebuild earning power

Rebuild earning power
Strategic growth investment■ Solutions business
Growth business

Exploratory business

Enablers
for execution
35/40

Expansion: Accelerate global expansion(subscription model, retread strategy, Webfleet Solutions, etc.)

Tires
Strategic growth investment■ Start in areas where Bridgestone can leverage our core competencies- Toward commercialization of recycle business and soft-robotics business■ Reinforce foundation for financial strategy - reinforce global control function■ HRX

Strategic growth investment

Solutions

Bridgestone 3.0 Journey

Strategic resources investment“Aggressive approach” & “Challenge”

Mid Term Business Plan (2021~23): Strategic resources 700 B JPY
M&A / CVC / Strategic partnership

Strategic investment / Strategic expenses

350 B JPY

Secure “credibility” of business through core biz reinforcement
Strategic growth investments for growth biz expansion

Restructuring and Reformation

 Business portfolio restructuring
 Manufacturing footprint restructuring
 Structural reformation of Japanese business (drastic reduction of fixed cost)

Growth investment
 Tire business(reinforce core business)• Dan-Totsu product strategy• Manufacturing technology• E-commerce Tire-centric solution business(expand growth business)• Retread strategy• Tire-related services• Subscription

36/40

350 B JPY

Ratio of strategic
resources:
Strategic investment: 30%
Strategic expenses: 5%

Accelerate business through strong co-creation activities

DX domain Invest in startups
 Acquire digital talent

Solution partner domain Mobility solution business(expand growth business)• Fleet solution• Solution network• B-innovation (digital product design infrastructure)• Smart factory through DX

 IT Infrastructure• Core IT infrastructure systems update• Remote work infrastructure reinforcement• IT security reinforcement

 Mobility solution• Scale up in N. America
Accelerate through acquisitions/alliances Solution network• Expand/reinforce

 Retread• Incorporate new manufacturing
technology• Reinforce Bandag facilities, networks

 Repair• Reinforce tire repair technologies throughalliances

Sustainability domain(including recycle)

 Material recycle• Co-creation with startups
 Recycle business• Co-creation towardcommercialization
 Renewable energy procurement

Exploratory business Soft-robotics business• Partner withJapanese/American startups

Financial strategy to realize portfolio management
Rebuild and execute financial strategy foundation that support the Mid Term Business Plan
Rebuild earning power by utilizing “ROIC” as a new management index.
Strict financial evaluation at planning and execution phases for investments.

■ Support financial evaluation and strategic decision-making by business portfolio (incl. divestment management) If the business does not meet the established financial criteria, develop a recovery plan.
If the business does not recover, consider divestment.
■ Drive profit improvement efforts based on ROIC tree:
ROIC

NPAT

GP margin %Investment capitalturn over

OPEX %• Add new management KPIs based on ROIC tree

Cash Conversion Cycle*• Strengthen management at each production/ sales entity level

Fixed asset turnover• Manage investment of operational/ strategic items separately

Investment management by item

■ Reinforce individual
investment management

Reinforce corporate function*Cash Conversion Cycle = DIO + DSO -DPO

• Launch global control function (Jan. 2021)• Launch capex SC*: Select investment using KPIs from strategic/financial point of views. Global CAO as leader• New M&A SC*: Thorough evaluation & selection by the committee incl. Global CEO, Global CAO and SBU leaders

Investment decisions• Thorough financial evaluation based on ROIC
• Set hurdle rate adding capital cost and risk (by region, by business)• Evaluate CO2 emission cost and reduction impact■ Gradual establishment of global financial and accounting foundations to execute the initiatives above(Internal group rules, IT infrastructure, organization, etc.）

37/40*SC: Steering Committee*SBU: Strategic Business Unit

HRX: HR & organizational strategy to support Mid Term Business Plan
■ Execute an HR strategy with “Aggressive approach” & “Challenge”, while leveraging strengths
Build HR strategy and organizational structure by business step by stepCore business

Culturetransformation

Breakaway from existing challenges and make a radical transformation,
while leveraging our unique strengths- Group global optimization aligned with business strategy- Clarify roles and responsibilities, improve organizational efficiency, optimize talent allocation⇒ Generate resources, and flexibly reallocate to growth and exploratory businesses

Create structure and working style for solutions business

Growth BusinessNew culture
creation- Build global organizational structure for solutions business, maximal leveraging of diversity & inclusion- Develop digital talent. Promote exchange of talent on global basis, from Webfleet Solutions and iTrack solutions
business, etc.
Digital talents：Approx. 1,600 talents（as of Jan 2021）
Bridgestone 830 (JPN: 560, EU & US：270), Webfleet Solutions + iTrack solutions biz：750

Challenge
Exploratory business

Bridgestone’s HRX*

*HRX: Human Resource Transformation

38/40⇒ Export the new culture to core business to make it stronger

Build new structure based on challenge- Diversity & inclusion, global utilization of talents- Internal and external networking and talents exchange to facilitate co-creation- Entrepreneurial spirit

Maximize organization capability (Organization x Talent) for execution of Mid Term Business Plan
Continuously promote development of diverse talent and next-generation global management39/402021

2nd Year of Bridgestone 3.0, the “Third Foundation”
40/40

Statements made in this presentation with respect to Bridgestone's current plans, estimates, strategies and beliefs and other statements that are not historical facts areforward-looking statements about the future performance of Bridgestone. Forward-looking statements include, but are not limited to, those statements using words such as"believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "may" or "might" and words of similar meaning in connection with a
discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in othermaterials released to the public. These statements are based on management's assumptions and beliefs in light of the information currently available to it. Bridgestone
cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, andtherefore you should not place undue reliance on them. You also should not rely on any obligation of Bridgestone to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Bridgestone disclaims any such obligation.

Copyright © Bridgestone Corporation

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