Mid-Long TermBusiness Strategy Update

August 7, 2020
Global CEO and
Representative Executive Officer

Shu Ishibashi

Communication Plan

Continuous update of the strategy progress based on the Mid-Long Term Business Strategy Framework-Part 1 - July 8, Whole picture of Mid-Long Term Business Strategy Framework■ Bridgestone 3.0 (Third Foundation)
To become a sustainable solutions company

Core Business: Premium strategy

Build new core competencies: Sustainability, DX / Technology, Innovation, HRX- Part 2 - August 7, 2020 1st half financial results announcement■ 1st half financial results / full-year forecast(Newly disclosed information, linked with Mid-Long Term Business Strategy Framework)

Growth Business: Game-changer, new value creation- Part 3 - September 15 Bridgestone Innovation Gallery■ Innovation for solutions, starting with empathy

Tokyo - Kodaira: Reopening following renovation of the former Bridgestone TODAY gallery■ Mid-Long Term Business Strategy Update
・ Core Business (Tire & Rubber Business) :Sense of urgency / Issues / Strengthening

・ Growth Business (Solutions Business) :Financial result in 2019 and Mining solution / Dan-Totsu new product・ Direction of Portfolio Management

Core competencies: Sustainability / DX / Technology, Innovation
New innovation: diversified business and rubber actuator

February, 2021 Announcement of “Mid-term Business Plan”■ Mid-Term Business Plan, based on

Mid-Long term Business Strategy Framework

1/28

Business plan to be strategically consistent on a global basis and to be executed steadily,considering volatile business environment. (shift from three-year business performance plan
to the overall target and implementation plan with Mid-Long term strategic KPIs)

Mid-Long Term Business Strategy Update

2/28

•

Core Business (Tire & Rubber Business)•

Growth Business (Solutions Business)•

Direction of Portfolio Management

Build our unique business modelC

Mobility
Solutions

B

Tire Centric
SolutionsA

Value
amplified

Tire & Rubber

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

Create and sell “value”

GrowthBusiness

Business to provide added value to products through products andtire related data

Produce and sell “Products”

Produce and sell high-value-added products (Dan-Totsu
products) at an optimum cost and price⇒a base of Bridgestone Business Strategy

Core
Business(Spiral up)

Evolve to solutions business leveraging the strengths and expertise of tire & rubber business
3/28

Recognition of issues– Business performance review ( 2015 – 2019 )Bridgestone Group operating profit
 Though the sales are almost flat, operating profit has decreased.
2015：517 billion yen 2019: 326 billion yen
 Main factor is costs increase, although vol. / price / mix are improved.
 Implementation of robust expense & cost structure reforms（procurement, logistics, production footprint andbusiness restructure etc. ） Price increase is not enough to eliminate negative headwinds in raw
material price and inflation.
 Strengthen global price management
 Emergence of tier２tire manufacturers impacted on entire tire industry.

Profit share in tire industry
 Profitability within the tire industry has been decreasing.
 Profit share of global companies carrying strong brands has been
increasing as price competition intensified especially since 2017.
 Bridgestone has maintained stronger position in profit share withstrong brand power and mix improvement.

(in B. JPY)
600

Volume

+14

500

Price
+57

△56

△25

△71

300

Latin America
inflation

0

Conversion
Cost

△77

△17

326

△191 B. JPY

517
2015

Tire profits(in B. USD)
20

Mix,
Others+21△37
OperatingExpense200
100

Depreciation/
Amortization

Raw
Materials

ForeignExch. Loss

400

2019

BS share in tire industry profit amount 2015 - 2019

18.3%

16.0%

2015

2016

15

REF: BCG analysis

17.3%
16.0%

18.0%

2017

2018

15.7%

10
5
0

4/28

2015 - 2019 Operating profit analysis

2019

Bridgestone
OthersRecognition of issues– Tire business performance in 2019
（unit : Billion Yen）

PS/LT

Net Sales

Operating Profit

Operating Profit %

1,709

178

10.4%

825

82

9.9%

384

88

22.9%

※Including retail and credit card business

TB※Including retread business

OR, AC, AG, MC*PS＝Passenger tires, TB＝Truck & Bus tires
OR＝Off The Road tires, AC= Aircraft tires, AG＝Agriculture tires, MC＝Motorcycle tires
5/28

Recognition of issues– Diversified products business performance in 2019
Tennis3 B¥ (4%)( % ) = Portion in sales amount by business category

Building（Resin pipes, Seismic products）

26 B¥ (10%)

Chemical & Industrial Products Biz
283 B¥ (49%)

High-performancechemical products（Chemical prod. / OA）

39 B¥ (14%)

Chemical &Industrial Products
Biz
Net sales

G-MAA（Hose・ Belt・Crawler ）Sports / Cycle Biz
76 B¥ (13%)

NVH（NVH・seat pad）

115 B¥ (43%)

Diversified Products
Business
Net sales 588 B. YenOP*
0.2 B. Yen
OP%
0.03%

89 B¥ (33%)“Chemical & Industrial Products Business has been transformingwith creative ideas ”
Various business products with new entries and withdrawals(Major discontinued business：Electric paper, EVA film, fender andbathroom unit etc.)

Diversified Products Biz
in Americas
224 B¥ (38%)

Golf
26 B¥ (35%)

Cycle
42 B¥ (56%)

Sports / Cycle Biz
Net sales

Air springs
37 B¥ (17%)

Diversified
Products Biz
in Americas
Net Sales
Roofing product187 B¥ (83%)*OP=Operating profit

6/28

Schooling
4 B¥ (5%)

Core Business and Growth BusinessC

Mobility
Solutions

B

Tire Centric
SolutionsA

Tire & Rubber

Value amplified(Spiral up)

7/28■ Growth Business- Expand solutions business- Accelerate “spiral-up” with Core BusinessRetread, Webfleet Solutions,
Mining solution etc.

Bridgestone growth engine■ Core Business- Rebuild earning power

Reformation of expense and cost structure
Operational excellence
Bridgestone profit centerCore Business- Rebuild earning power

Reformation of expense and cost structure

・ Restructure of production footprint and business・ Expense and cost reforms in procurement and logistics
・ Strict selection of investment,
thorough expense management

Operational excellence (Strengthen premium business strategy (EtoE) )Marketing

R&D

Procurement

Strengthen Dan-Totsu
product strategy• Strengthen premium products strategy• Simplification and differentiationcommonality / modularity

8/28

Production
Plan

Manufacturing

Logistics

Improvement of
manufacturing

Sales• Improvement of manufacturing- Maximum use of existing equipment- Improvement of productivity• “To manage manufacturing is to develop
people there."

Customer Use

3R

Strengthen sales inpremium category• Wholesale / Retail pricemanagement• Strengthen premium channels（incl. E-commerce）

Core Business- Rebuild earning power
Strengthen premium
products strategy

Strengthen
Dan-Totsu
product
strategyMarketing

Simplification and differentiation- Visualization of Product competitiveness(Dan-Totsu, Gap, Delay)- Expand Dan-Totsu products by innovation

R&D

Procurement

Production
Plan■ Commonality / Modularity- Share casings / belts as module between tires - simplification
E.g. in Passenger tires for Japanese market# of Casings / Belts module : 30 to 40 (Current)  5 (in 2025)- Customize tire performance by tread rubber / patterns-> Maintain high competitiveness to respond market- Reduction of SKU (≒ # of product sizes)
Increase of efficiency by simplification

Manufacturing

Logistics

Sales

Customer Use

Strengthen engineering chain through market intelligence and insights
・”Real” intelligence by on-site field engineering X “Digital” intelligence by combination of tire data and mobility data.
Market intelligence obtained by Real X Digital is plugged into Dan-Totsu product strategy and development.
Engineering Chain

9/28

3R

C

Mobility
Solutions

B

Tire Centric
SolutionsA

Tire & Rubber

Value amplified(Spiral up)

10/28■ Growth Business- Expand solutions business- Accelerate “spiral-up” with Core BusinessRetread, Webfleet Solutions,
Mining Solutions etc..

Bridgestone growth engine■ Core Business- Rebuild earning power

Reformation of expense and cost structure
Operational excellence
Bridgestone profit center

Growth Business*OE：Original equipment tire / REP: Replacement tire2017-2035 profit pool [100 mil. USD]

Profit pool in the Automobile Industry
Current mobility business area

Source: BCG analysis

Conventionalparts

New vehicle sales(engine-driven/hybrid cars)

BS TireREP biz area

BS TireOE biz area

Finance

New mobility business area
After services

BS TireREP service biz area

SDV/
EV partsNew
vehicle sales(EV)

BS TireNew OE biz area

Connected car/data-related
services

Sharing
services

New BS solutions biz area
New BS Tire
REP biz area

Expansion of profit pool in the new mobility business area as well as current area. Change of profit structure.
11/28

Growth Business

Bridgestone’s solutions business

Provide various solutions to society and customers,
supported by structured sustainable solutions business model.
Tire monitoring system

Wear Prediction Model

New Material

Digital Simulation

Retread tire mgt. system

Unique Algorithm
Tire database platform

Technical Center（Rome, Italy）
Subscription model

Fleet Mgt. System

Technical Center（Tokyo - Kodaira）

Aircraft Solution
Collaboration with JAL
Collaboration with Microsoft

Global common solutions platform

12/28

Dealer matching system

Technical Center（Akron, OH, U.S.）

Mining Solution
iTrack solutions Business

Customized solutions
by region / businessGrowth Business

Data: 2019
Equity store / Franchise / Voluntary chain（excluding contracted stores）

Dan-Totsu solutions network

Increase quality of network to adapt developing solutions business.
Global10,340
Truck & bus tire
3,470
network
TB retread network
550
Passenger car tire
network

EU・MEA
Russia・India・Turkey

3,700
1,130
90

13/28

Asia Pacific・China

1,840
500
30

Japan

1,130
330
20

Americas

3,670
1,510
410

Growth Business

Solutions business related sales in 2019

Expand solutions business with strengthening Core Business.
 Service related sales
at equity storesGroup Net Sales in 2019

3,525 billion Yen
C

Mobility
Solutions

B

Tire Centric
SolutionsA

Tire & Rubber

14/28

Growth Business
525 B. Yen

15％Core Business
3,000 B. Yen

85％

326
Passenger (U.S., Japan, Thai）
Truck & bus（U.S., Japan, Australia） 14
Mining（U.S., Australia）
10

350 B. Yen
 TB retread service sales（Global）
 Solutions business sales*TB＝Truck & Bus tires

105 B. Yen- Sales with new solutions contracted sales (non-conventional tire sales)
Aircraft tire solution, truck tire milage sales
Subscription (mobox)、Webfleet Solutions etc.

70 B. Yen

525 B. Yen

Growth Business

Solutions business operating profit

TB retread and Webfleet Solutions maintain same profit level as 2019, even under headwind businessenvironment in 1H 2020. Expand Growth Business which is resilient to business environment changes.
Webfleet Solutions* *Excluding M&A related cost

Operating profit % ＊2019 ACT
Tire Business

30％

OR/AC
/AG/MC

20％
10％

PS/TB
OE

Less-resilient

Solutions Business

TB
RetreadWebfleet
Solutions

27%

24%

20%

21%

24%

25%

Y20/Q1

Y20/Q2

10%
0%

Y19/Q2Q3

Q4Global TB Retread

PS/TB
REP

30％
20%

Resilient to businessenvironmental change*PS＝Passenger tires, TB＝Truck & Bus tires
OR＝Off the road tires, AC= Aircraft tires, AG＝Agriculture tires, MC＝Motorcycle tires
15/28

30％

22.8% 21.2%

17.3% 17.4% 19.6% 19.4%

10%
0%

2015

2016

2017

2018

2019

2020 1H

Mining Solution

16/28

Increase offleet availability (uptime)

Enhancement of fleet efficiency(faster transportation ofincreased payload)

17/28

C

Mobility
Solutions

B

Tire Centric
SolutionsA

Tire & Rubber

18/28

Dan-Totsu new productBridgestone MASTERCORE

More payload

Growth Business - Mining Solution（Tire payload）

Dan-Totsu new productLoad pressure
resistance

FasterLong-lasting（Vehicle speed）

Heat
ResistanceBS
Conventional

Wear
ResistanceLess repair

Less breakdown

Cut
Resistance

Separation
resistance（Durability）

New pattern technology（Longer tire life）（Durability）

Tread-cooling technology introduced

BS unique steel code / rubber adhesion system

High quality powerful tirewith Dan-Totsu durability

Anti-rust steel cord

19/28

※In-house

Composition of latest durability-improving rubber

Industry-newGrowth Business - Mining Solution

Dan-Totsu new productDurability /Longer tire life

More payload(Tire payload)

Heatresistance106

PayloadLong-lasting(Vehicle speed)

100

Vehicle speed

Load pressure resistance
Faster114@Iron ore mine in Australia(Longer tire life)

BS
Conventional

Wearresistance

Vehicle speed
Durability / Longer tire life

105
100
100

Payload@Gold mine in Mexico

Less repair

長持ちする
Less
breakdown

Cut resistance

Separation resistance(Durability)（耐久性）(Durability)

Improve tire capability without sacrificing ofother tire performance

Able to customize the usage of tire according to Mine operation / Minelayout without changing tire
20/28

PayloadDurability / Longer tire life
Vehicle speed

112
100
100

@Copper mine in USA*Index based on BS Conventional tire performance as 100 (BS analysis)

C

Mobility
Solutions

B

Tire Centric
SolutionsA

Tire & Rubber

21/28

Solutions Platform

iTrack solutions business
Solution Operation Center / Customer-based

C

Growth Business ‐ Mining Solution

Digital platform

B Acquisition of iTrack solutions business owned by Transense Technologies（June 2020）
 Expansion of solutions business, adding 40 digital personnel as new teammates to collaborate for DX acceleration• Expansion of internal pressure /heatmonitoring system（＝Real-time remote monitoring）

Full-time operation monitoring

Layout/curve/slope analysis

Fleet operation efficiency analysis• Real-time collection/analysis of Fleetdata（speed, location information）

Safe operation of fleets

Full utilizationof tire availability

Suggestion of
optimal route/layout

Offer tailor-made service to each customer
Connect Dan-Totsu product / network / service and develop BS unique solutions
22/28

Growth Business ‐ Mining solution

Dan-Totsu network

MASTERCOREIntroduced customers

43

mines

（Solution, Service, Sales, Partnership included）

iTrack solutions business
Monitoring Center

Solution Center
Other BS owned
Partnership
DigitalSales

MASTERCORE introduced customers

52

bases

Technical Center（UK・London）

Service
Solution
Base

Network（AUS・Pilbara）（AUS・HunterValley） iTrack solutions business
Monitoring Center（CHI・Renaca）

Support Dan-Totsu solutions by Dan-Totsu product / service / network“Real” X “Digital” market intelligence to plug in Dan-Totsu product strategy and development
23/28

Growth Business ‐ Mining Solution

Spiral-up acceleration with Core BusinessC

Co-create social value andcustomer value with customers
Support entire mining operation
BS uniquewear / durability
prediction

Mobility
Solutions

B

Tire Centric
Solutions

A

Further developmentof attractive productTire & Rubber“Real”

Genba-based service
Solutions engineer
Mining solution center“Digital”

iTrack solutions business“Dan-Totsu new product”

Bridgestone MASTERCORE（Giant off-the road tire for mining）

Expand solutions business foundation thorough enforcement of Core Business & Dan-Totsu product24/28

Direction of Portfolio Management

25/28

Direction of Portfolio Management
Optimize business resources as Bridgestone group, with clarified business position and roleCore Business (tire & rubber business) and Growth Business (solutions business):
Investment criteria and evaluation criteria of its return, based on characteristics of each businessApproach to Criteria

Direction of strategic growth investment / restructure• Focus on Capital Cost

Growth Biz

Possibility of value creation and probability
Retread, Webfleet Solutions, DX

・ Maximize return / cash ・ strengthen profit baseCore Biz

Tight management of investment by business/ category capacity of solid cash generation
Restructuring of Manufacturing footprint
and Diversified products

In addition to current management index- ROA, ROE and OP, to add new criteria such as
ROIC is under consideration.

・ Strict selection of business which
has solid profitability and invest
resource intensively to them

Clarified goal / action KPI and milestone- Establish system to follow up result of investment / return strictly- Management of discontinued business - establish rules  Clarify criteria (unprofitable / no synergy etc.)

Agile PDCA to achieve results
26/28

C
B
A

Global Business Scenario (2020-2023)
COVID19
impact

2020

2021

2022

2023

Estimated second wave

Impact continues throughout the year

Gradually recovery

RecoveryCrisis management
Rebuild earning power

Stage

Transformed new
Bridgestone

Strategic growth investment■ “Safety First”■ Cash oriented management

Strategic
Focus

・ Net sales scenario planning・ Resource management
・ Asset management
・ Secure positive free cash flow

■ Impairment items

・ Do not push the burden
to the future

27/28

Rebuild earning power
Reformation of expense and cost structure

・ Restructure of global production footprint and business・ Expense and Cost reforms incl. procurement and logistics

Operational excellence・ Strengthen premium business strategy

Strategic growth investment
Growth Business : Retread / Webfleet Solutions
Core Competence : DX / Innovation■ Reformation

・ Core Business :Strengthen premium categorybusiness
・ New business portfolio
・ Profitable resilient businessstructure■ Realize new growth strategy
・ Growth Business :Expansion of solutions businessCommunication Plan

Continuous update of the strategy progress based on the Mid-Long Term Business Strategy Framework-Part 1 - July 8, Whole picture of Mid-Long Term Business Strategy Framework■ Bridgestone 3.0 (Third Foundation)
To become a sustainable solutions company

Core Business: Premium strategy- Part 2 - August 7, 2020 1st half financial results announcement■ 1st half financial results / full-year forecast(Newly disclosed information, linked with Mid-Long Term Business Strategy Framework)■ Mid-Long Term Business Strategy Update

Growth Business: Game-changer, new value creation

Build new core competencies: Sustainability, DX / Technology, Innovation, HRX- Part 3 - September 15 Bridgestone Innovation Gallery■ Innovation for solutions, starting with empathy
Tokyo - Kodaira: Reopening following renovation of the former Bridgestone TODAY gallery

・ Core Business (Tire & Rubber Business) :Sense of urgency / Issues / Strengthening

・ Growth Business (Solutions Business) :Financial result in 2019 and Mining solution / Dan-Totsu new product・ Direction of Portfolio Management

Core competencies: Sustainability / DX / Technology, Innovation
New innovation: diversified business and rubber actuator

February, 2021 Announcement of “Mid-term Business Plan”■ Mid-Term Business Plan, based on Mid-Long

term Business Strategy Framework

28/28

Business plan to be strategically consistent on a global basis and to be executed steadily,considering volatile business environment. (shift from three-year business performance plan
to the overall target and implementation plan with Mid-Long term strategic KPIs)

Statements made in this presentation with respect to Bridgestone's current plans, estimates, strategies and beliefs and other statements that are nothistorical facts are forward-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 other materials 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, and therefore you should not place undue reliance onthem. 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