Bridgestone Corporation (BRDCY) has reported a downturn in truck and bus tire sales across North America, Europe, and China for the fiscal year 2023, with a slight decline in adjusted operating profit. Despite the challenges, the company is forging ahead with a strategic plan to enhance its premium tire segment and solutions business, aiming for a revenue increase and improved profitability in fiscal 2024. The company's focus on expanding its premium tire lineup, specifically the ENLITEN brand, and cost reduction strategies through supply chain improvements and partnerships, is central to its business plan for the coming year.
Key Takeaways
- Bridgestone reported a decrease in truck and bus tire sales in key regions but saw an increase in premium tire sales, accounting for over 57% of revenue.
- The company's revenue for 2023 was JPY 4,300 billion, with adjusted operating profit at JPY 480 billion.
- Aiming for a revenue of JPY 4.4 trillion and adjusted operating profit of JPY 530 billion for 2024.
- Plans to focus on expanding its premium tire segment, specifically the ENLITEN brand.
- Strategic initiatives include cost reduction, strengthening global management, and investing in R&D and partnerships.
- A proposed dividend of JPY 210 per share for fiscal 2024, up from JPY 100 in 2023.
Company Outlook
- Bridgestone anticipates revenue growth and improved profitability by 2024, with a focus on retail sector improvements.
- The company is cautious about the volatile Latin American market but sees opportunities in Asia, particularly India.
- A conservative sales forecast is in place, with potential price increases.
Bearish Highlights
- The company faces challenges in Europe's retail sector and potential risks in Latin America and the global OE business.
- There is a need to reduce high-cost product inventory in North America and to adjust strategic investments downward.
Bullish Highlights
- Bridgestone remains optimistic about future growth, especially in North America, and has maintained or increased market share despite challenges.
- The company plans to launch new products in North America, Europe, and Asia, aiming to secure spots in major retailers.
Misses
- Adjusted operating profit fell slightly to JPY 480.6 billion in fiscal 2023.
- The company's ROIC fell below target at 8.7%.
Q&A Highlights
- Bridgestone conveyed optimism for the company's future performance, aiming for an operating profit of JPY 530 billion for the fiscal year.
- They discussed their focus on expanding sales in various regions and improving cost efficiency.
Bridgestone is positioning itself to navigate a challenging business environment by focusing on high-value products and services, reducing costs, and leveraging strategic partnerships. The company's emphasis on premium tires and solutions, along with its cautious yet optimistic approach to market dynamics, underscores its commitment to strengthening its global presence and improving shareholder value.
InvestingPro Insights
Bridgestone Corporation (BRDCY) remains a key player in the Automobile Components industry, as reflected in the stability and consistency of its financial performance. With a market capitalization of $29.06 billion and a Price/Earnings (P/E) ratio of 11.94, the company presents an attractive valuation in comparison to industry peers. Investors may find comfort in Bridgestone's ability to maintain a steady dividend payout, having raised its dividend for 3 consecutive years and maintained payments for 32 years, which speaks to its financial resilience and commitment to shareholder returns.
The company's profitability is also noteworthy, with a Gross Profit Margin of 38.48% over the last twelve months as of Q1 2023, indicating efficient operations and a strong pricing power within its market segment. This is further underscored by a Revenue Growth of 13.35% during the same period, showcasing Bridgestone's capacity to expand its revenue streams despite market fluctuations.
InvestingPro Tips for Bridgestone highlight its low price volatility and moderate level of debt, which are indicative of a stable investment with managed risk. Additionally, Bridgestone's liquid assets exceed its short-term obligations, providing a cushion against market uncertainties and enabling the company to pursue strategic initiatives such as the expansion of its ENLITEN brand and other premium tire segments.
For investors seeking further insights and tips on Bridgestone Corporation, InvestingPro offers additional analysis and metrics. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 6 more InvestingPro Tips available at: https://www.investing.com/pro/BRDCY, which can provide a deeper understanding of Bridgestone's financial health and market position.
Full transcript - Bridgestone Corp (BRDCY) Q4 2023:
Unidentified Company Representative: I would like to thank all of you for coming to Bridgestone's Financial Results Presentation for 2023. First, I would like to introduce to you the participating members. We have Global CEO, Representative Executive Officer, Shu Ishibashi; Mr. Masahiro Higashi, Global COO; Shida Yoshikazu, Global CCO; and Naoki Hishinuma, Global CFO, and Executive Director, Global Finance. These four members will participate from our side. I would like to first of all invite Mr. Shu Ishibashi, Global CEO and Representative Executive Officer, to present the summary of financial results for 2023, including review of mid-term business plan '21 to '23, as well as business plans for 2024.
Shu Ishibashi: Hello, everyone. I am Shu Ishibashi, Global CEO. First, I would like to explain the financial results for 2023, and provide review of 21MBP, and business plans for 2024. 2023 was the final year of the 21 MBP, which was announced in February, 2021. Our goal was to become a strong Bridgestone capable of adapting to change. In addition, looking ahead to our next three-year plan, the 24MBP, we have been driving initiatives to lay foundation for premium enhancement and its evolution with the solutions business. However, last year, there was significant decline in truck and bus tires for replacement mainly in North America, Europe, and in China, and we were unable to sufficiently adapt to the change. In particular, accuracy in demand sales forecast in North America and Europe, as well as weak business and channel foundations in Europe, which were exposed by the challenging business environment remained as issues. Additionally, we consider monitoring signals to respond to change as in the case of the sharp devaluation of currency in Argentina, which negatively impacted our financial results as new issue. As we have not yet returned to a strong Bridgestone capable of adapting to change, our top priority in 2024 is to improve and reinforce business quality. On the other hand, we have been reinforcing our structure to produce and sell premium tires throughout the 21MBP. And we have completed laying the foundation for premium enhancement. Linkage with the solutions business was partially achieved having firmly confirmed and qualified what to do and what not to do. Unfortunately, financial results for 2023 landed below our full-year forecast announced in February of 2023. Compared to the 2023 targets in the 21MBP, which was announced in February of 2021, with tailwinds for currency exchange, revenue, adjusted operating profit, and net profit amounts, as well as planned dividend all exceeded targets. However, ROIC, our most important KPI, fell below target, leading an issue in improvement of business quality. Next, I will explain details of our results. Our revenue was approximately JPY 4,300 billion. Although the sales volume declined due to significant demand decline for TB replacement tires in North America and in Europe was large negative factor, we secured increased revenue versus pervious year by achieving sales mix improvement through expanded sales of premium PS replacement tires, sales expansion of ultra-large and large OR tires, and with tailwind from currency exchange. The revenue portion of the solutions business excluding retail tired achieved our target of 20%. Adjusted operating profit was approximately JPY 480 billion, and adjusted operating profit margin was 11.1%. In addition to negative impacts on production costs from the raw material prices, energy cost and rising labor cost, conversion cost increased from deterioration in planned capacity utilization reflecting sales decline mainly for TB in North America and Europe, and decline in Asian and Japanese exports. We covered this through improvements in price and source mix, thorough expense management, and on-site productivity improvements in production, but with Argentina's hyperinflationary accounting negatively impacting profits by approximately JPY 10 billion, profit decreased versus pervious year. Excluding this impact, we increased profit from previous year. Net profit was 107% of previous year, an increase of JPY 21.5 billion. ROIC, our most important management index, was 8.7%, and did not reach our target of 10%. We are planning dividends to be JPY 200 per share, and will continue to improve on this. As for the situation in Argentina, which continues to change, in December 2023, we set up a countermeasure project which includes the management team in Americas as well as the finance teams at the global headquarters, and are reinforcing signal monitoring and countermeasures against change. The TB replacement tire business became a large negative factor in the 2023 financial results. In North America, demand was 82% of previous year, prior result was 86%. Even in the challenging environment we were able to achieve market share increase based on our strong business foundation. In Europe, demand was less than 80% of prior year, and sales were 70%. In this challenging environment, we were unable to balance price and quantity. Weak channel foundation along with weak customer base were exposed, and we lost market share. Accuracy in both demand forecast and sales forecast responding to change remains an issue. And we will work towards improving management quality as well as business and management quality. Global sales was 85% of prior year, impacted by the sales decline in North America and Europe, and ensuring a focus on premium, rather than pursuing overall sales volume, such as reduction of unprofitable business. As for PS replacement tires, in North America, sell-out demand gradually recovered from the second quarter and distribution inventory adjustment was completed by the end of first-half. Although demand recovery continued in the second-half, sell-in demand was slightly below previous year for the year. In Europe, total sell-in demand was approximately 90% of prior year, impacted also by the slow winter tire sell-out in the second-half. Reflecting this, distribution inventory adjustment is expected to take until the first quarter of 2024. In such an environment, we ensured our focus on premium rather than pursuing market share for overall PS tires sales in both North America and Europe. Also in Japan and in Asia, we drove premium enhancement, such as reducing sales of low rim diameter tires. Our global sales volume was approximately 90% of the prior year. Despite the overall demand not growing, demand for high rim diameter tires was solid, except in Europe. In North America, we expanded sales and maintained our market share from prior year. In Europe, although demand slightly increased from prior year, weakness in channel foundations, which is an issue, was exposed, leading to a decline in market share. Globally, sales grew to 100% of previous year, supporting our performance. I will now explain financial results by segment. In Japan and in China, Asia-Pacific segments, both revenue and profits increased year-on-year. In Japan, we thoroughly focused on premium for the replacement tire business, while a challenging environment continued for the OE business, reflecting the significant increase in sales of off-the-road tires for mining vehicle, as well as solid exports, both overall revenue and profit increased from last year. In Asia region, we advanced improvement of sales mix through a focus on premium. In Americas and Europe, Russia, Middle East, India, and Africa segment, although we increased revenue, we saw an inability to respond to change, especially largely impacted by the significant sales volume decline in TB and conversion cost deterioration due to the required production adjustment. In response, profit decreased, especially in Europe, weakness in management and business foundation was exposed. Next, I will review our 21MBP activities. First, regarding rebuilding earning power, along with the plan, we executed restructuring of tire plants and internal manufacturing sites and business portfolio of the diversified products business. With regards to manufacturing sites, we have restructured approximately 50 sites. Although we do not expect restructuring to be as much or large as in 24MBP compared to 21MBP, we plan to initiate the second stage of restructuring and rebuilding in order to focus on premium, as for expense and cost structure reformation, as well as we reduced fixed costs by approximately JPY 20 billion in the 21MBP through promoting initiatives such as consolidating offices in Japan, improving business productivity and efficiency globally, focusing on structural reformation of fixed cost. Variable cost also helped maintain competitive variable cost ratio by executing optimization of logistics cost and unit price, and improving efficiency in logistics despite the impact of inflation. In the 21MBP, we promoted management focusing on capital cost based on ROIC, our most important management index. In Bridgestone's own way, we are propagating the concept of ROIC to the Genba level [bettering] (ph) Genbutsu-Genba. Also, to firmly management investments and strategic resources, we established Global M&A executive meeting, where major projects are discussed with the global management team, and the structure to evaluate in the certainty of investment return based on ROIC. We will continue to strengthen the global controlling function in order to conduct periodic follow-up reviews and PDCA cycle. We believe the activities in themselves were good, but as for the results, we could not achieve the target of 10% of ROIC, which means insufficient earning power and ability to respond to changes. Although the gross profit OpEx ratio and fixed asset turnover improved, cash conversion cycle deteriorated due to the factors such as increased year-end inventories resulting from lack of management to cope with declining demand in North America and Europe, et cetera. In terms of ROIC, it will not only strengthening earning power, but also improving management and working and business quality is an urgent issue. Next, on establishing the foundation for premium enhancement mainly in 2023, despite the challenging environment, we thoroughly selected and executed investments in reinforcing production to drive premium enhancement. During the 21MBP, we invested a total of approximately JPY 160 billion. For passenger car tires, we replaced manufacturing equipment in order to manufacture high rim diameter tires and ENLITEN product, and also made investments for production enhancement. In OR, reinforcing the production to manufacture our Dan-Totsu product "MASTERCORE". For truck and bus tires, we started reinforcement of our Thailand plant, our global supply source, as well as our plant in the U.S. However, based on recent demand and sales decline, we are adjusting investment timing and speed. To reinforce our foundation for linkage with the solutions business, we invested approximately JPY 150 billion of strategic resources. In addition to the reinforcement and enhancement of retail and service, retread and mining solutions, in 2021, we acquired Azuga, a digital fleet solutions provider in the U.S., laying the foundation to establish our mobility tech business in North America. We are also gradually investing resources and to adapt to the needs of new mobility, such as for the development of digital tire sensors. Regarding laying the foundation for premium enhancement, we are close to completion. Throughout the 21MBP, we captured most of demand increase, and achieved sales expansion of high rim diameter tires. Even under the challenging business environment in 2023, focusing on the premium and the passenger car tire segment contributed to the improvement of sales and mix and supported the Group's performance. When you connect it to our growth from 2024 onwards, including [undertaking] (ph) and replacement tire [encourage] (ph) and demand from OE tires. In addition, we established foundation for premium focus in each region, including strengthening sales of premium tire brand. The sales portion of premium tires in 2023 was 57%, and it will continue to grow in 2024 as well. The core of passenger car on the premium tire is to introduce products equipped with ENLITEN. We launched four products in 2023 in North America and Europe, such as Turanza EV, EV-specialized tire in North America, and Turanza 6 in Europe, as you see on this page. We will continue to create social value and customer value by launching new products customized to each market, and Sharpen edge in Japan, Asia, and other regions. Another core of premium tire is to expand MASTERCORE, our Dan-Totsu product, and sales of mining tires. Under the challenging business environment, we achieved increase in sales volume and improvement of market share as the business which supports the Group's performance. We will continue to strengthen it, establishing the foundation to enhance mining solutions. Regarding evolution with solutions business, that we achieved partially, we clarified what to do and what not to do, back in June, 2023. What to do is to focus on the reinforce solutions which amplify value of premium tires, reinforce to promote retail and service and commercial BtoB solutions. In terms of retail and service, we began initiatives to reinforce retail services size in North America and Japan. For commercial solutions, we enhanced retread in North America and Japan, as well as mining and aviation solutions, and established "Fleetcare" concept centered around North America. We will continue further enhancement. To clarify what not to do, we determined loss-making and unprofitable projects one by one. Consumer solutions such as MOBOX was determined to be a failure due to challenges with the business model. And as a result, we decided to discontinue it. Also, for retread in Europe, which is unprofitable business, we will promote rebuilding with limited customers. Likewise, for retread in Asia, we will make improvement with limited areas and customers. Regarding retail and service, we drove initiatives to strengthen and improve steadily in the United States, leveraging 2,200 equity stores which served as growth enabler for the premium tire business; we realized enhancement of service and improvement of business quality. In 2023, its profitability improved as a standalone business as well. In 2024, we will promote further strengthening and expansion, including the challenge for a new store format. We also continue to reinforce tread in North America and Japan. In North America, we achieved sales expansion and market share increase of retread based on the strong business foundation even under the challenging business environment. In Japan, we reinforced and expanded TPP, which is a solution that integrated retread and maintenance. As a market leader, we will create demand for retread and contribute to sustainability. Here is the 2023 performance by business portfolio, which reflect our execution and results, including the initiatives I mentioned so far. As for revenue portion, the premium tire business accounted for slightly more than 60%. The solutions business, including retrial tire, accounted for approximately 30%, and the diversified products business accounted for 7%. As we explained at the beginning, the premium tire business resulted higher revenue and lower profits versus the prior year, but the solutions business saw growth versus prior year due to strong retread in the U.S. The performance of diversified products business also steadily improved although there is still more to do. Next, I will explain the business plan for 2024, the first year of the 24MBP. We will respond to both remaining issues from the 21MBP, as well as respond to new issues for 2024, making the return to a strong Bridgestone capable of adapting to change our number priority, we will focus on the following three points; reinforcing business structure globally, the second stage of restructuring and rebuilding, and further focus on value creation or the creation of new premium. In the 24MBP, the plan for 2024 is positioned as a period in which we will have a clear idea on resolving remaining issues from the 21MBP, as well as new issues, and in which we will build the foundation to drive transformation, in 2025 and 2026, as the true next stage, the original intention for the 24MBP. Our three axis for management; tackle past negative legacy squarely, without delay, focus on execution and delivering results for immediate issues, and lay foundation for future growth will not change. To reinforce business quality, which is our most important issue, we believe it is essential to reaffirm and re-penetrate the Bridgestone DNA, on-site Genbutsu-Genba, and at a global level. Bridgestone received the Deming Application Prize, in 1968, for the first time in the tire industry. Aiming to earn the prize, the company established the Deming Plan in the 1960s. Based on the basic thought good company quality makes good quality of products and services. And under the five concepts, PDCA, why-why analysis, standardization explained by using accurate data and controlling important points, we have continued to drive Group-wide quality improvement initiatives. These are all strongly reflected in our mission, serving society with superior quality. I am determined to once again firmly penetrate this basic thought and activities within the global management team, and accomplish a Bridgestone-like improvement in management quality and business and working quality. To continue Group-wide quality improvement, in addition to our basics of 3S, "Seriri, Seiton, Seiso," we also need to ensure Seiketu & Shitsuke to maintain and make them a habit. Regarding business environment assumptions, which will be the premise for reinforcing earning power in 2024, economic trends, particularly in Europe, continue to be challenging. Even on a global level, high energy cost will continue and labor cost will significantly increase. There is also a need to continue closely monitoring and responding to geopolitical risks, including tire demand forecast, challenging conditions in the business environment is expected to continue for the first-half, and slowly recover in the second-half. As for TB replacement tire demand in North America and Europe, for which forecasting accuracy became an issue, in North America the compound annual growth rate between 2018, before COVID-19, and 2023 was 101%. This shows moderate growth as a medium-term trend. Meanwhile, for Europe, the compound annual growth rate for the same period was 97%. And we do not expect a major recovery in the medium-term. Now, concerning demand and our sales activity replacement tires for 2024, in North America, although distribution inventory adjustments will continue through the first quarter, and demand will decline versus prior year, demand from then onwards is expected to recover and exceed the prior year by close to 10% for the year. Sales will also prove to be challenging in the first quarter, but increase over the year. We aim to slightly increase market share for new tires, and expand our TB business, retread included. For Europe, major demand recovery from last year cannot be anticipated, and we expect about the same level. For our sales, we plan to launch new products and slightly increase market share, focusing on the premium segment. Based on the premise of promoting a focus on premium, such as reducing unprofitable sizes in Asia and Japan, we plan growth for global sales at 106% level versus the prior year. For passenger replacement tires, demand in North America is following a recovery trend, having bottomed out in 2023. And we expect sales to also recover from last year. In Europe, challenging conditions will also continue for passenger, with slow sell-out demand recovery, sell-in demand will also not recover significantly, and we expect the same level as the prior year. We will ensure our previous focus for sales, further reducing low-profit business such as the low rim diameter category. For passengers in total, we will reduce sales volume and decrease market share with intent. Factoring in demand growth in India, Southeast Asia, and other places, we plan increased sales versus prior year for global sales. Regarding PS high rim diameter tires, taking in the continuous demand growth globally, we plan on both sales expansion and market share increase. For sales in North America, we will increase market share based on Dan-Totsu products, and new channel development. Even in Europe, where we lost market share in 2023, we plan market share increase based on Dan-Totsu products, expansion of sizes, refining the wholesale sales structure, and rebuilding of the retail business. We will also drive sales expansion in China and on global basis. Based on sales expansion and market share increase of premium tires, for our financial plan for fiscal 2024, we plan JPY 4.4 trillion level in revenue increased to 103% compared to the prior year. Ensuring the reinforcement of earning power by driving both sales mix improvement and business cost reduction simultaneously, adjusted operating profit is planned to be JPY 530 billion level, 110% of prior year. We plan to return adjusted operating profit margin to our 2021 level of 12%. We are also aiming to return ROIC to more than 9% by making improvement efforts across the entire value change. As for shareholders' return, we will continue to drive improvement and forecast a dividend of JPY 210 per share. In the 24MBPs through next stage, we will continue growth and further reinforce earning power. Our target is to achieve JPY 640 billion level in adjusted operating profit and 13% level in adjusted operating profit margin by 2026. For the premium tire business, we plan adjusted operating profit margin of over 14% in '24, accomplishing turnaround from '23 results. By 2026, we will reinforce earning power and aim for 16% level in adjusted operating profit margin. We will provide details during the 24MBP announcement scheduled for March 1st. Here is the overall view of plan by business portfolio. In the Solutions business, we aim to achieve growth focused on retail and retread, targeting increase in revenue and profit versus prior year. In the diversified products business, we will also continue to improve the performance, sharply focusing on areas where Bridgestone's core competencies can be leveraged. And concerning specific initiatives for 2024, first of all, we will promote the expansion of Dan-Totsu products, ENLITEN, a new premium as a starting point for all. REGNO GR-XIII REP PS premium tire launched in last February is the first product equipped with ENLITEN in Japan. In Europe, we launched the latest generation of long-haul TV tire lineup, ECOPIA equipped with ENLITEN. In addition, in North America, we plan to launch a product equipped with ENLITEN for light trucks which responds to the last mile within this year. Regarding business cost down, we will create value by building new partnership with strategic partners, improving efficiency and reaping benefits from its scale merit. Promoting global supply chain management, logistic transformation and streamlining linked with BCMA including inventory reduction, nearby production etcetera. As for BCMA, base technology for manufacturing and R&D which streamlines development and supply chain and reduces cost of development and manufacturing, we will create benefit at global four model plants. Also, we will work on the improvements of manufacturing costs through steady productivity improvements. BCMA, Green & Smart activity and other details will be explained in the 24MBP presentation. For the second stage of restructuring and rebuilding, we will manage the overall European business as business unit under focused management and conduct elaborate PDCA cycle. We will improve management and working and business quality through introducing new talents and scheme, including dispatching talents from headquarters and establishing structure to reinforce on-site Genbutsu-Genba activities. Regarding retail in Europe, support from U.S. retail team, with strong business foundation started from October 2023 and we have began to revolt while confronting the challenges. We will continue to improve aiming to become profitable from 2026. Linked to this, we will also restructure and streamline sales structure for wholesales. For TV, we will further work on reducing unprofitable business and thoroughly strengthen sales for fleets and focus on premium. In terms of retread, we will rebuild in limited area and improve profitability. Other initiatives will be steadily promoted such as reinforcement of premium focus in China business, rebuilding the Thailand business to return to Dan-Totsu number 1 position, and restructuring channel in Japan to maintain and reinforce Dan-Totsu number 1 position. The foundation of this plan for 2024 is new global management structure that values Bridgestone's DNA, Genbutsu-Genba. We divided the global region into 47 area and clarified their roles and responsibilities as business units. We have initiated the structure that will enable us to respond to change promptly by thoroughly monitoring signals, visualizing issues and conducting PDCA cycles. Finally, I will explain the resources to execute these plans. Capital investments including strategic and ordinary investments totaled JPY 420 billion in 2023, which was approximately 1.3x versus 2022 and JPY 430 billion is planned for 2024. Of this amount, strategic investment will be at the level that exceeds JPY 160 billion in both '23 and '24 mainly in reinforcement of premium tires. Under the challenging business environment, we will continue to reinforce and enhance investments. R&D investment will be maintained at a JPY 120 billion level or nearly 3% of revenue. In addition, we will reinforce injection of R&D resources in the solutions business in the 24MBP, JPY 7 billion level of resources is planned for 2024. More details will be explained at the 24MBP presentation in March. Total strategic resource including investment and expenses amounted to approximately JPY 250 billion in 2023. In 2024, from the perspective of certainty of investment returns and ROIC, we will further focus on injecting resources in the premium tire business and continue to reinforce it. Approximately 50% of the total strategic resource is planned to be for the premium tires. For the solutions business as well, we will invest resources mainly in retail and service and retread in North America and Japan. This is all regarding the explanation of our plans for 2024. In 2024, we will drive our initiatives, placing the highest priority on returning to a strong Bridgestone capable of adapting to change. The overall review of the 24MBP will be explained at our IR Day scheduled on March 1st. We appreciate your continued support, and thank you very much for your attention.
Unidentified Company Representative: Thank you very much. That was the midterm business plan summary for the previous three years ending which ended in 2023 as well as the business plan for 2024 and the new midterm business plan. To continue, we would like to turn to Mr. Naoki Hishinuma, who is the Global CFO and Executive Director of Group Finance financial results for fiscal 2023 as well as your forecast.
Naoki Hishinuma: My name is Hishinuma. And so, I would like to cover consolidated business performance and 2023 full-year as well as the consolidated, the depreciation for 2024. This is my agenda. So, I am going to start here, which shows the consolidated performance. Business and financial performance for fiscal 2023, JPY 4,313.8 billion increase over the prior year. However, the adjusted operating profit was JPY 480.6 billion slightly down from the prior year. Sales declined as well as hyperinflationary accounting affected the results. To add a little more on hyperinflationary accounting, from Argentina, it was back in December 2023 that the Government of Argentina announced the modern devaluation more than 50% devaluation of Argentinian Peso. And then, a company which based on the IAS, the group retrospectively applied the fiscal year end currency rate to value and translate from the beginning of the fiscal year. Looking at profit attributable to owners of the parent which is JPY 331.3 billion, we take note that, although in the prior year, we had loss factors such as impairment losses from business operating assets in Russia and the Bridgestone Cycle's recall costs. Those losses became smaller in this fiscal year, and so the net profit in the current fiscal year saw 10% increase from the prior year, ROIC come to 8.7%, 0.7 percentage point decline. As to the changes from the projection, this is up in revenue, but down in terms of profit. We recognize as the executive summary, the points which was made by our CEO. Net lack of response of new to address changes has become apparent and the goal of becoming a strong based on capable of adapting to change has to continue. Now overview of the performance, setting aside the sales in that region, there was four passenger car and light truck tires, and the sales decline was witnessed. However, for the passenger car, high rim diameter tires above 18 inches and mining tires performed well. Now full-year business environment, currency exchange both USD and Euro appreciated against Japanese Yen. Raw materials, the feedstock prices of raw materials declined versus prior year and due to the spike of energy, labor and other costs of raw material supplies. As a result, the overall purchase cost of raw materials became almost the same level on this prior year. Higher demand for the OE segment, although there were differences by region tire demand continue to recover and increased. And the production level at the OEMs recovered by the improvement of semiconductors and tires. Replacement in tires, especially decline in TBR demand versus prior year, in mainly U. S. and North America. And we do recognize that global in total, the sales decline was there. And therefore, the new tire sales in the OE segment, this is the tire sales performance although it was signed recovery owing to the recovery of the OEM operations, in the replacement segment, particularly the prolonged, the economic slowdown in Europe affected the resource outcome which was pointing to the tone of decline. Warm winter pointed to the decline in winter tire demand in Japan. ORR, the ultra-large at 105%, large size at 104%, in particular, highly profitable on the mining tires continue to sell strongly. As a result of the continuation of the focus on the premium zone, passenger car above 18 inches high rim diameter performance stood out to be 108% of the prior year. Here is the consolidated financial results looking at the various analysis. Please take note that in order to make it more straightforward, we changed the clarification from the prior year and previous classification to the new one. In particular, [Veras] (ph), Argentina subsidiary and hyperinflationary accounting were affected in all of the factors. We are showing these factors separately. So, let us focus on the new classification. The negative input on inflationary, on the energy and labor costs were offset and covered by the selling prices, the mix improvements. However, due to this lower demand, the sales volume impact was quite negative, which is not enough to be offset by the tailwind from the Yen depreciation and the slight decline in net results. Before on the hyperinflationary accounting, we would have seen JPY 8 billion increase in the adjusted operating income. By segment, as we mark before in Japan and China, Asia-Pacific, other regions, we saw up both on revenue and operating profits. However, in other segments, up in revenue but down in operating profits. Now as to the full-year projection back in February '23, appointed have been due to lower adjusted operating profits other than in Japan. The consolidated financial results and byproduct on the fiscal 2023, passenger car and light truck tires backed by the Yen depreciation up in revenue and operating profits, margin owing to the volume decrease and changes in composition between OE and replacement segment, that change was down the margin. However, the above 18 inches premium tires saw expansion supported the mixed up element. And this sort of margin erosion was kept at 0.4 percentage points. Truck and bus tires in North America and Europe on the sales of tires decreased. And owing to the production adjustments, conversion cost worsened and this was down both in revenue and adjusted operating profit margin also came down by 3.3 on the percentage points. Specialties, the sales performance improved to increase further for the mining tires as well as the tailwind of Yen depreciation. So, upfront revenue and operating profit margin improvement by 1.6 percentage points. Diversified product and business in total increased in revenue and adjusted operating profit margin improved by 1.0 percentage points. So, the balance sheet and cash flow statement, total assets was JPY 5.427.8 billion up by JPY 465.6 billion is affected mainly by the exchange factor. Equity ratio improved by two percentage points to 61.8%, free cash flow of JPY 363.7 billion positive net income increase and the improvement in the operating capital conditions. So, on the year-end here, the improvement, capital expenditure even in the severe business environment, that continues to focus on laying foundation for the future growth. So, that in the premium focus continued to enhance production, IT infrastructure investments continued and so the capital expenditure in total was JPY 420 billion. As regards to fiscal 2024, we forecast revenue of JPY 4.430 billion, up 3% from the previous year and adjusted operating profit of JPY 530 billion up 10% from the previous year. The adjusted operating income margin is expected to improve 0.8 points year-on-year to 12%. Net profit is projected to be JPY 359 billion, an increase of 8% from the previous year. The net profit includes approximately JPY 63 billion from the gain on sales of fixed assets announced today, which will be used to implement the second stage of restructuring and rebuilding in areas where remaining issues were identified in the 21MBP. ROIC and ROE are expected to improve from the previous year to 9.4% and 10.6%, respectively. The assumptions underlining the forecast are shown here. We expect the business environment in general to be difficult, especially in the first quarter to the first-half of the fiscal year. As for the exchange rate, we expect the Yen to appreciate versus the previous year. And for raw materials, both natural rubber and crude oil prices are expected to rise from 2023 levels, which will continue to be a factor in lowering profits. In terms of demand for tires for new vehicles, we expect demand to be generally on par with the previous year, although there will be some differences by region. And in the replacement market, the recovery trend from the second half of 2023 is continuing. So, we are forecasting moderate recovery with some regional differences. Demand for passenger car tires 18 inches and larger, PS HRD is expected to continue to grow moderately, especially in the U.S. and Europe. This is our tire sales forecast for the full-year of 2024. Sales of tires for passenger cars like trucks and trucks and buses are expected to increase year-on-year in the replacement market. In Europe, sales of passenger car tires for the replacement market are expected to decrease slightly from the previous year due to reductions in low profit areas. Sales of tires for mining use off the road tires are expected to remain firm at the same level as the previous year due to solid demand for minerals. In addition, sales of premium tires for passenger cars 18 inches and larger are expected to continue to grow steadily with double-digit year-on-year sales growth projected for the full-year. I will now explain the factors behind the year-on-year increase or decrease in the adjusted operating profit forecast. We expect an increase in sales volume and mix on the back of global sales growth of replacement tires and expansion of premium tire sales. On the other hand, conversion costs are expected to deteriorate slightly from the previous year, taking into account cost increases due to continued inflation. As for operating expenses, to in addition to the increase in variable costs due to higher sales, for fixed cost 2, we have factored in the effects of wage increase and inflation. In this difficult business environment, we will strengthen our business structure and reinforce our earning power and we forecast a JPY 64.4 billion increase in profit year-on-year excluding exchange rate effects. Next, I will explain the projections by segment from 2024. We have partially changed segmentation, transferring the India business to Asia-Pacific, India, and China. So, it will now be Europe, Middle East, and Africa segment. And for the Japan segment, sales are expected to increase, but profits are expected to decrease and the margin is expected to decrease by 2.2 points. In addition to the negative impact of the stronger Yen assumptions compared to the previous year, the main factors are the decrease in profit in the new vehicle tire business with its severe profitability and the negative impact of index linked prices of mining tires due to a shift in the period recognition. In other segments, we increased an increase in both revenue and profit as well as improvement in margins. Now to shareholder returns, the Company's basic dividend policy is to strive for stable and continuous dividend increases through sustainable enhancement of corporate value with a target consolidated payout ratio of 40% based on comprehensive evaluation of the medium term earnings forecast, investment plans, cash flow and other factors in addition to the Company's business performance and financial position for the relevant fiscal year. In accordance with this basic policy, we plan to pay a year-end dividend of JPY 100 per share for fiscal 2023 as announced in February 2023 for an annual dividend of JPY 200 per share, an increase of JPY 25 from the previous year. For fiscal 2024, we plan to increase the dividend by JPY 10 from 2023 to JPY 210 per share for the full-year. We will continue to strive to meet the expectations of our shareholders through stable and continuous increases in dividends linked to business performance. This is the end of my presentation. Thank you very much for your kind attention.
A - Unidentified Company Representative: Now, we would like to ask five analysts that we have asked prior to this presentation to receive questions. Now to start with, I would like to ask Mr. Kakiuchi from Morgan Stanley Securities to begin, please. Kakiuchi from Morgan Stanley Securities, thank you.
Shinji Kakiuchi: My first question, the capability to respond to changes was not enough is what you said. Reasoning of demand situations in Europe and other abrupt changes in the situations, how swiftly and ideally you were able to respond and that's what you were referring to. The optimization, not only globally but by region and local, is something that you have been pointing out from time to time. What do you need in order to enhance the capacity to respond? Is that a matter of the entire organization? Is it to do with the structure, whatever particular maybe aspects in order to become once again a strong Bridgestone once again, what do you think is needed?
Shu Ishibashi: Yes, I did say that we were not sufficient enough to be able to respond to changes. It has to do with the overall organization wide, the character or the tendency that we have or the fundamental strengths even, which can be broken out into different elements; 47 business units that we have now after reorganization, which means that the distance between 47 -- each of the 47 and the ground that you operate on, it has become much closer so that each manager and the person responsible, they should be able to respond. Well, east versus west. The eastern area region has been segmented very, very meticulously. And when I speak of the capacity to respond as an organization, that's one key point. To be close to our customers, that is the Genbutsu-Genba, the so-called DNA of Bridgestone. That's the first point. Number two, that is how being aware and being able to respond to what's taking notice on the management level. As we have 47 business units, those SBU heads have to recognize or have to feel that something is changing. Something is amiss. What's the issue? That has to be noticed and acknowledged much more swiftly. The sensitivity to that, the incipient and the signs of change, this should be taken note of, among others. I talked about the sales projections and how the conditions were starting to change. If we were able to take note of the initial signs of change, then we should have been able to respond more effectively. We took too much time to get to the adjustments or the changes to the production plan. That came too late. That ended up with a very massive increase in the conversion costs. The sales decreased as well as conversion costs increased. So, it affected both the sales operations and the manufacturing operations. So, the managers in charge have to be able to take note of the earliest of the signs of change. And then, once we take note of the beginning of the signs of change, then we would be much faster in trying to respond to that or to come up with the actions which can be taken so the awareness they change. Then the supply chain management and the structural setup, structural framework can be adjusted to become much more meticulous. Not only production, not only sales, but supply chain as well, all have to be tied together much more closely. And the third point that I would point out here is that as we have the overall framework and mechanism, so I did refer to how many people matters and the structural framework and the mechanism for another. What I next think is that how we went through the process of the demand projections as well as the sales forecast and projections. That overall mechanism can be refined or have to be refined. So, by combining all of the three points that I believe I identified, we should be able to become a much better organization with more detail, or the much more meticulous, the much more sensitive, much heightened sensitivity to signs of change. And much more meticulous in the way of acknowledging and then identifying, defining the initiatives to be taken. Now, this is something which is not meant to be focused only on the Japanese, not only on the non-Japanese. And from the all different tiers of the organization, all different regions, Japanese, the Europeans, and the North Americans, and different tiers of the organization, particularly on the management level. These all have to be done this year. That's the sense of issue that I have. Now, under the executive committee that we have, the global team, in February we are going to have a meeting in Japan in Kurume, Kyushu. That is where everyone is going to gather. This is where the Bridgestone's operation first began, looking at factories that we have there, as well as the facilities. My expectations would be that executives gathered there that would have the first-hand opportunities to be able to take note of the things going on, which hopefully will get to the better.
Shinji Kakiuchi: And my second question is Europe, which is in the West. The number of production units that are planned for this year, including India and Middle East, I believe is expected to decline. So, is it that you're still trying to reduce the inventory on the manufacturer side? Also in the HM plan, you are going into the second stage of restructuring. And the restructuring to be expected is not as large as the previous three years. But especially for TBR, the production capability, even if it returns to the earlier stage, will have some difficulty maintaining the level. So, is there a possibility of some kind of reduction in the operations or production capabilities?
Shu Ishibashi: As you know, we had Betoon in Europe, which was closed. And at present, we are not thinking of a major closure of a plant. But for each plant, reduction in the production is being considered, especially for trucks and buses. Production reduction is considered. And to meet that there will be some reorganization within the plants. And for the passenger, low rim diameter tires, production reduction is started already -- has started already. So, the major manufacturing site will not be closed. But from the start, there will be a plant management, including the reduction of the production level. And that will be carried out in Europe starting this year. And this will improve the situation over last year. High rim diameter premium tires, they will obviously continue to be strengthened. Thank you very much. For this year, for the financial, Mr. Hishinuma explained. But the cost may be impairment. In Europe, there will be some kind of measures taken this year. And they will be actually accounted for in the BS of PL. I would like to take that up. As I mentioned earlier, there is no major restructuring, reorganization considered. But in Europe, there are things that I cannot talk about yet. But in Europe, retail, retread, there is a production site there. They are being challenged. And there would be some negative impact that we cannot avoid, to be honest with you. Thank you very much.
Unidentified Company Representative: Thank you, Mr. Kakiuchi. Next, I would like to ask Mr. Sakaguchi of Mizuho Securities.
Tairiku Sakaguchi: Thank you. I'm Sakaguchi of Mizuho. Thank you very much. I have two questions myself too. In North America, TB inventory, could you give us some more details in the third quarter results? Not only dealer, but manufacturers' inventory had built up and they needed to be adjusted, especially for the manufacturers. How have you been able to reduce the inventory? There is production. And for the conversion cost, I believe that there seems to be some improvement in Americas. But, I just said OP, or maybe conversion cost, seems to be a factor for reducing the reduction in the profit. So, what is the trend you are seeing in the first quarter now?
Shu Ishibashi: For last year, too, we had been working on the manufacturer as well as the dealer's inventory. We do need to reduce the inventory on the part of manufacturers, and we have continued to work on this. In North America, for trucks and buses, there are local production, and also there are imports from Japan and Asia. So, there are two parallel lines. In case of the imports from Asia and Japan, there has been a reduction, definitely. But local production adjustment has been carried out very severely, but the level of this adjustment may not have been sufficient. The reason for that is because sales forecast has been at the core of the issue, and the actual number was much, much lower than what we had expected. So, the production reduction had to be actually implemented in advance, very widely. And we did do that in North America, too, but the sales had been lower than what we had forecasted, and the amount of the reduction has not been enough. And there has been reduction in the imports from Asia, and that has --
Unidentified Company Representative: So, in that sense, at the end of last year, there was a lot of high-cost product inventory, and that is the present state of North America. And this year, well, that's been shifted to the next year, and it's not a large inventory, but it is higher than we had expected. And in the first quarter, naturally, we will have to follow this. And for the first quarter, with regards to the dealer of inventory, the major dealers see, I think, a big reduction in their inventory, but the smaller and medium dealers still have inventory, so it will take until the second quarter because of that. And in January, our TB flash numbers, basically, our share, market share is going up, and as a whole, still, the situation is quite severe. So, first quarter, yes, a severe situation will continue, but the manufacturer inventory will gradually come down, and then that will make it healthy, and we can maintain a balance. So, that's what we are doing, and after the second quarter, I think it will be better. And last year, with regards to dealer inventory, well, compared to the usual dealer inventory, I would say that it was about 1 million higher, and gradually, it is coming back to the normal state. And that will be reflected in the actual numbers. So, the sell-in demand is from 106 to 110, and the higher than the normal inventory, if that comes down to the normal state, or if we keep this in consideration, then I would say it would be about 2% to 3% higher than the previous year. So, that's the level that we are thinking about right now.
Tairiku Sakaguchi: Thank you very much. My second question, in 2024, by business portfolio, what is your forecast solution, you'll have increased revenue and increased profit with high profit. Retail will grow stably. So, retail profitability improvement is, I think, a big factor, and as has been introduced from before, the background and how sure this is. And what kind of measures are you taking for improvement if you could explain that?
Unidentified Company Representative: Yes, earlier, with regards to the directly managed stores in the United States, there was an explanation. Can you show that? As you can see here, from 2021, on a continuous basis, I think we are seeing a good state. And with customers, and the direct operated stores in the U.S., 25% is tire sale, and 75% is maintenance service or car automobile care or maintenance of the automobile. So, this kind of maintenance work, demand can be exposed, and service be provided. That's very important. So, as you see here, to increase the vehicle checks, and you have to have a deep relationship with customers in order to do that. So, in terms of maintenance service, for example, you can say in three months, you have to replace this, or in half a year, you have to replace this. And that would raise customer retention, also raise the customer satisfaction. And in that way, the retail side will improve. And with retail, there could be more focus on premium products, and the tire profitability would be raised. So, gradually, that's how things are getting better. And with regards to retail, in the Genba in the field, I have a lot of trust in the top managers. And with regards to retail, we will continue to input resources. And we will also develop new formats in the U.S. It will start to steer. So, quality enhancement will be the next stage. And I think we are seeing better user experience. In other words, we are building up the foundation. So, in that sense, in North America, retail stores maintain directly. I think it is getting better. And the second point is that last year, or not just last year, but they have continued to have a large deficit in retail in Europe. From spring to summer last year, we've had discussions about what to do. And so, the team in the U.S. from October have entered the Genba, and they are working together. And to what extent can you do the kaizen and reduce the deficit? It's that kind of activity. And with that, as a whole, the retail sector will improve. And the other big retail market is Japan. And in Japan, we have new B Select, which is a network building that started. And it is focused on the premium tires. So, steadily, I think we should see an improvement. And therefore, within our solution, retail business itself, and as discussed for MTB, will steadily improve. And then, the global retail network, because it exists, the premium tires can see sales expansion. So, I think that is very solid. We call it enablers. And with that, we have the customer touchpoints ourselves. And we have our own stores and we have partners who work together with us. And with that combination, I think that we can go forward.
Tairiku Sakaguchi: Thank you.
Unidentified Company Representative: Thank you, Mr. Sakaguchi. Now, turning to Mr. Maki from SMBC Nikko Securities.
Kazunori Maki: Maki from SMBC Nikko. Thank you very much.
Unidentified Company Representative: Thank you.
Kazunori Maki: One question, about return -- shareholder return, you said that over mid-term about 50% dividend ratio has been met in for. Now comparing from the prior year, this is what we see here 1 percentage point improvement expected. And I am sure that taking opportunities that you capture that you continue to enhance the shareholder returns. Now I would like to hear your view on that once again. And then, also on the [indiscernible] assets, strategic investments, what I get as a sense is that most recently maybe [indiscernible] adjusting down the overall level or the magnitude of strategic investments. So, what is your thinking now including on the share buyback? So, at least for this fiscal year what would you do? And what will be your expectations in terms of the shareholder return? Thank you.
Unidentified Company Representative: I would like to ask our CFO to respond on that.
Naoki Hishinuma: But, deployment of resources, by 2030, I mean, there is '23 aspiration on the plan that we have. And it's been coming down in terms of -- 2023 level expected. The new MTPB points to slightly on the lower level of strategic investments. Now it's 1.5 times. We were thinking of doubling that. But given the most recent situations, to start only with investments in which they are certain. So, about 1.5 times that is my sense of the deployment of the strategic resources. As to the allocation of strategic resources, I will go into details in the beginning of March. Return policy is that 40% in dividend ratio is something that we would like to preserve, that's shareholder dividend. So, the beginning -- the initial business plans and if we continue in that respect and in that direction, this is exactly the amounts that you see here. Of course, there's any upside that we realize and we would consider under federal return more aggressive on the return to shareholders. Share buyback, our basic thinking is, of course, it's one option in the general definition of shareholder return, however, strategic investments -- the balance between the buyback, the end the dividend payout. So, everything has to be taken in a good balance. And as to how much we spend for the strategic investment purposes and how much that means.
Kazunori Maki: Well, I hear what you said. So, there are certain -- I have a sense that as you get even closer on the fiscal year end, then you probably and will continue to decide on what you can do more, hopefully?
Naoki Hishinuma: Well, of course, we always aim higher that is the spirit of this management. So, as we do so if there are circumstances allow us do an even higher, we may do that.
Kazunori Maki: Thank you.
Unidentified Company Representative: Thank you very much, Mr. Maki. Now from Citigroup Markets in Japan, Mr. Yoshida, would you please?
Arifumi Yoshida: Yes, thank you. My one question is as follows. In this fiscal year, JPY 530 billion the existing operating profit, what is the certainty of being able to accomplish that? How confident are you? For the past several years, the EU remained rather conservative. But, you basically accomplished the target. Last year, you came down a little bit in terms of adjusted operating profit. So, I guess in order to aim for the certain level of the accuracy or the probability of the accomplishment you may have to become somewhat more conservative. But what do you think?
Unidentified Company Representative: I would like to ask CFO to respond.
Naoki Hishinuma: Risk versus opportunities would mean that in terms of opportunities starting in the second half, demand conditions will slope up. But how quickly is it going to exceed our anticipation then that wouldn't be another opportunities that we can identify. But conversely risk would be that Latin American economy, very volatile situations. We do have to keep that as a potential resource.
Shu Ishibashi: On top of that -- this is Shu Ishibashi speaking. Opportunities would mean that there is always the sense of speed and taking actions and there should be opportunities for transformation due to transformation in Europe, and they are losing businesses. What more we can do much more quickly and so that at least we can be able to minimize the magnitude of loses in North America and many areas. And they are driving overall global performance of the entire group, how we can accelerate the speed there. And this year, Asia, Southeast Asia, and India where last year the overall foundation and infrastructure and that became solidified, India is a growing market. Bridgestone is recognized as a top running in India. All the more, I have a strong expectation towards Indian operations opportunities. It should be there. Risk would be as spoken by Mr. Hishinuma, the instability in Latin America at large. And also, global OE business that's on the passenger OE business globally severity that has been persistent is getting more and more severe if any. So, there is a risk and uncertainty. That's it. Thank you.
Arifumi Yoshida: Thank you very much.
Unidentified Company Representative: Thank you, Mr. Yoshida. So, we will have the final person to ask question and that will be Mr. Sakamaki of Daiwa Securities.
Shiro Sakamaki: Thank you very much. I would like to last ask question. Up until now, before Mr. Shu Ishibashi was a CEO, the sales were actually built up from the Gemba. But, there are fixed cost and the currency were actually added from the head office. Is this the way in which these were built? Last year, there is a sales and demand forecast. And I think the way in which they were formulated has changed since last year. Is that your sales forecast is more conservative? Sell prices are going to be increased. But, I think it is not easy to raise the prices. I believe that you have just mentioned that there will not be a major increase in demand. Would you be able to continue to use the same formula in building these forecasts? Or, is it way that you are actually being conservative in doing so?
Unidentified Company Representative: Now, first of all regarding the top line, as I mentioned earlier, for passenger and for TV we tend to expand sales, that is our plan. I don't know whether it's conservative or aggressive. But, I believe that in Europe and in North America and in Southeast Asia, India and Japan, we have built up the numbers. And we have the reasons why we have been able to focus that. Therefore, I think that they are realistic targets. Also, at the bottom there is improvement. Conversion cost had been very volatile last year. And this year too energy cost and labor cost had stayed at the very high level. And as a result, they could be a negative factor. But, we make steady efforts to reduce the business cost. In the '24 MTBP, this will make a major contribution to global procurement and logistics related ways retread BCMA. In '24 it's only making smaller contribution. But as we move towards '24 MB, we will have more contribution and steady productivity improvement. They need to be planned well. And for truck and busses in North America if the demand comes back, there will be increase in sales. Even under a very challenging conditions in North America, the products that we are good in the fleet business and commercial dealer network and retread which is our strength. And we have a very strong package. And we have been able to maintain it. We did not destroy it. Therefore even in this very difficult environment, we were able to improve the share. So, what we have been able to maintain and increase the share is something that will give us security. So, as the demand increases, I know that top line will increase for sure. And this is true also for the OE and retreads. And for the passengers, general, we will try to intentionally reduce it in Europe. But for the passenger premium, demand is strong. Therefore, we will have new products and new size in United States, Americas, Europe, and in Asia. We will launch many products and for the channels too. Although in Europe it is not strong, but we will improve it. And in North America as I mentioned earlier, we will try to develop new partners. We will have independent partners. As I mentioned earlier before, there are major retailers, large ones throughout United States, and we as Bridgestone if we secure a stock, we can actually make it very stable. We can actually secure a spot in the store. And where we can actually secure those spots in the store is very important. And once we secure those and once we do have the possibility and forecast that we will be able to do that, the future for North America will be brighter. And in retail, we have a very strong movement. Although it is not easy, we do see a rather stable strong trend. So, if we continue our efforts and actually accomplish what we had started with, I think the future is bright. You say that we did not do well last year. But by making the steady efforts and in June last year for mid-term, we had actually confirmed each of these steps one by one. And, some were not doing well. But, some were doing very well. There were some solid items. And we actually sort of built the whole based on what is strong. But of course, there are things that may happen suddenly like the case in Argentina. But, we do need to become a very strong company. That'd be a good answer?
Shiro Sakamaki: Thank you very much.
Unidentified Company Representative: Thank you very much, Mr. Sakamaki. So, we would like to close the Q&A session here.
Unidentified Company Representative: So, with that, FY2023 briefing on the results will come to close. We thank you for your participation.
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