Bridgestone Business report FY2008

Business Highlights

Financial Overview
(in millions yen) FY2008 FY2007 Rate of change (%)
Sales 3,234,405 3,390,218 (4.6)
Operating Profit 131,550 249,961 (47.3)
Ordinary income 74,488 219,016 (66.0)
Current net income 10,412 131,630 (92.1)
Tire segment
Sales 2,629,150 2,755,992 (4.6)
Operating Profit 92,756 195,036 (52.4)

Major Factors
Tire Segment
-Despite the Company's efforts to boost sales by launching new products and enhancing its global production structure with a focus on its strategic areas, revenues decreased from the previous year's result due to falling vehicle sales worldwide and slumping demand also in the replacement market in the fourth quarter.

<Japan>
-Unit sales of tires for both OEMs and the aftermarket decreased year-on-year.

<Americas>
-In North America, unit sales of tires for passenger vehicles, small trucks, trucks and buses to both OEMs and the aftermaket decreased from the previous year's results.
-Unit sales of strategic products including UHP tires for the aftermarket largely increased from a year ago.

<Europe>
-Unit sales of both passenger vehicle tires and small truck tires decreased from the previous year's results due to a drop in sales in the OEM market.
-Sales of strategic products such as UHP tires and runflat tires for the aftermarket rose from a year ago.
-Unit sales of truck and bus tires for the OEM market increased from last year, but those for the aftermarket decreased due to the impact of the slumping economy.
-Sales of special tires such as radial tires used in large construction vehicles greatly increased from a year ago supported by continuously favorable demand for these products.


Contracts
-Bridgestone-brand Dueler(TM) H/L 400 tires are original equipment for Toyota's all-new next-generation Highlander sport utility vehicle (SUV). Currently, 15 other Toyota vehicles come standard with Bridgestone- and/or Firestone-brand tires, including the Avalon, Camry, Camry Solara, Corolla, 4Runner, FJ Cruiser, Land Cruiser, Matrix, Prius, RAV4, Sequoia, Sienna, Tacoma, Tundra and Yaris. (From a press release on Jan. 10, 2008)

-Bridgestone-brand Potenza(TM) tires are original equipment on the all-new 2008 Pontiac G8 performance sedan. (From a press release on Feb. 27, 2008)

-Bridgestone-brand Dueler(TM) tires are original equipment on the latest installment of Toyota's sport utility vehicle (SUV). 2008 Toyota Land Cruiser is available with Bridgestone Dueler H/T D684 II tires in size P285/60R18 114V. (From a press release on Apr. 10, 2008)

-The Company announced that it has begun supplying its sporty performance "Ponteza RE050" for factory installation on the Mercedes Benz SL-class. (From an article in the Nikkan Jidosha Shimbun on Jun. 14, 2008)

-Bridgestone-brand Potenza RE050A(TM) tires are original equipment on the 2009 Cadillac STS touring sedan. (From a press release on Jul. 25, 2008)

-Bridgestone Firestone North American Tire, LLC (BFNT) exclusively equips the 2009 Infiniti FX with Bridgestone-brand Dueler (TM) tires. Three other Infiniti vehicles come standard with Bridgestone-brand tires including the G35 Sedan, G35 Coupe and M45. (From a press release on Sep. 8, 2008)

-Bridgestone Firestone North American Tire, LLC (BFNT) announced that the 2009 Toyota RAV4 Sport will be available with Bridgestone-brand Dueler H/L 400 (TM) Run-Flat tires (RFT) in size P235/55R18 99H as part of the Sport Appearance Package. (From a press release on Oct. 2, 2008)

-The Company announced that it has started supplying ECOPIA EP25 tires as standard equipment for Toyota Motor's "IQ," to be launched in Europe in the beginning of 2009. (From an article in the Nikkan Jidosha Shimbun on Nov. 18, 2008)

-Bridgestone Firestone North American Tire, LLC (BFNT) is supplying Bridgestone-brand Potenza(TM) RE050A(TM) tires as original equipment for the 2009 Nissan 370Z sports coupe. (From a press release on Nov. 20, 2008)

-The Company supplies its Run-Flat tires as original equipment for the NISSAN GT-R SpecV. (From a press release on Jan 30, 2009)

-Bridgestone Corporation is supplying its Run-Flat tires as original equipment for the BMW X6. (From a press release on Feb. 6, 2009)


Business Partnership
-The Company and Toyo Tire & Rubber Co., Ltd. announced that they have agreed to enter into comprehensive business and capital alliance agreement. By joining hands in the areas of production technology and procurement or producing products for each other on consignment, the two companies will try to keep their competitiveness against emerging powers with low-priced products. (From an article in the Nikkan Jidosha Shimbun on May 17, 2008)


Overseas Investment
<Thailand>
-The Company announced that it will enhance the production capacity at its passenger car tire plant in Nong Khae, Thailand.
-The Company will increase production of steel cord, reinforcement material for a tire, in Thailand in 2009.

<China>
-In Dec. 2008, the Company announced that it has held an opening ceremony at its new synthetic rubber plant in Guangdong Province, China.

<Hungary>
-In Apr. 2008, the Company announced that it held an opening ceremony of a new plant in the outskirts of Tatabanya, Hungary that has just begun operations.

<Mexico>
-In Oct. 2008, the Company announced that the company has inaugurated a plant producing carbon black in Mexico.

>>>See Investment for more details


Restructuring
<U.S.A.>
-Bridgestone Americas Tire Operations (BATO) announced that it has made the decision to cease passenger and light truck manufacturing at its LaVergne, Tennessee, USA tire plant due to negative economic conditions. The company will implement a layoff beginning in mid-March 2009. Truck tire manufacturing will continue at LaVergne. (From a press release on Jan. 22・ 2009)

-Firestone Industrial Products Company, LLC (FSIP) announced that it will close its Noblesville, Ind., air spring plant. The closure is expected to occur in the second half of 2009. The Noblesville plant produces industrial and automotive air springs, used as both original equipment and in the aftermarket. The facility employs about 300 teammates. (From a press release on Sep 16, 2008)


Joint-ventures
-The Company announced that it has concluded a joint venture agreement with Sundaram Industries Ltd. in India for production of anti-vibration rubber for automobiles. The agreement to establish a joint venture called "Bridgestone TVS India Limited" was signed on December 3・ 2008. The new company is to be established in the spring of 2009, capitalized at 358 million rupees and invested 51 percent by Bridgestone and 49 percent by Sundaram. It will be headquartered in Chennai, Tamil Nadu, employing the workforce of about 700. The two partners have been in agreement on technical assistance for the anti-vibration rubber business since 1996. (From an article in the Nikkan Jidosha Shimbun on Dec. 5, 2008)


>>>Financial Forecast for the Next Fiscal Year(Sales, Operating Income etc.)

R&D

R&D Expenditure
(in millions yen) FY2008 FY2007 FY2006
Overall 93,200 86,700 86,600
Tire segment 74,300 68,900 71,400


Number of R&D facilities
  North America Central
& South America
Europe Middle East/
Africa
Asia/
Oceania
Japan Total
Technical Center 1 0 1 0 1 2 5
Proving
Ground
2 2 2 0 3 2 11


Domestic R&D facilities
R&D Facility Location
Technical Center Chuo-ku, Tokyo
Technical Center for Diversified Products Totsuka, Yokohama
Bridgestone Proving Grounds Nasushiobara, Tochigi
Hokkaido Proving Grounds Shibetsu, Hokkaido


Overseas R&D facilities
Country City
Technical Center
U.S.A Akron, Ohio
Italy Rome
China Wuxi
Proving Ground
U.S.A Fort Stockton
Columbiana
Mexico Acuna
Brazil San Pedro
Italy Castel Romano
Aprilia
Thailand Nong Khae
Indonesia Karawang
China Wuxi


New Testing Facility
-The Company announced that its subsidiary Thai Bridgestone Co. Ltd. had inaugurated a new proving ground in Ayutthaya. The testing facility built at a cost of one billion baht consists of a high speed circuit and test tracks reflecting various road conditions in Thailand and other Asian countries, including roads with specific surfaces. The new proving ground is built in an area of about 530,000 square meters, which encompasses a variety of facilities, including a 3.3-kilometer long high speed circuit track, comprehensive test roads expanding to an area of about 48,000 square meters, test roads specific to check noise, vibration and harshness, as well as maneuvering and wet road performances. (From an article in the Nikkan Jidosha Shimbun on Jan. 27, 2009)


R&D Activities
-The Company announced that it has reached an agreement with Central Glass Co., Ltd. on joint development of fire-retardant electrolyte for lithium-ion secondary batteries, which are highly expected to spread as automotive batteries for driving. As the combination of the fire retardant, developed by the Company and Nippon Chemical Industrial Co., Ltd. and sold by the latter company, and the electrolyte developed by Central Glass has proved both superior battery performance and a safe, fire-preventive feature, they will jointly work to optimize the electrolyte for early practical application. (From an article in the Nikkan Jidosha Shimbun on Oct. 28, 2008)

Investment Activities

Capital Expenditure
(in million JPY) FY2008 FY2007 FY2006

Overall

275,300 272,300 261,300

Tire business
(Consolidated)

247,900 240,800 230,800


Overseas Investment
<Thailand>
-The Company announced that it will enhance the production capacity at its passenger car tire plant in Nong Khae, Thailand, in a bid to cope with sales increase in Thailand and the global export market. By investing 10 billion yen in total, the company will build a production structure able to produce 6,000 units more per day by the end of 2010. This will boost the daily manufacturing capacity at the Nong Khae plant to 36,500 units. (From an article in the Nikkan Jidosha Shimbun on Jan.23, 2008)

-The Company will increase production of steel cord, reinforcement material for a tire, in Thailand. The steel cord production will be boosted from the current 28,000 tons a year to some 38,000 tons in early 2009, and up to 40,000 tons by the end of the year. Out of a total investment of 2 billion yen, about 300 million yen will be spent on production equipment by the end of this fiscal year, as construction work including expansion of the building has already been completed. (From an article in the Nikkan Jidosha Shimbun on May 27, 2008)

<China>
-The Company announced that it has held an opening ceremony at its new synthetic rubber plant in Guangdong Province, China. In response to increasing demand for high-performance tires in China, the new facility will manufacture 50,000 tons of styrene-butadiene rubber (SBR) yearly for use in tires made at its plants in China and other parts of Asia. The new plant is called Bridgestone (Huizhou) Synthetic Rubber Co., Ltd. Built on 200,000 square meters of land in Huizhou City, Guangdong Province, it employs 210 people. (From an article in the Nikkan Jidosha Shimbun on Dec. 9, 2008)

<Hungary>
-The Company announced that it held an opening ceremony of a new plant in Hungary that has just begun operations. The new plant is the first fully-automated tire production facility in Europe for the Company. The Company plans to raise the daily production capacity to 8,000 units by 2009 for high-performance tires and large rim-sized tires for passenger cars and light commercial vehicles. The plant, about 660,000 square meters, was built on the outskirts of Tatabanya, Hungary at a cost of about 190 million euros (approx. 30.4 billion yen) to mainly produce radial tires for passenger cars and light trucks, employing 200 people. (From an article in the Nikkan Jidosha Shimbun on Apr. 7, 2008)

<Mexico>
-The Company announced that the company has inaugurated a plant producing carbon black in Mexico. The new plant annually produces approximately 35,000 tons of the raw material to be used as a reinforcing material in tires for its tire plants in North, Central and South America. The manufacturing facility of Mexico Carbon Manufacturing S.A. de C.V. (MXCB, Altamira, Tamaulipas, Mexico) has a floor space of approximately 430,000 square meters and a workforce of 100. It started operation in May 2008. (From an article in the Nikkan Jidosha Shimbun on Oct. 21, 2008)