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5. Bridgestone Corporation Business Report FY ended 2014

Factors
1) Tire Segment
<North America>
-In December 2014, the Company attributed it's stagnant financial performance for the year 2014 to the slow economic recovery in North America. The Company explained that the sales of its passenger car tires increased steadily in North America, while those of the tires for mining vehicles were sluggish due to the slow economic recovery in the region. The Company projects a 3% to 4% growth in the global tire market in 2015 and forecasts that its business performance will improve. When the Company announced its half-year financial results in August, it revised its full-year net sales forecast for 2014 downward to 2.3% increase over the previous year, from 6% growth announced at the beginning of the term. (From an article in the Nikkan Jidosha Shimbun on December 3, 2014)

<Japan>
-Sales volume of passenger car and light truck tires increased year-on-year, partially due to last-minute demand seen before the consumption tax hike in April 2014. Sales volume of truck and bus tires also grew from the previous year.

<Europe>
-Sales volume of passenger car and light truck tires decreased year-on-year, while that of truck and bus tires increased year-on-year.

<Asia/Pacific>
-Sales volume of passenger car and light truck tires remained the same as the previous year's levels. Sales volume of truck and bus tires climbed from the previous year.

<China>
-Sales volume of passenger car and light truck tires increased year-on-year. Sales volumes decreased significantly from the previous year in truck & bus tire segment.

Brand Strategy

-The Company intends to make Firestone a global tire brand by 2019. The Company currently sells original-equipment tires under the Firestone brand in North America and Mexico only. It intends to expand this supply network to other regions and enhance Firestone brand image. By improving the brand image, the Company hopes to increase Firestone tire sales in the aftermarket. The company will clearly differentiate its two brands, the Bridgestone and the Firestone, by positioning the Firestone below the Bridgestone. The global sales expansion of the Firestone tires will help the Company to achieve its regional revenue goals set in its midterm business plan and to upgrade the value of the Bridgestone brand. (From an article in the Nikkan Jidosha Shimbun on October 21, 2014)

Restructuring

<USA>
-Bridgestone Americas, Inc. announced plans to relocate its headquarters to downtown Nashville in a newly constructed facility slated for completion in mid-to-late 2017. The new headquarters will house more than 1,700 employees - 1,100 currently based in Nashville, Tennessee, USA and 600 more jobs from three out-of-state business units that are being relocated to the city. The planned 514,000-square-foot, 30-story headquarters building will break ground in early 2015. The new headquarters will be home to Bridgestone Americas' corporate staff and supporting functions, as well as Bridgestone Americas Tire Operations, LLC; Bridgestone Retail Operations, LLC; Firestone Building Products Company, LLC; and Firestone Industrial Products Company, LLC. (From a press release on November 11, 2014)

<China>
-The Company will consolidate its Strategic Business Units (SBUs) to manage its tire operations in China and Asia Pacific. The Company currently operates six tire SBUs in six regions: Japan, Americas, Europe, China, Asia Pacific, and Middle East & Africa. The tire SBU in China, Bridgestone (China) Investment Co., Ltd., will be integrated into Bridgestone Asia Pacific PTE. Ltd. (BSAP) effective July 1, 2014. BSAP currently oversees the Company's tire operations in Asia and Pacific excluding China, but will be reorganized as the SBU which manages operations in China as well as Asia and Pacific. BSAP's abbreviations will be changed to BSCAP. By integrating the two tire SBUs, the Company intends to make the best use of its management resources for emerging countries where further growth is expected. After the integration, the Company's global regional tire SBUs will be five. (From an article in the Nikkan Jidosha Shimbun on May 13, 2014)

Major Contracts

-Major contracts gained in FY ended Dec. 2014       *RFT stands for Run Flat Tire.

Awards

-Bridgestone Americas, Inc. announced that its Wilson, North Carolina tire manufacturing plant recently received three Green Factory Environmental Achievement Recognitions at Honda's 22nd annual Environmental, Safety and Ergonomics Symposium. The Bridgestone Wilson tire plant produces more than 32,000 passenger tires each day. Honda recognized the Wilson facility in three categories: energy reduction, natural resources and pollution prevention. (From a press release on December 8, 2014)

-The Company announced that Bridgestone Europe has been awarded the BMW Supplier Innovation Award 2014 in the category "Efficient Dynamics", in recognition of the Company's new ologic technology for tires developed for the BMW "i3" electric vehicle. The Company is currently exclusive tire supplier to BMW "i" vehicles, supplying Ecopia EP500 tires with ologic technology for the urban all-electric BMW "i3" and Potenza S001 sport tires for the BMW "i8" electric hybrid model. (From a press release on October 15, 2014)

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

Product Development

Natural Rubber Extracted from Guayule
-The Company will begin pilot production of tires using natural rubber extracted from guayule, a plant cultivated by the Company in arid areas in the U.S., in mid-2015. The Company intends to create a new supply source of natural rubber in response to growing demand for tires in a long term as well as in preparation for a shortage of Para rubber trees, a traditional source of natural rubber, whose growth is subject to bad weather conditions and diseases. The Company has celebrated the grand opening of its Biorubber Process Research Center (BPRC) in Arizona, the U.S. More than 30 researchers and technicians will work at BPRC to research and develop processing technologies for extracting natural rubber from guayule. The Company runs a research farm in Arizona to research the genetic improvement of guayule and agronomic techniques for growing it. The company will hasten to optimize cultivation and develop processing technologies for guayule, aiming to commercialize tires made from guayule natural rubber by the mid-2020s. (From an article in the Nikkan Jidosha Shimbun on November 28, 2014)

Acceleration Sensor Installed Inside the Tire Tread
-The Company has developed a new technology to estimate remaining tread-depth with an acceleration sensor installed inside the tire tread. The new technology enables the wireless transfer of information on acceleration to an in-vehicle analyzer that estimates tread wear of the tires. A system incorporating the new technology encourages a driver to rotate or replace the tires as needed, enabling optimal management of tires. The Company expects demand for the new system mainly in tires of trucks and other commercial vehicles. The Company will further conduct practical testing of the new technology and reduce the size and weight of the system, aiming to put it to practical use in several years. (From an article in the Nikkan Jidosha Shimbun on November 17, 2014)

Studless Winter Tires in China
-The Company announced that it will release the Blizzak G01 studless winter tires in China in September 2014. The Blizzak G01 will be a new addition to the Blizzak snow and ice tire series targeted at the China market, offering excellent snow driving performance, outstanding performance in dry road conditions, and excellent fuel economy. The Blizzak G01 uses Blizzak series' original foamed rubber compound technology, while adopting a new, asymmetric tread pattern. Fifty-two types of Blizzak G01 tires will be available, ranging from 14 to 19 inches in size. (From a press release on September 19, 2014)

ECOPIA "ologic" tire - Larger diameter with narrower width
-The Company's Ecopia EP500 ologic tires will be original equipment on the BMW "i3", a mass-market electric vehicle of BMW Group. The new tire features the Company's "ologic technology" which combines the tire's larger diameter with narrower width to significantly improve both fuel efficiency and safety. As the exclusive tire supplier for the "i3", Bridgestone will supply revolutionary eco tires. (From an article in the Nikkan Jidosha Shimbun on January 20, 2014)

Co-development

-The Company and Kao Corporation announced that they have jointly developed a new highly-functional rubber material that enhances the tire's wet grip performance and improves the vehicle's fuel efficiency. The 100% plant-derived material was developed by combining Bridgestone's "Nano Pro-Tech" compound technology with Kao's interface control technology used in developing detergent products. The new material can use a larger amount of silica and improve dispersibility, which increases the vehicle's braking performance by 12% on wet road surfaces. The Company aims to employ the new material in its tires, which will be fitted to various automobiles from passenger cars to construction vehicles. (From an article in the Nikkan Jidosha Shimbun on November 20, 2014)

Number of R&D Facilities

R&D Facilities in Japan

R&D Facilities Outside Japan

 
Tire division's major investment projects
-New plants in the U.S. and Thailand to produce radial tires for construction and mining vehicles (currently under construction)
-New plants in Vietnam and Russia to produce radial tires for passenger vehicles (currently under construction)
-Capacity expansions in China and Hungary

Investment Outside Japan

<Mexico>
-The Company announced that it has held a groundbreaking ceremony for its new polyurethane foam plant for automotive seats in Guanajuato, Mexico. The new plant, which will be operated by Bridgestone Automotive Products de Mexico, S.A. de C.V., is scheduled to start operations in the first half of 2015. It will be able to produce polyurethane foam for approximately 360,000 vehicles per year. There are expected to be about 100 employees by 2017. (From a press release on May 30, 2014)

<China>
-The Company's subsidiary in China, Bridgestone (Shenyang) Tire Co., Ltd. (BSSY), held the opening ceremony of its new plant in Shenyang Economic & Technological Development Zone (in Shenyang, Liaoning Province). The subsidiary is the Company's fully owned radial truck and bus tire manufacturing company in China. The new plant has a land area of 395,000 square meters. It is capable of producing approximately 5,000 radial tires per day.

<Vietnam>
-The Company announced that Bridgestone Tire Manufacturing Vietnam Limited Liability Company (BTMV), its Vietnamese subsidiary, has held an opening ceremony for a new passenger car radial tire plant in the Dinh Vu Industrial Zone of Hai Phong City. The plant started production in April 2014 and will increase its production capacity to approximately 10,000 tires per day by the end of 2014. BTMV's capacity is expected to reach approximately 49,000 tires per day in the second half of 2017. The plant will serve as an export base for replacement passenger vehicle tires sold in the U.S., Europe, and Japan. (From a press release on October 24, 2014)

<Russia>
-The Company announced that it has broken ground on its new passenger car radial tire plant, which will be called Bridgestone Tire Manufacturing C.I.S. LLC, in the Zavolzhye Industrial Zone, Ulyanovsk Oblast, Russia. The new plant, which will cover approximately 81 hectares, is scheduled to start operations in the first half of 2016. It will manufacture passenger car radial tires, including winter tires, for the Russia/CIS market. Production capacity is expected to reach 12,000 tires per day during the second half of 2018. At about the same time, the plant is expected to employ some 800 people. (From a press release on April 2, 2014)