Bridgestone Corporation Business Report FY ended Dec. 2016
Financial Overview |
(in millions of JPY) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | Rate of change (%) | Factors | |
| Sales | 3,337,017 | 3,790,251 | (12.0) | - |
| Operating Profit | 449,548 | 517,248 | (13.1) | - |
| Ordinary income | 432,534 | 507,303 | (14.7) | - |
| Current net income | 265,550 | 284,294 | (6.6) | - |
| Tire Division | ||||
| Sales | 2,759,274 | 3,168,218 | (12.9) | 1) Sales were the result of the factors below, as well as negative currency translation resulting from the appreciation of the yen. |
| Operating Profit | 414,711 | 472,762 | (12.3) | - |
Factors
1) Tire Division
-Unit sales of tires for passenger cars, small-sized trucks, regular-sized trucks, and buses were higher year-on-year.
-The North American tire-sales business sold more tires for passenger cars and small-sized trucks year-over-year, while it sold fewer units of tires for regular-sized trucks and buses due to a decrease in sales of new trucks and buses.
-Unit sales of tires for passenger cars, small-sized trucks, regular-sized trucks, and buses were higher year-on-year.
<China/Asia/Pacific>
-Unit sales of tires for passenger cars, small-sized trucks, regular-sized trucks, and buses were higher year-on-year.
Divestitures
-Bridgestone Americas, Inc. announced that it has reached an agreement to divest its business in Venezuela, Bridgestone Firestone Venezolana C.A. (BFVZ), to the Corimon Group. This divestiture follows BFVZ deconsolidation in the third quarter of 2015, and a strategic decision to prioritize Bridgestone’s growth and investment in other Latin American markets. (From a press release on May 23, 2016)
Company Awarded Favorable Ruling in Design-Infringement Lawsuit
-The Company announced that it has received a favorable ruling in its lawsuit for infringement of design rights against Chinese major tire manufacturer Triangle Tyre Co., Ltd (Triangle Tyre). Triangle Tyre had been manufacturing and selling tires using a tread pattern for studless tires that Bridgestone holds exclusive design rights to. In October 2013, Bridgestone filed a lawsuit with the Intermediate People's Court in Changchun, China, claiming that the activities of Triangle Tyre constituted an infringement of its design rights. In July 2015, Bridgestone's claim was upheld, and the court ordered Triangle Tyre to cease manufacture and sale of tires that use the tread pattern and pay damages to the Bridgestone. While Triangle Tyre appealed the ruling, the High People's Court in Jilin Province upheld the original ruling in January 2016 at an appeal trial, resulting in a victory for Bridgestone. (From an article in the Nikkan Jidosha Shimbun on May 20, 2016)
Mid-term Management Plan
-The Company announced that it has made its new "2016 mid-term business plan" for the years 2017 to 2021. The new business plan is an update of the 2015 mid-term business plan, and includes new strategies and measures to reflect changes in business environment and future prospects. The Company has set a new target of becoming "a true global company" and "being far ahead of the others in the industry in every respect," and will cultivate global corporate culture, develop human resources capable of global management, and upgrade the global management structure. The Company will strengthen its competitiveness by introducing its cutting-edge "Examation" tire assembling system utilizing information and communication technologies (ICT) with a new artificial intelligence (AI), to its plants outside Japan by the end of 2016. The Examation system has been only deployed at the Company's flagship Hikone Plant so far. (From an article in the Nikkan Jidosha Shimbun on October 18, 2016) -The Company has introduced the new "Examation" tire assembling system, which utilizes information and communication technologies, at its Hikone Plant. Bridgestone has converted its material processing expertise, and data 480 quality categories for single tires into algorithms. The new Examation system uses artificial intelligence (AI) to automatically control tire assembling processes based on these proprietary algorithms. The new system achieves automatic control of all assembling processes and offers an improvement of more than 15% in tire uniformity. The Examation system will be used to manufacture series-produced tires that are 17 inches and smaller. The company plans to introduce the new system into its other plants in and outside Japan successively. The Hikone Plant, which is the first to introduce the new system, is a facility specifically designed for manufacturing passenger car tires. The plant has a daily production capacity of 53,000 units and is one of the largest passenger car tire plants in the Bridgestone Group. Since labor shortages have become the norm at the Hikone Plant, the introduction of automation to save manpower savings has become necessary. With the introduction of the new system, Bridgestone is aiming to increase production capacity at the Hikone Plant by 1.4 times. (From an article in the Nikkan Jidosha Shimbun on June 14, 2016)
Major initiatives of "2016 Mid-term Management Plan"
| Innovation (technology,business model & design) |
|
| Enhance and expand sales network |
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Major Contracts
-Major contracts gained in FY ended Dec. 2015
| Product | Installed models |
| Tire - BRIDGESTONE brand, FIRESTONE brand | Honda "Ridgeline", Nissan "Infiniti Q60" |
| DUELER H/P SPORT | Maserati "Levante" |
| ECOPIA | Nissan "NOTE e-POWER", Mitsubishi Fuso Truck Bus "Canter" |
| ECOPIA EP150 | Daihatsu "MOVE Canbus", Suzuki "Ignis" |
| ECOPIA EP160 | Honda "Clarity Fuel Cell" |
| Ecopia H/L 422 Plus | FCA US "Dodge Durango" |
| POTENZA RE050A | Fiat "Abarth 124 spider", Suzuki "Alto works", Toyota "Voxy ZS" G's "","Noah Si "G's"" |
| POTENZA RE050A, DUELER H/P SPORT | Toyota "C-HR" |
| POTENZA S001 | Mazda "Roadster", Toyota "86 GT "Aero package FT"" |
| POTENZA S001L RFT, TURANZA T005 | Toyota Lexus "LC500 / LC500h" |
| POTENZA S001, TURANZA EL450 | Alfa Romeo "Giulia" |
| TURANZA | Subaru "Impreza" |
| Turanza EL440 | Chrysler "Pacifica 2017 model Limited" |
Awards
-September 2016: The Tosu and Hikone Plants were awarded the 2015 Supplier Quality Excellence Award from GM.
-July 2016: The Company was awarded the Foundational Principles Award from FCA US.
-July 2016: The Company’s subsidiary in Brazil, Bridgestone do Brasil Industria e Comercio, was awarded the Supplier Quality Excellence Award from GM.
-March 2016: The Company was awarded the Supplier of the Year Award from GM, for the 14th time.
-March 2016: The Company was awarded the Environmental Award, given by Honda in appreciate for excellence.
Outlook for FY ending Dec. 31, 2017
|
(in million JPY) |
| FY ending Dec. 31, 2017 (Forecast) |
FY ended Dec. 31, 2016 | Rate of Change (%) |
|
| Sales | 3,630,000 | 3,337,017 | 8.8 |
| Operating income | 452,000 | 449,548 | 0.5 |
| Ordinary income | 433,000 | 432,534 | 0.1 |
| Net income attributable to owners of the parent | 280,000 | 265,550 | 5.4 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
R&D Expenditure |
(in millions of JPY) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Overall | 95,400 | 94,900 | 94,100 |
| -Tire Division | 79,800 | 79,400 | 79,400 |
R&D Facilities
Number of R&D Facilities (as of 1 April, 2016)
| The Americas | Europe/Middle East Africa/Russia |
China/Asia Pacific | Japan | Total | |
| Technical Center | 1 | 1 | 2 | 2 | 6 |
| Proving Ground | 4 | 1 | 3 | 2 | 10 |
R&D Facilities in Japan
| R&D Facility | Location |
| Technical Center | Kodaira, Tokyo |
| Technical Center for Diversified Products | Yokohama, Kanagawa |
| Bridgestone Proving Grounds | Nasushiobara, Tochigi |
| Hokkaido Proving Grounds | Shibetsu, Hokkaido |
R&D Facilities Outside Japan
| Country | City |
| Technical Center | |
| U.S.A | Akron, Ohio |
| Italy | Rome |
| China | Wuxi |
| Thailand | Pathumthani |
| Proving Ground | |
| U.S.A | Fort Stockton, Texas Columbiana, Ohio |
| Mexico | Acuna |
| Brazil | San Pedro |
| Italy | Aprilia |
| Thailand | Nong Khae, Ayutthaya |
| Indonesia | Karawang |
| China | Yixing |
R&D Activities
Fleet solution using "Tirematics" IT system
-The Company announced that it has commenced verification tests of a fleet solution using its proprietary Tirematics IT system in Rio de Janeiro, Brazil. The verification tests started with four vehicles in cooperation with a Brazilian bus rapid transit (BRT) operator. The Tirematics IT system measures air pressure and temperature of tires for buses as well as commercial trucks using a tire pressure monitoring system (TPMS). Tirematics allows operators to remotely monitor real-time information about the tires as well as vehicle location. When the system detects abnormal tire air pressure or sudden temperature changes from a truck in service, the system will inform the service manager and the driver via an alert. This will make it possible to prevent unexpected operational troubles caused by tire failures. (From an article in the Nikkan Jidosha Shimbun on July 22, 2016)
The concept for a next-generation curb docking system
-The Company announced a joint-research project with Yokohama National University and the Japan Transportation Planning Association. The goal of the project is to enhance curb docking by enabling bus tires to more closely approach curbs in order to minimize the gaps between boarding entrances and bus stops. As the project's outcome, Bridgestone introduced the idea for a road edge slope that will enable buses to approach curbs naturally with minimal steering wheel manipulation. The road edge slope would serve as a means of controlling the angle of approach to the curb that is not dependent on the driver's skill level. In addition, Bridgestone formulated the concept of a next-generation docking curb together with a concrete shape proposal. This concept entails a rounded groove on the side of curbs to reduce the shock from tires making direct contact with the curb, and its tests were conducted. Based on quantitative data on the damage from curb contact collected through tests and simulations, Bridgestone anticipates that this material will help reduce wear to tire sidewalls by approximately 30 percent, and aims to complete these technologies and find practical application for them by the year 2020. (From a press release on December 16, 2016)
Next-generation synthetic rubber
-The Company announced that it has successfully synthesized polyisoprene rubber (IR) with a highly controlled molecular structure using its unique polymerization catalyst. Bridgestone says that the newly synthesized IR may generate a next-generation rubber that has superior performance to that of natural rubber. Bridgestone is aiming for practical application in the 2020s. (From an article in the Nikkan Jidosha Shimbun on December 14, 2016)
Product Development
-On December 19, The Company announced the launch of its new Alenza global tire brand for premium SUVs. The company will broaden its product range and boost its sales by launching the new brand targeted at SUVs, which are increasingly sold worldwide and offered in various models. The Alenza 001, the first of the new brand, will be released in Japan in February 2017. Bridgestone has marketed tires for SUVs and AWD vehicles under its Dueler brand. However, the tire manufacturer has established the new brand specifically targeted for premium SUVs because of increasing sales volume of luxury SUVs that are not intended for driving on rough roads, but are primarily for city commuting. The Alenza tires will be designed to mainly support on-road driving and unleash the power of high-performance SUVs. Bridgestone assumes that the new tires will be used for models like the Audi Q5 and Lexus RX. The company will sequentially release the Alenza tires in Japan and the rest of the world. (From an article in the Nikkan Jidosha Shimbun on December 21, 2016)
-Bridgestone Europe announced that it has been selected by Aston Martin as an official project partner for the new DB11 model to be launched later in 2016. This program sees Bridgestone support Aston Martin with a series of technical developments, durability testing and global media launches including use of its European Proving Ground in Aprilia, Italy. Bridgestone has worked closely with Aston Martin on tire development for many years, including projects such as the DB9, V8 Vantage S and Rapide and now the new DB11 will be fitted with Bridgestone’s UHP sports tire, Potenza S007. (From a press release on March 7, 2016)
-The Company announced that it will add four tire sizes, developed for mini vehicle use, to its Potenza "Adrenalin RE003" sports tire series, and that they will be released on February 15. The Adrenalin RE003 series employ a tread pattern which has both high levels of block rigidity and water-repellency developed though the Company's work engineering tires for motor sports. Adrenalin RE003 tires offer a nimble steering feel for anything from driving at high speeds, to normal commuting in a city. They are made from silica-blended rubber that offer superb grip on wet road surfaces. With the addition of the four new varieties, the Adrenalin RE003 tire lineup will consist of 41 different tire sizes. (From an article in the Nikkan Jidosha Shimbun on January 21, 2016)
Capital Expenditure |
(in millions of JPY) |
| FY ended Dec. 31, 2016 (Actual Result) |
FY ended Dec. 31, 2015 (Actual Result) |
FY ended Dec. 31, 2014 (Actual Result) |
|
| Overall | 194,100 | 253,500 | 296,300 |
| -Tire Division | 178,000 | 229,800 | 268,300 |
Investment Outside Japan
-The Company announced that its subsidiary PT Bridgestone Astra Indonesia (BSAI) held an opening ceremony for its new automotive anti-vibration rubber products manufacturing plant in Indonesia. The plant is the Bridgestone Group's first in-house production facility for automotive anti-vibration rubber products in Indonesia, and will start operations by the end of September. The plant will have a monthly production capacity of 300,000 units. Bridgestone Group has licensed out its technologies to a subsidiary of PT. Astra Otoparts Tbk, a manufacturer of auto parts in Indonesia, for automotive anti-vibration rubber products for the Indonesian market. Production will be transferred to the new plant of BSAI. The plant will adopt new production technologies to establish a system for supplying high quality products to clients such as automakers in a timely manner. The products will initially be supplied to vehicle manufacturers operating in Indonesia, and Bridgestone will consider exporting the products throughout the ASEAN region in the future. (From an article in the Nikkan Jidosha Shimbun on September 26, 2016)
-Bridgestone Americas Tire Operations announced the expansion of the company’s passenger tire manufacturing facility in Wilson, North Carolina, with an official groundbreaking ceremony. The company will invest USD 164 million in the five-year project. Phases one and two of the investment, which will total nearly USD 100 million, will focus on the addition of 167,000 square feet of manufacturing space to increase plant capacity by 3,000 tires per day, bringing daily production to 35,000 by 2018. (From a press release on March 9, 2016)
-The Company announced that it will establish an automotive seat foam plant in Niagara County, New York, U.S.A. The plant, which will be called the Sanborn Plant, will serve as the Company's third seat foam production base in the U.S. and the eleventh in the global market. The new facility will have a floor area of 65,000 square feet (approximately 6,000 square meters) on 11 acres (approximately 45,000 square meters) of land. The Company will lease this building from a local developer, and will invest USD 5 million (approximately JPY 600 million) in manufacturing equipment. Operation is planned to begin by March 2017, with full-scale production expected to start around June-August 2017. Seat foam will be supplied for Japanese OEMs' vehicles sold in North America. This project is expected to create approximately 60 new jobs by the end of 2017. (From an article in the Nikkan Jidosha Shimbun on December 18, 2015)
-Bridgestone Canada Inc. announced that it is expanding its Canadian passenger and light truck tire manufacturing facility in Joliette, Quebec, as part of a five-year investment that could total upwards of CAD 300 million (approximately USD 250 million). The multi-phase expansion of the facility is expected to break ground in 2016, and will help the plant meet market demand by producing larger diameter tires that fit today’s pickup trucks and SUVs. The overall project will help increase plant capacity by 3,000 tires per day to bring daily production to 20,000 tires per day by 2023. The Joliette facility produced its 150 millionth tire in 2014. (From a press release on February 26, 2016)