Bridgestone 2014 Mid-term Management Plan Masaaki Tsuya CEO and Representative Board Member Concurrently Chairman of the Board, Bridgestone Corporation Oct 16, 2014 Today’s agenda 1. Introduction 2. 2014 MTP (priority issues) 3. 2014 MTP (management targets) 4. Ultimate Goal MTP: Mid-term Management Plan Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 2/27 Today’s agenda 1. Introduction 2. 2014 MTP (priority issues) 3. 2014 MTP (management targets) 4. Ultimate Goal Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 3/27 1. Introduction (Summary of 2013 MTP) Ultimate goal Mission and Foundation Basic Stance Reform Tools To become a truly global company To achieve “Dan-Totsu” - The Bridgestone Essence - Lean & Strategic (L&S) - Group Global Optimization (GG Optimization ) - SBU Organization - MTP • Cultivating global corporate culture Priority issues • Developing human resources capable of global management • Upgrading the global management structure Communication, Teamwork, & Bottom-Up Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 4/27 1. Introduction (Summary of 2013 MTP) 2013 Management targets Qualitative goal : - Maintain our commitment to the Bridgestone Essence, & our basic stance (L&S and GG Optimization) - Secure both growth and profitability - Always aim for “ the higher level ” position (continuous Kaizen) - Promote innovation Quantitative goal Growth : Exceed the industry average Overall : Consistently deliver ROA 6% and OP10% Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 5/27 Today’s agenda 1. Introduction 2. 2014 MTP (priority issues) 3. 2014 MTP (management targets) 4. Ultimate Goal Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 6/27 2. 2014 MTP (priority issues) (1) Culture : cultivating global corporate culture A. Clarify brand strategy B. Technology & business model innovation C. Continuous Kaizen (2) HR: developing human resources capable of global management (3) Structure : upgrading the global management structure A. Governance : B. Tire SBUs : C. DP business : enhancement of governance systems restructure the tire business SBUs expansion of the Diversified Products business Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 7/27 2. 2014 MTP (priority issues) (1) Culture : cultivating global corporate culture A. Clarify brand strategy (a) Elevate / redefine the Bridgestone Logo (“B Mark”) : Bridgestone Mark Bridgestone Mark B Mark Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 8/27 2. 2014 MTP (priority issues) (1) Culture : cultivating global corporate culture A. Clarify brand strategy (b) Integrated brand strategy including diversified products • Major Brand (Tire & Diversified Products) • Globally unified/aligned • Major Brand (Tire & Diversified Products) • Regional Regional + Global (Brand power differs by region Unify globally) 3rd Brand (e.g. • Regional ) Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 9/27 2. 2014 MTP (priority issues) (1) Culture : cultivating global corporate culture A. Clarify brand strategy (c) Official Worldwide Olympic Partner Strategic Investment: Increase brand awareness and value; promote further global business development Shared Values: Sustainability, Social Responsibility, Diversity & Environmental Stewardship Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 10/27 2. 2014 MTP (priority issues) (1) Culture : cultivating global corporate culture B. Technology & business model innovation For consumers Mega Trends include: Urbanization, Demographic change (aging populations), Emerging market growth, Alternative fuels, Environmental concern/impacts, Traffic infrastructure change Raw Materials Products Solutions ・Guayule ・Russian Dandelion ・Biomass synthetic rubber ・Strategic products ・100% sustainable material concept ・Air Free Concept ・IT/sensor technology (TPMS, CAIS) ・Anti-vibration solution package Guayule (2nd generation) Air Free Concept [Tires, Anti-Vibration Products (AVP), Seat Pad] ・”1 mile” concept of human transportation (bicycle, smart mobility) ・ Services and mobility for aging society (sports, smart mobility) CAIS Smart mobility Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 11/27 2. 2014 MTP (priority issues) (1) Culture : cultivating global corporate culture B. Technology & business model innovation For commercial users Fleet solutions New tire Mining solutions Retread Tire Conveyor Belt Agriculture Mobility solutions HYD Hose Rubber Track Tire Service & Maintenance IT/sensor technology RFID Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 12/27 2. 2014 MTP (priority issues) (1) Culture: cultivating global corporate culture C. Continuous Kaizen In each & every area of business : continuous improvement (a) 2 Tools to facilitate Kaizen : SBU Organization / MTP (b) Kaizen also applies to 3 priority issues : Corporate culture / HR / Structure The 5th Bridgestone Group & Global TQM (Total Quality Management) Conference Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 13/27 2. 2014 MTP (priority issues) (2) HR : developing human resources capable of global management (a) Diversity : Advance the development and promotion of diverse talent GDC (Global Development Class) : Global pool: 114 people in last 10 years (14 nationalities) (b) Language : Designate English as an official company language Global meetings conducted in English e.g. Global EXCO (Global Executive Operational Committee) Group & Global TQM Conference Bridgestone Group Awards (Global Competition) Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 14/27 2. 2014 MTP (priority issues) (2) HR : developing human resources capable of global management (c) Global EXCO : Highest body of global business execution Utilize & strengthen global talent Frequency : Periodically throughout the year Language : English Members : 14 people (5 nationalities) 4 from the Americas, 2 from Europe, 1 from China/Asia/Pacific, 7 from Japan [GHO(Global Head Office) & GMP(Global Management Platform)] Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 15/27 2. 2014 MTP (priority issues) (2) HR : developing human resources capable of global management Moving forward (a) Developing global future leadership: VIP (Vision, Integrity, Principles) (b) Global & regional talent rotation (c) Global & regional training and development programs (d) Creating a global committee structure Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 16/27 2. 2014 MTP (priority issues) (3) Structure : upgrading the global management structure A. Governance : enhancement of governance systems What we have done (a) Independent Board members : strengthen “check and balance” function (the parent company and each subsidiary) (b) Committees : upgrade the Boards’ committees’ accountabilities/responsibilities (through building diverse teams in order to promote robust discussions) (c) Delegation : clarify lines of authority & responsibility, and enhance delegation (d) SBUs : restructure the tire business SBUs Moving forward (a) Boards & Committees : strengthen & fully utilize (b) Global EXCO : management team operating with transparent & robust discussions (c) Further SBU restructure : clarify the roles of GHO/GMP/SBU Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 17/27 2. 2014 MTP (priority issues) (3) Structure : upgrading the global management structure B. Tire SBUs : restructure the tire business SBUs What we have done (a) Establishment of BSCAP (Bridgestone China SBU+ Asia Pacific SBU) (b) Future expansion of European SBU (West & Eastern Europe + Middle East, Africa, Turkey, & Russia) (c) Further optimization of GHO/GMP Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 18/27 2. 2014 MTP (priority issues) (3) Structure : upgrading the global management structure B. Tire SBUs : restructure the tire business SBUs 20% 1500 15% 1000 10% 500 5% 0 0% 2011 2012 Sales 2013 OP% 5% 0% 2011 2012 Sales 10% 500 5% 0 0% 2014 (Forecast) Sales ( billion yen ) 1000 OP% 500 0 OP% Sales ( billion yen ) 15% Sales 10% 2013 2014 (Forecast) OP% Others [Asia&Pacific + China + Middle East&Africa + Russia] 1500 2013 1000 (Forecast) 20% 2012 15% 2010 2000 2011 1500 2014 Americas [North America + Latin America] 2010 20% 2000 20% 1500 15% 1000 10% 500 OP% 2010 2000 OP% 2000 Sales ( billion yen ) Europe [Western Europe + Eastern Europe] OP% Sales ( billion yen ) Japan [Japan Tire + Specialty Tire + Diversified Products] 5% 0 0% 2010 2011 2012 Sales 2013 OP% 2014 (Forecast) (by Geographic Segments) Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 19/27 2. 2014 MTP (priority issues) (3) Structure : upgrading the global management structure C. DP business : expansion of the Diversified Products business (a) Chemical & Industrial Products : ・Integration : domestic sales organization, China operations ・Further upgrading synergy with tire business - Tires, Conveyor Belt and HYD Hose ・Hose business : acquisition of one of the largest US service companies (b) Automotive Components : ・Further upgrading synergy with tire business - Tires, AVP and Seat Pad (c) Sporting Goods & Bicycles : ・Closer coordination with other group business & marketing activities i.e.: WGC (World Golf Championships) Bridgestone Golf “B mark” Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 20/27 Today’s agenda 1. Introduction 2. 2014 MTP (priority issues) 3. 2014 MTP (management targets) 4. Ultimate Goal Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 21/27 3. 2014 MTP (management targets) Framework & Priority Issues: Consistent with 13MTP Qualitative goal : Quantitative goal : Growth : Overall : Each SBU : - Secure both growth and profitability - Consistency & Sustainability Exceed the industry average - Consistently deliver at least ROA 6% and OP10% - Consistently deliver ROE 12% OP10% (respectively) & Continuous Kaizen Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 22/27 3. 2014 MTP (management targets) 16% ROE OP ROA 13.7% 14% 12.7% 12% 12.3% 10% 8% 6% 9.1% 7.4% 8.9% 6.4% 5.8% 4% 6.3% 9.4% 6.0% 6.1% 3.8% 3.6% 2% 3.0% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 ROA (%) 3.0 4.1 0.3 0.0 3.6 3.8 6.0 6.1 OP (%) 6.4 7.4 4.1 2.9 5.8 6.3 9.4 12.3 ROE (%) 7.4 10.3 0.9 0.1 8.9 9.1 13.7 12.7 Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 23/27 3. 2014 MTP (management targets) Dividend Per Share (yen) 90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 FY 2006 2007 2008 2009 2010 2011 2012 2013 2014(F) Net Income (billion yen) 85.1 131.6 10.4 1.0 98.9 102.9 171.6 202.0 293.0 Dividend Per Share (yen) 24 26 24 16 20 22 32 57 80 Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 24/27 Today’s agenda 1. Introduction 2. 2014 MTP (priority issues) 3. 2014 MTP (management targets) 4. Ultimate Goal Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 25/27 4. Ultimate Goal - To become a truly global company - To achieve “Dan-Totsu” Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 26/27 Statements made in this presentation with respect to Bridgestone's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Bridgestone. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "may" or "might" and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions and beliefs in light of the information currently available to it. Bridgestone cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on any obligation of Bridgestone to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Bridgestone disclaims any such obligation. Copyright © 2014 Bridgestone Corporation | Oct.16. 2014 27/27
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