Hello, everyone. I am Shuichi Ishibashi, Global CEO. First, I will explain the summary of financial results for the first quarter. To start with the conclusion, in the first quarter, we secured increase in both revenue and adjusted operating profit versus prior year, due partly to the tailwind from the currency exchange. Regarding the business environment, compared to our assessment in February, demand decline resulting from the economic slowdown became more prominent, mainly in the United States and Europe. We also saw negative impacts to cost from inflation, et cetera. Against this headwind, we reinforced strategic price management and drove the improvement of sales mix primarily for replacement tires. We placed further focus on the premium segment and accelerated the review of low-profit segments in order to secure revenue and profitability growth. There are no changes to the full-year guidance for fiscal 2023 from the figures announced back in February.
Expecting demand recovery in the second half, we will not change our approach in pursuing both increase in premium sales volume and price for the full year. To secure revenue and profitability, we will constantly aim to improve premium sales volume, price increase, and optimization of the sales mix. I will here explain highlights of our performance. Our revenue recorded 117% versus prior year, achieving our first revenue of over JPY 1 trillion for the first quarter, including impact from currency exchange. Our adjusted operating profit exceeded JPY 110 billion, securing 116% increase in profit versus prior year. In addition to focusing on premium segments for passenger car premium tires and off-the-road tires for mining vehicles, we covered negative impact on cost from raw material increase and inflation through improvements in selling price and sales mix.
We achieved increase in profit due partly to the tailwind from the currency exchange, despite impacts of decrease in sales volume from decline in demand. From here, CFO Hishinuma will continue with further details.
Thank you. That was the summary of the performance for the first quarter by our CEO, Mr. Ishibashi. Next to call upon Global CFO Naoki Hishinuma to give you the briefing on the first quarter 2023 financial results.
Thank you. This is Hishinuma speaking, serving as the Global CFO. I would like to explain our consolidated financial results for the first quarter of fiscal 2023 and our forecast for the full year 2023. This is the agenda for today. I will mainly give you financial supplements and a breakdown of some of the figures. Now to begin with the consolidated financial results for the first quart2er 2023.
Consolidated results for the first quarter 2023 are as shown here. On this page, I would like to add explanations on profit for the quarter attributable to owners of parent. In addition to the year-on-year increases in sales revenue and adjusted operating profit, in terms of adjustment items, a loss of JPY 13.5 billion was recorded in the previous year due to impairment losses on Russian tire business assets. As a result of the JPY 10.7 billion gains from the sales of land and other factors in this quarter, the quarterly income increased by JPY 90.5 billion compared to the previous quarter. Overview of the performance for the first quarter of fiscal 2023, focusing on the overview of the performance by product.
For the passenger car and light truck tires, OE segment, although there were differences by region, tire demand recovered as the vehicle productions level at the OEMs was improving since the second half 2022. In the Replacement segment, while tire demand declined due to economic slowdown, sales for passenger car high rim diameter tires continued to be relatively resilient. Truck and bus tires in the OE segment, since the second half 2022, demand continued to recover from the impact of semiconductor shortages. Tire sales was particularly strong in Europe. Replacement tires, sales declined versus prior year in the U.S. and Europe due to the economic slowdown. Japan, sales declined in the first quarter partly due to rush before price increases in prior year. The mining tires, increased sales versus prior year in global total. Suspension of exports to Russia was covered by sales in other markets.
Moving on to business environment for the first quarter of fiscal 2023. Currency exchange. Japanese yen depreciated against both U.S. dollar and euro compared with the prior year. Raw materials. In total, the purchase cost for raw materials increased due to spike of energy, labor, and other costs of raw material suppliers, though the fees stock prices of raw materials have softened. Conversion costs increased versus prior year due to continued inflation in energy, labor, and other costs at plants. Costs increased, pushing down earnings. Tire demand in the OE segment. Although there were differences by region, tire demand recovered as a semiconductor shortage situation at the OEMs was improving.
In the replacement segment, while tire demand showed prominent decline due to the economic slowdown, mainly in the U.S. and Europe, demand for passenger car high rim diameter above 18 inch in the tires continued to be relatively resilient. The tire sales units growth for the first quarter. Passenger car and light truck tires and also on the front truck and bus, the tires, backed by economic slowdowns in global total, it was lower than what it was earlier in sales. For the OE segment and the regional differences, semiconductor and the shortage conditions improved, which meant that OEM is on the production recovered and to push up global total over the prior year level. In the replacement market, backed by the slowdowns of economy in U.S. and Europe, they declined year-on-year in sales.
For the mining and construction tires, ultra-large size 105%, large size 110%, both exceeding the prior year level, particularly profitable mining tires, the sales continued to increase. In the premium domain, where our focus was further tightened, and the passenger car high rim diameter tires above 18 inches in global market was 104% in terms of the sales units. This relative strength stood out once again. Adjusted operating profit analysis, JPY 15.7 billion year-on-year increase. Negative impacts of inflation of raw material, energy and labor costs was covered by improvements in price and mix. Although declining demand pushing down sales volume, adjusted operating profit landed with an increase over the prior year, with the yen depreciation serving as a tailwind. Performance by segment.
In Japan and Americas regions, the results landed with year-on-year increase in revenue and adjusted operating profit, and as well as in other regions, increase in revenue, decrease in profits. For the Japan segment, robust increase in sales of mining tires, improved profitability of general tires in the export business coupled with the tailwind of weaker Japanese yen improved profitability over the prior year. Consolidated financial results by product therefore in this first quarter. Passenger car and light truck tires year-on-year increase in revenue and adjusted operating profit. However, declining profitability in Europe and changes in OEM versus replacement segment composition is pushing down profitability. Margin dropped from the prior year. For Truck and Bus tires in the U.S., retread operations improved with revenue and profitability improvements, and as a result, increase in revenue profits over the prior year with the improved margin as well. Specialties area.
Highly profitable mining vehicle tires sold well and coupled with the tailwind of FX, year-on-year increase in revenue and profits, operating profit, as well as the margin significant improvement. For the diversified products and business, year-on-year increase in revenue, decrease in the profits. The next page showing diversified products and business on the continuing operations basis. Positive profits continued from the prior year. Chemical and Industrial products and business increased both in revenue and adjusted operating profit with the further improvement of the margin, thus continuing on the track of improvement. Sports and cycle business. Positive profit was secured, however, year-on-year decline in both revenue and profits. Diversified products business in Americas. Due to the improvement of selling prices from the final quarter prior year, the margin improved. Next is the balance sheet and cash flow highlights for the first quarter.
Total assets increased by JPY 32.7 billion to stand at JPY 4,994.9 billion. With the advent of yen depreciation effects was the major factor at play. Equity ratio increased 0.8 percentage points at 60.6%. Financial health continues to enhance. Free cash flow, positive JPY 39.7 billion. Increasing quarterly profits as well as improved working capital condition among others pushed up free cash flow year-on-year. Finally, I would like to give remarks on fiscal 2023 guidance. As said before, there's no change in the consolidated financial forecast for the fiscal 2023 from February guidance. Here, I would like to focus on the assumptions. Currency exchange expects exchange rate levels of JPY 120 per dollar and JPY 135 per euro from the second quarter onward.
Raw material costs. Though natural rubber and crude oil are currently showing softness, raw material cost increase is expected in the second half of the year as the economy recovers. Tire demand in the OE segment, no material change is expected from February guidance for the demand recovery, associated with continuous improvement in situation. Replacement segment, however, the overall demand, the recovery has been slower than the February guidance, which is expected to catch up in the second half of the year. Close monitoring is required, especially in the U.S. and Europe market. The demand for the premium areas, which is passenger car, high rim diameter tires, and mining tires, is expected to remain relatively resilient. Under such circumstances, favorable currency impact is expected compared to February guidance based on latest assumption.
However, though the positive impact from year-on-year, the volume increase shrinks due to weaker demand. No change in the company's approach to pursue both volume increase in the premium areas and the price sales mix improvement. That completes my presentation to you. Thank you very much.
Hello again. This is Shuichi Ishibashi, Global CEO. In this session, I will talk about the Mid-Term Business Plan for the fiscal years 2024 to 2026. To build this plan, we are currently identifying and considering management issues one by one as a global team. In this year's quarterly IR communication sessions, I will provide updates on the planning process. As I have explained in the past, Bridgestone is accelerating transformation along our long-term strategic aspiration roadmap, which outlines where we want to be towards 2031, the 100th anniversary of our founding.
In the Mid-Term Business Plan, with this year being its final year, we will move closer to becoming a strong Bridgestone capable of adapting to change. We'll move on to the next stage from Mid-Term Business Plan, 2024 through 2026. In involving management, our three axes are tackle past negative legacies squarely without delay, focus on execution and delivering results for immediate issues, and lay foundation for future growth. These three axes will not change. In the 2024 MBP, we will balance these three axes while also focusing on creating new "premium" towards future growth. We aim to drive various evolution in management. Regarding our management approach, we will be shifting from the crisis phase in which we focus on solving global common issues, starting from COVID-19, to passion towards future growth.
A "passion for excellence." Building and managing strategy will also move on to the next stage. From being led by a global strategy to encounter common issues, we will deep dive into individual issues by region while balancing consistency with the global strategy and continued growth. As for earning power, which we focused in the 2021 MBP, we will move from the rebuilding phase into a reinforcement phase. For strategic growth investments, we will move on to an expansion and reinforcement stage, basing ourselves on the investment management structure built so far. We will also include talent creativity that we plan to implement as a global KPI from the 2024 MBP.
Based on what I just said above, as a business stage, we will clearly identify which business product category and region to reinforce and expand on both a global and regional basis, and pursue operational excellence across the entire value chain. I will explain more about the business stage. In the 2024 MBP, we will divide our business initiatives into five, as shown here, to build our global and regional strategy. First we will further reinforce the premium tire business, which we have focused on enhancing in the 2021 MBP to a sustainable global premium tire business, quote, unquote, towards the next stage. We will develop strategies according to Bridgestone's position in each region. The following three they will be our core. North America, where we aim to acquire a leader position. Europe, where we aim to establish a unique position by integrating solutions while basing ourselves on the follow-on strategy.
Japan, where we aim to maintain and reinforce our Dantotsu leader position. We will also enhance our sustainable global premium tire business in regions from which we anticipate will become the next profit contribution areas, South America, Southeast Asia, and the Middle East. Second, in emerging countries and growing markets, we will drive expansion of premium for the passenger car tire business, especially in India and China. Third, we aim to evolve specialties and tires, which includes off-the-road tires for mining vehicles, one of our primary sources of revenue and profit into a Dantotsu premium business combining premium tires and solutions. We will take a premium leader strategy for the off-the-road tires for mining vehicles based on our Dan-Totsu product MasterC ore. For aircraft and motorcycle tires, we aim to establish a premium niche strategy. Fourth, we will expand the tire-centric solutions business, mainly in mature countries.
For Passenger car tires, we will reinforce our retail and service solutions network primarily in the U.S. as well as in Japan, Australia, and Thailand. For Truck and Bus tires, basing ourselves on retread, we will expand around North and South America, where we have competitive advantage, but also in Japan and Australia as well. Lastly, as a new challenge, we aim to build a mobility tech business that links premium tires, tire-centric solutions, and mobility solutions in order to provide new value to customers in North America. We will begin by reinforcing the coordination between Webfleet Solutions in Europe and Azuga in North America, and expanding rollout of Fleet Care, a package service which includes tire services and fleet management, which will be a key factor in obtaining competitive advantage hereafter. With this overall picture in mind, we will continue building the 2024 MBP.
Today, I would like to share progress on MBP planning regarding the general picture for our premium tire business, as well as the products and the assets core. In the 2024 MBP, we aim to increase profit and reinforce earning power on both fronts. Increasing price, improving position and sales mix through improving value to customers on one side, and reducing cost and environmental impact on the other. The access for increasing price are Dantotsu product power and product planning power. Leveraging the innovative tire technology ENLITEN, we will enhance basic performance while pursuing ultimate customization to customize products according to the desired performance by customer. We will also improve the sales mix with existing premium products, such as high rim diameter or the so-called HRD tires and new premium ENLITEN-equipped products.
To realize this, we will refine new brand power, which we will establish from here, channel power that will be the growth enabler for both the premium tire business as well as the solutions business, and global supply chain management power that ensures flexible and agile supply management, et cetera. Meanwhile, the access to reduced cost and environmental impact is our Dantotsu manufacturing and R&D power. Reinforcing Japan's manufacturing leadership, we will clarify the roles and responsibilities of 50 new tire factories around the world. Based on this, we will continue to develop and execute BCMA, which realizes ultimate customization to create new premium efficiently and in reducing cost, achieving simplification and differentiation. Furthermore, we will start realizing Green and Smart factories which aim to reduce environmental impact through the shift to green and to improve productivity through the shift to smart.
We will also drive co-creation with sustainability partners across the value chain. Today, I will begin by explaining progress on our Dantotsu product power and power to improve sales mix, which are at the core of our premium tire business. First, we will thoroughly ensure enhancement of the existing premium which we have been promoting. In the 2024 MBP, we will continue reinforcement, but also we will add a new perspective focusing on ultra-high rim diameter tires, which are 20 inches and above in diameter, where we expect a strong demand growth resulting from the accelerated shift to EVs. While following the EV expansion trend in the U.S., which is our largest market, we will also reinforce on the global basis.
Furthermore, towards the creation of Bridgestone's unique new premium, we will enhance product planning power based on the global product strategy which we have been re-strengthening from 2020, continually elevating our Dantotsu product power. As an example, illustrating customer recognition of the value of our Dantotsu products, in North America, we achieved a number one ranking in 2022 for the number of products which achieved number one in the Voice of Customer survey by Tire Rack, a tire distributor based on e-commerce and who has overwhelming support from premium customers. In Europe as well, we are receiving higher evaluations from magazines that have large local influence for premium tires such as the sport tire Potenza, winter tire Blizzak, and the Turanza 6 equipped with ENLITEN. Based on this Dantotsu product power, we will continue reinforcing sales of premium tires in each region.
This year, for passenger car tires, we plan to sell more than 50% of premium tires among total sales of replacement tires globally and further accelerate and expand 2024 onwards. For truck and bus tires as well, we will continue improvement in mix towards the premium. Moreover, in the 2024 MBP, we will start at full scale the creation of new premium where Bridgestone uniquely create value. For passenger car tires, we will concentrate on expanding products equipped with ENLITEN, which we consider our new premium in the EV era. ENLITEN achieves both environmental as well as driving performance required of tires. For example, significantly improving EV driving range and electricity consumption through reduced tire rolling resistance will contribute to lighter battery, reduced cost, and improvement in vehicle space utility.
We will start expansion of products from original equipment fitment, then take in the recursion demand to accelerate expansion to replacement tires in the 2024 MBP. By 2026, we will launch a cumulative total of 50 products to achieve 70% of ENLITEN equipment, also contributing to solving problems related to electrification of vehicles. Regarding this ENLITEN to create new premium, we will develop further detailing towards the 2024 MBP, which we will provide updates accordingly. This is all regarding current updates for the 2024 MBP planning process. We do appreciate your continued support and thank you very much for your attention.
That was Mr. Ishibashi, our CEO's presentation, the progress of Mid-Term Business Plan. We are ready to start questions and answers session. Let us start with questions from Mr. Sakaguchi from Mizuho Securities.
Thank you very much. Sakaguchi speaking. Two questions to you. The first regarding your first quarter performance results. The second question regarding the MBP. First, as to results. Market environment in North America and Europe, as well as the strategy therein, I would like to hear more. For the passenger car and the tire business, thank you very much for your explanations in duty details. That would suffice. However, for the TBR, I would like to know more. The BEIT, Europe, and or the US in the sense of deceleration this year for the market, the economics. You say that in the second half, the recovery is contemplated. The starting point, however, is relatively slow starting, ramping up in the phase of the recovery.
Once again, the confirmation of your read on the current status and how to recover into the second half, what particular actions in mind? Thank you very much.
For the TBR business operations, more than anticipated, it is true that there has been decline in demand. However, focusing on retread operation, since last year we have been enhancing this operation, have been making investments. This will help land to capture the benefits from those investments and activities from the past so that altogether can support the overall operations. In the first quarter, North American retread operation indeed turned out to be quite strong. Price, volume, coverage, in all regards it was good. To what extent we can have the good coverage coming from the retread operations going forward in this fiscal year?
As the fleet business, when we say the fleet business, but, it comprises the two sub-segments, the vehicle fleets as well as those working with the mid to small-sized, the dealer operations. The dealer support and dealers are the ones who are caring for these entities and, as we hear through various reporting in the media, the situation at the moment is tough. Although the demand is set to recover in the second half. As I say, it's dealers who typically will take care of the, of these inland, the trucking companies. For the passenger, operations, the recovery will be more resilient and faster than for the TBR side.
It is true that we do expect recovery to come about into the second half of this year. Let me try to sort out the other expectations and thoughts. Truck and Bus tire operations and mindful of those on the truck fleets. There are the sophisticated large fleets who probably will start to get on the track of recovery. That said, though, depending on the particulars of the situations, we have to be flexible. For the truck and bus tire operations, in the second half of 2022, there was a shortage of supply of major brands, including Bridgestone, and that allowed encroachment made by lower priced suppliers and the parties. As a result, inventory was inflated. In the first quarter, we saw the relatively high level of inventory of goods.
Going forward, one key point would be to successfully sell those goods in the inventory by capturing real demand. Once again, in reference to mid to smaller-sized and inland trucking operations, whom dealers take care of, the sense of speed is very important. Dealers support for inland trucking companies. I met with them in the first quarter, and I spoke about these matters. I will be going back to the States next week, then to make sure I have the sense of the situations and to further our discussions. I would say that the concept of having to sell off from the inventory goods accumulated and the realization of internal demand into the actual demands, the sense of judgment is very important.
I would say that more or less speaking, I can be confident that operations, they will move forward successfully. After all, last year there was a fiscal year when despite the shortage of the goods to sell, dealers were really supportive and cooperative towards us. Now for them to proceed at pace for the carrying of those, the inland trucking companies.
Well, thank you very much. I understand what you're trying to say, and thank you very much. It's very clear. The second question. I understood your explanations at the first of all, but in reference to the long-term strategic aspiration to the aiming for the 2030 net more than JPY 5 trillion revenue and adjusted operating profit and exceeding JPY 800 billion.
In that context, how is your position at the 2024 MBP? That you have made the various initiatives and spent money for the premium strategy and solutions and business strategy. Would you say that for the 2024 through 2026, the MBP horizon, I suppose that you are still gonna be making investments? If so, the reaping of benefits of those upfront investments would have to wait until the MBP which will come after the 2024 MBP. Would you expect that some of the good fruits of the past effort will come about, which can be reaped in the phase of the 2024 MBP?
Thank you for the question. My answer as the CEO is that obviously we have to keep at it.
You know, back in March, as we had a global executive committee meeting, we had the kickoff in this regard. Speaking of the kickoff, last summer we announced long-term strategic aspiration, since then, various environmental changes and of course, having to be mindful of the actual performance results, I have been kind of proceeding to date. One important point is to further enhance our earning power. In the course of the 2024 MBP, please take a look at the points one through five, starting with sustainable global premium tire business. It's in the order listed here. We would first start with sustainable global premium tire operations hub, two, generate the earnings. One, two, and three are the fine points listed here and that will secure earnings solidly.
In order to execute on these points one, two, and three , we need to take a look at the further premium orientation in the manufacturing footprint to be able to accommodate larger rim diameter tire that will come into mind. This is a conversion of the network plans as well as the overall enhancement. What I am trying to say is that we'll continue to make investments as relates to the manufacturing footprint, but at the same time, they're starting to reap benefits from that, so that the two, the B premium enabled up there to become further ready for the ENLITEN technology. Point number three. In the speciality tires and business, and also on point number two in emerging countries, in particular India and China, scenario change is not needed.
No change there. By securing the earning to the funds to spend, we'll move on to number four, which is tire centric solution. Retread operation has history already, track record already. Also, therefore the retail network. We should be able to expect earnings to come about through what is already operated, be it retread, the other retail network and services. We, we'll generate funds to spend for investments and those investments turn income into earnings. In doing that, I do believe that we can take on the newest challenge of number five, which is mobility tech business in North America. Speaking of mobility tech business in North America, let me say a word about Webfleet Solutions.
This is an entity which was acquired back in 2019 to become the member of the Bridgestone Group, and since then various episodes such as with COVID-19. However, the sense of speed of the operation of Webfleet Solutions, I also, I always wanted them to become more agile. However, they are convinced and I feel that Webfleet and the folks do recognize that through the real-time monitoring of the data coming from vehicles and also from tire, the overall, the program enhancement has started to be made. That would lead to the value enhancement for the Webfleet operation at large. Those the colleagues working in the Webfleet operations obviously feel that, and I felt that this through face-to-face interactions.
They are more motivated, they are more eager to move forward. That is very, very heartening, I thought. Also yet another point, which is rather characteristic of the Bridgestone culture, which is always to stay close to customers, or stay close to customers, being willing to and to being able to provide solutions into your problems and trouble. In doing that, the service providers, the programs can be enhanced. That's exactly what we would expect from Webfleet, and that's exactly what we already experienced back at the time of the Bandag retread provider, the acquisition in 2007. First with Bandag, now with Webfleet. Those acquired operations continuously become stronger, more valuable, and more motivated.
Although I'm not going to name names, be it the OEMs or the trucking companies or the truck manufacturers, there are various respective programs that they develop and operate. That means that 900,000 vehicle reserve database that Webfleet has is strength. That is what I will keep in mind. Speaking of point five, mobility tech business in North America, the combination of premium tire, retread and maintenance and mobility solution all packaged into the solution package. That is quite promising. Of course, that's a challenge we shall take on. In the period of the 2024 through 2026 fiscal, which is the course of the 2024 Mid-Term Business Plan, it's premature to expect that benefits they can accrue. This is going to be the period of upfront investments.
We need the scale to accomplish the critical mass in these services. Point number five, establishment of mobility tech business in North America, we will start with upfront investments, and that's what we are going to do on the end, the 2024 MBP. The large objectives is that in the 2024 MBP that we will generate earnings through the premium tire business operations and tire centering solutions business, part of those, and they can yield the earnings, so that we can begin to make upfront investments for mobility tech business in North America during the period of the 2024 MBP, which is 2024 through 2026. That can linearly lead into 2027 MTP. With the 2021 MBP, we were able to go up now to some dozen percentage of the point, the progress level.
We will continue with upfront investments necessary, which we are totally willing to do. On top of everything that we have been doing, we do need the new platform. That is what we are going to do with point number five, mobility tech business. First, we have to be mindful of the immediate operation environment, how much we can generate as our earnings. Is it the max that we can do? In continuously doing that, we will move forward. Key the performance indicators will be the ROIC, ROE. We will keep on tracking those.
It's not as though that we can always and constantly, the expect the improvement of those ratios all the time, but we will do the most that we can do. Come next spring in 2024, I'm sure that I will be able to reveal to you further details.
Thank you very much. That completes my questions to you.
Mr. Sakaguchi, thank you very much.
Let's move on to the second questioner, who is Mr. Maki from SMBC Nikko Securities.
Thank you. Maki speaking from SMBC Nikko. I too have two questions to pose. The first is regards to performance results for the first quarter. The point to question number two is the Mid-Term Business Plan. The first quarter is about full-year guidance. The effect of pricing, that's what I would like you to explain further.
Earlier, I remember hearing that good benefits the price increases is the one that you would expect. The softening of the cost situations, and I wonder whether there's any inherent possibility that you would have to or you there may be extra room to adjust the prices downwardly because of the cost the development. I'm sure that you're talking with dealers. From the standpoint of dealers, what is it that do you think they prefer? The higher prices, which would enlarge their the value in the inventory? They prefer to have lower selling prices because that would make it easier for them to sell items which are today in the inventory. In your conversations with dealers, what's the sense that you get?
By the way, relating to this, raw materials, what you said, is that the cost of the improvement or the recovery. The non-Japanese manufacturers tend to think that throughout this fiscal year, it is going to be the continuation of the tone of recovery. What do you think?
Thank you very much for your question. The price increase is always a very sensitive matter. In the current fiscal year, I said that we will continue to hike prices. Of course, mindful of market conditions, competitive thrust before finalizing our decisions. For the first quarter, we announced the price increases which have been executed. On pricing, I would say that we have now a certain leading edge which can cover various other negative factors. You also ask about the sentiment among dealers as they are mindful of their inventory.
Well, with the higher prices to sell, the total value of the dealer inventory can become larger. That's encouraging, provided that they can sell those goods in the current market. Also that emerging conditions can be expected then to improve this or the little by little of the selling price increasing is under the working conditions typically at dealers. The current situation at dealers is that their inventory has been inflated and they have to make sure that those goods can be sold into the market by realizing internal demand into real demand for them. To what extent that can be successful? How much time would dealers need? Those are the considerations and assessments that dealers are making. I would say that national fleet or existing fleets, these are very important customers of ours.
They understand and accept the value of Bridgestone tires and therefore, and combining also the retread and the service capabilities, they would be more willing to listen to, and in the end, accept the request for higher prices to sell. Full year guidance. This is Hishinuma speaking. The raw material and the prices, the second half and thereafter, the cost will become larger. Also having to be mindful of energy, labor and those inflationary effect. The negative from the combined effect is there, but not as much as we once anticipated. These are all collective positives. In comparison with what we reconsidered and gave you as guidance back in February, the conditions more recently has recovered or has eased. OPEX and export, the freight and the conditions.
Today's conditions are better than February observations. As to other costs, conversion costs, no big change. I'm just repeating what I already said in the presentation. Raw materials and OpEx vis-a-vis February, all in all positive. That is our current observation. Ishibashi back again. I would like to say regarding ocean freight, which has been for the past several years really declined, which was very sharp in magnitude, causing hardships upon all of us. Bridgestone has been impacted by that as well. However, relative to others who have to rely on ocean freight, that service impact that we felt as Bridgestone was probably a little less. Now the situation is starting to ease because the magnitude of negative impact was relatively small.
The magnitude of recovery, how much of that we can feel, would probably be more limited, at least in comparison with smaller manufacturers who felt the dire impact of the higher ocean freight costs payable. Now in turn, they can look to the probably bigger benefits of the easing conditions than Bridgestone. We at Bridgestone, as we exemplified in the full year guidance, are looking come forward to the easing of conditions to an extent. These are negotiation matters. How successful we can be.
Thank you very much for that answer. That suffices. What you say, in my words, let me summarize. What you said is that the so-called tier two manufacturers, they start on the very challenging conditions, they're having to compete against tier one manufacturers. They also have inventory issues.
In comparison to business conditions today is that the selling conditions are good and expected to improve. The pricing situation is stable enough. Having heard that though, the CPI decline is starting to happen, if the cost situation going forward changes, then the overall costs prevailing can become lower, may present you with some different considerations necessary. You will consider what would be the actions to make as you get to that situation, correct?
Well, my answer as the CEO is that business always like that. There are the three fundamental factors of cost, selling price and volume. How to strike the optimal balance among the four.
Operational judgments are very, very important, and whether or not there is adequate progress in making those operational judgments or not, that's all up to the top of the operation, the competence of those in place. In the first quarter, I did have conversations with local operational tops. To what extent? Take it with a grain of salt, as everyone says. That differs from one head to next. Sometimes some operational heads were the most successful than others. Slight delay in accommodating, accepting the price adjustment gave them dire results. Others were more successful. This sort of a sense of balance is very, very important and is always there. Again, the balance among price, volume, that's the volume of premium goods, and cost. When this balance is adjusted successfully, then the bottom line to be generated, can benefit the operations.
If you ask me of my, the resolve, this balance is very, very important, and I'm not going to yield on that.
Thank you very much for that answer. It was very thorough and clear more than anything else. My question number two refers to the Mid-Term Business Plan. You said previously that JPY 1.2 trillion to understand the investment, the funds or the amount will be set aside, which is simply put double what it was in the previous, MBP. I recognize that in order for you then to challenge, the enhancement of the solution business, you do need to make investments such as for items number four and number five on that, strategy. Where would you make investments? What will be... When will be the timing of the return to be recouped?
Is it in the course of 2024 MBP? Leading these discussions will be the BCMA. Ultimately, I don't know to what extent you can answer that.
Well, thank you. The topic that I very much you prefer to answer. In our global discussions, we sooner or later recognized that we cannot just stay to take a look at situation from global perspectives. That's the reason why I refer to regions or different businesses and programs. Each of these are the region-specific or the business-specific or the program-specific measures were analyzed to come up with the list of items which you see on my presentation slide. All of these items are the ones that we have more or less the certainty of what is likely to come about.
Speaking of others which are not even booked, in these presentations, there are many more by region. Something the premium tire business in Africa, too early to speak. Tire-centric solutions, various challenges, and some of the challenges were that we once took on. However, as we recognized that those challenges and attempts were not yielding on the well, that we decided then to withdraw, cancel, or modify. I am sure that we'll continue then to have that sort of exercise. Speaking of upfront investments, of course, that we need to make upfront investments. However, we will make sure that a business case can be examined ahead of those investment decisions. We don't know the expected return, the business case, and that would suffice.
All of those processes have been followed before we come up with a set of five that I show on this page. The business case meaning that on the sum acceptable on the numerics are available on the, for each and every one of these items. Outside of these items, to what extent that we can incorporate and that those are opportunities into the MBPs. Back in 2021 MBP, we had similar sorts of discussions. The solution investments and premium investments at the premium tire business. Now India, China, and other areas, what about mining tires? I know that there are always going to be opportunities which warrant these transient investigations by us. Our future will be full of interim opportunities.
The key to success will be then to scrutinize and examine the business case, then to identify those opportunities, successful opportunities, as early and not as possible, and before the others latch onto those, and so that we can reap the pioneers of the benefits. Management resources being finite is always with us. The choices that we are making are tire-centric solutions. These are basically in the mature the country markets. Mobility tech business, why not start in North America? That is the market with the most preparedness, certainty is the highest. I hope I am speaking adequately on the, what we announced as long-term strategic aspiration to 2030. All those thoughts are with us. Here we are translating that into the contents of 2024 MBP.
Obviously, we will never allow wasteful investments from the wasteful activities. In time, we are on the free of funds which were to be truly ready to be invested. By the way, investment calls are very tricky, because even if once the expected before the final judgment to make those investments, with situation changes and whatever else, we may have to forgo or delay or cancel even some of the originally expected investments. That's part of it.
Thank you very much. You are, as always, very thorough. Thank you very much.
Thank you, Mr. Maki. That was Mr. Maki from SMBC Nikko. Let me ask you, Mr. Sakamaki from Daiwa Securities, thank you very much for waiting.
Thank you. Sakamaki speaking. Thank you for your time once again.
I have two questions, the same as the other analysts on the performance results and MTP. The first question may be answered by CFO. The first quarter, the adjusted operating profit versus the internal business plans that you have, how would you assess that? Back in the days of Mr. Yoshimatsu, that there was the cyberattacks in North America which pushed down the profits by some JPY 19 billion. You are to compare this first quarter's the adjusted operating profit result versus that JPY 19 billion. What do you think, any repercussion or anything further? Slowness of recovery.
Okay, let me answer the question. This is Hishinuma, CFO speaking. The waterfall chart showed that raw material was a positive factor because the impact was less than what was anticipated. Price and mix as well, the positive factors.
Conversion costs and OpEx, these are cost items. What those costs were not as severe as anticipated. I can say relatively in the positive. On the other hand, volume, sales volume, the estimate did not come about 100%, it was a little bit various negative. The offset against these set of positives. FX. We thought that yen, if anything, may appreciate a little bit. No, it's clearly in the phase of yen depreciation. FX as a factor is positive.
Thank you. Are you trying to say that, you know, the JPY 116.8 billion is over and above your internal business plan? Inclusive of the ex- FX as a facto r?
Yes. It's above our internal business plan.
My second question goes to Mr. Ishibashi.
It's about Mid-Term Business Plan. You're focused basically on the premium tire business. In particular, I'm interested in further explanations about your electric vehicles, EV tire ENLITEN technology. Other companies say that EV tires tend to show the strongest sense of loyalty from customers. What they're saying is that the original OE fitted tires are the ones that these customers are likely to purchase in the aftermarket more so as a trend than with the conventional cars and tires. I wonder if you agree. If so, EV markets that are starting up first in Europe and also China, would you be willing to capture shares in the OE business, even with a little bit of challenging conditions, so that you can recoup the business in the aftermarket?
No.
There are the various of the international of the discussions of the, which I talked about Euro 7 or the tire road, the rare particles. Anything that you can say or know about EV tires?
My answer, CEO speaking. EV tires, OE fitment is increasing, and it's not only Bridgestone. I know that it is so at our French competitors as well. What you say, and that would be the remarks made by other companies, that's what we refer to as recursion demand concept. How the OE fit, the tires are the ones that customers would seek to purchase in the replacement market. That has been so with the existing premium tires, even if we set aside ENLITEN.
With EV tires or the high rim diameter tires, it is true that the Europe and China are going ahead of the other country markets or regional markets. Next to come is said to be North America, where big cars have always been driven, and with those big tires. With the shift towards the EVs, even larger diameter tires will come in demand in North America, something like above 20 inches. Already we have a strategy thereof, that we are ready, so that we can aggressively capture that coming demand. As the top tire manufacturer, we of course may have the strategic thrust.
As you say, it is always true that in the OE segment of the tire business, we have to be willing to accept the certain rather challenging terms and conditions, so that we can look to good benefits to come in the replacement market. OE business is quite tough, to be honest. Even despite that toughness, it's not red inks, it's your positive little profits. It's a totally different sort of business required in the OE segment, totally different from that in the aftermarket. Our emphasis on the premium models of all on the OEM car models reflects that in having diameter of the tire fitments. Also, that we will be able to enjoy good recursion demand in the aftermarket.
Obviously, it's not in names only that we always say it, that our mission is, the first and foremost to contribute leading to car companies. It is so very true. The behind the scenes that there are some rather marginal decisions that we have to make to accept. Be that as it may, EVs with higher rim diameter tires, OE segment the going first, to be followed, the in the replacement segment demand. How successful we can be, before the, your, the passenger car tire and the business, that is always very, very, the critical. The passenger on the product whole year, business profit basis there. Now that we have something else to look forward to, which is the ENLITEN technology, the new platform technology.
New premium position, how we are going to establish that? How we are going to secure and sustain that position? Like our French competitors, we are thinking the same. In our case, ENLITEN is value. Simply put, it is something to enhance the performance of tires. The customers have varying needs on tires. The performance enhancement is always preferred, demanded by customers. You mentioned tire and road wear particles, so-called TRWP. Industry-wide, the endeavors are continuing. The various details have to be identified. We understand that the concept is that there is going to be that longer durable life, and yet, the particles have those negative aspect of the typically considered longer life can be covered further. That's what this entire ENLITEN technology is all about.
Durable life is set to be extended by some 20%. This foundation technology, there are conflicting attributes with the conventional technologies. With the ENLITEN, and this is a completely new foundation platform technology. This sort of conventional dynamics of one going up and the other is having to concede does not have to come about. I'm not going to go into details today. That's for the future sessions. Speaking of future sessions, BCMA. Producing this simplistically and yet to be able to positively differentiate would mean then that the value that would be enhanced and yet costs to incur can be saved. That's very important. What we are doing at Bridgestone is that across all of the 50 manufacturing plants, visualization process is going on.
ENLITEN technology, or the commonality and modularity, which plants need to introduce what into how in the process discussions. This all, there is ongoing rigorous discussions will be and possibly added into the future Mid-Term Business Plans. Identifying kind of further cost-saving opportunities, further mix improvement opportunity, the further opportunities to enhance our pricing positions. We are obviously at the earlier phase of those deliberations. My expectation is that in the June round of the global executive committee meeting, we will make judgments about these matters for all of the 50 plants, one after another. Please remember the balance that I talked about, the value of mixed cost and price. Our understanding and expectations will have been clarified. Branding, sustainable brand power, how we are going to enhance that brand power. All of these considerations are going in parallel with one another.
All of these, the factors and issues have been with us for some time already, each varying can do importance and significance. What was done in the past is up for review so that we can possibly realign. I started to talk about ENLITEN, but be it ENLITEN, high rim diameter tires, EV, coming opportunities, we will capture one after another at good timings and after the thorough examinations. That is the key point about our Mid-Term Business Planning exercise. Well, looking at you seem to have an expression on your face and saying that, "Well, here the Ishibashi goes again." I will convince you that it's not just that I have in mind in future sessions.
Thank you very much indeed.
Mr. Sakamaki, thank you very much.
You know, everyone, we have to be mindful of the time remaining. I am afraid Mr. Kakiuchi from Morgan Stanley Securities, you are going to be the last questioner. Very sorry, Mr. Kakiuchi, I have to ask you to pose only one question.
Accepted? Thank you. I would like to focus on the recent passenger car and light truck on the business. Replacing business domestic, 81% in Q1, whereas the industry average was 92%. You being the top runner in the domestic industry, obviously, I don't think there is ever any big disparity in between your standing in the industry average. I wonder if you can analyze this a little bit further. Is it about the effect of the price hikes or something else?
Mr. Hishinuma will go first as the CFO.
Yes. Last year, we started to discuss price hikes.
We executed that in April. Back in March, there was the one-off demand which was created. However, that was the prior year. This will compare against that, and there was repercussion for this year. Understood. Now, the challenge of hiking selling prices in the Japanese domestic market. I, as a CEO, would like to remind you that this is something that we started to do in the prior fiscal year. Once announced, then to what extent that would stick to the market is another. The sticking of the announcement to the market, this is where the Japanese market is much more challenging than in other markets, be it Europe or North America. With thorough discussions and expert explanations, we have been able to overcome some of the hurdles.
From the we had previous, the prices in the prior year that resulted, however, with the pre-buy, and we have to compare this quarter's number against, the pre-buying effect affected the results. Speaking of the pre-buying, as the phenomenon, in the most recent round, our experience has been that it was not as much as, in the prior round of the price hikes. It seems to have been taken more than speaking as an extension of the normal business course. Of course, we have new products. Now, many thoughts, but I would like to also point out that in this tire industry in Japan, Bridgestone is the party who has been relatively aggressive in, executing price increases.
Okay, thank you.
What you're saying, that in comparison with Europe and the other North American markets, do you imply, as I think, that there's further room for selling price increases? What do you think? What are customer reactions and sentiments?
My answer as a CEO, the Japanese passenger car and the tire business. Bridgestone's and passenger car tires, be it Regno and Bridgestone, the prices are overwhelmingly high. Overwhelmingly so. That's unique as a condition because going to Europe and to North America, Michelin and Bridgestone, the pricing is well, it's comparable to one another. In Japan, our prices are the sort high. Absolutely so. That is the situations to wanting to execute the price hikes. We have been mindful of the industry characteristics or the national sentiment of the Japanese. There's a hurdle that becomes even higher and higher.
Yet, we feel that there's more that we would like to dare to execute. The extra caring becomes necessary then to explain and discuss and convince the counterparties from our conversations. There are other factors, be it inflation, yen depreciation, and the heightened energy charges and labor costs. All in all, to produce tires in Japan and to sell in Japan, to produce and sell goods in Japan is so very difficult, regardless of whether it is the OE segment or replacement segment. That's the nature of the tire business in Japan. Made in Japan, sold in the outside market, that's export, the business is different because in the overseas markets, we have been able to execute price increases more so than in Japan.
This is a phase of the weaker Japanese yen, so the export is very good. On one hand, made in Japan, sell in Japan, is quite severe and challenging. That is the actual sense that I have. Mindful of inflationary trend of costs, to what extent we can't really offset all of those negatives with the price increases. Not to net 100%. That's my honest observation.
Thank you very much, Mr. Kakiuchi, and thank you very much, everyone. Our time is up, I'm afraid. This is the end of Q&A. With that, we complete today's presentation of 2024 Mid-Term Business Plan and the progress presentation. Thank you very much indeed for your participation. Thank you very much for staying with us until the very end. This wraps up today's program.