Ladies and gentlemen, thank you very much for listening to the earnings call hosted by Bridgestone Corporation. Let me introduce to you the members from Bridgestone: Global CEO and Representative Executive Officer, Shuichi Ishibashi, Global CAO, Global CSO, Yasuhiro Morita, Global CFO, Global Financial Division Head, Naoki Hishinuma. Three executives from Bridgestone will explain the matters. First, I would like to begin by asking Global CEO Shuichi Ishibashi to talk on the summary of financial results for the first half of 2025 and fiscal 2025 guidance.
Hello to everyone. I am Ishibashi, Global CEO. Today, I will provide an overview of the financial results for the first half of 2025 and the full-year guidance. Bridgestone has designated 2025 as the Year of Emergency and Crisis Management. Amid a global environment marked by heightened uncertainty due to factors such as U.S. tariffs, we are advancing our management strategy by anticipating the business structural changes on a country and market-specific basis so that we can turn changes into our opportunities going forward. First half performance saw a revenue of over JPY 2.1 trillion, adjusted operating profit of approximately JPY 235 billion, and an adjusted operating margin of 11.1%, representing an increase compared to the prior year. The impact of U.S. tariffs in the first half was minimal due to the maritime transportation and also inventory lead times. Results are in line with the plan announced back in February 2025. Net income from continuing operations includes business rebuilding costs booked as adjustment items, resulting in a decrease compared to the prior year. In terms of sales, strong sales of tires for passenger cars, trucks, and buses, as well as mining and aircraft premium tires, and improvements in the sales mix continued.
Additionally, the effects of the second stage of business rebuilding have begun to contribute to performance, primarily in Europe and the U.S. Global business cost reductions have achieved results exceeding the plan, contributing approximately JPY 35 billion in profits during the first half and steadily supporting performance under challenging conditions. We will continue to carry through what we have decided to do, and starting from the second half, we will start growth with quality from markets to grow. We will provide detailed explanations by area of management priority. The North American business achieved a profit increase across the entire premium tire segment. The commercial truck and bus replacement market business, which is a strong business foundation, continued to expand sales ever since the first quarter and improved profitability. Looking ahead to the second half, we anticipate a decrease in low-priced imports due to U.S. tariffs and an increase in demand for major brands. We will leverage both the Bridgestone and Firestone brands to capture further sales expansion opportunities. In the consumer tire business, we are accelerating business rebuilding and multi-brand strategies for Bridgestone and Firestone, and while progress is gradual, results are beginning to emerge. Progress on these initiatives will be explained later. Next, regarding Latin American business, which is a key management issue, Argentina has improved its adjusted operating margin to 12%, while the business in Brazil continues to face significant losses exceeding our expectations. Since May, we have refreshed our management structure, prioritizing improvements in management and operational quality, and have improved operations based on Gembutsu Gemba.
A global team is driving initiatives to enhance productivity and reduce costs, and we were able to slightly reduce the loss margin in the second quarter compared to the first quarter when we hit the bottom. Going forward, we will continue to focus on rebuilding from production to sales and aim to achieve profitability by the final quarter. The European business has strictly adhered to the principle of focusing on quality. We have steadily focused on business rebuilding and achieved year-on-year profit growth for the second consecutive quarter. In the truck and bus tire business, we implemented measures such as optimizing production facilities and achieved break-even levels in the first half, excluding retreads. The retail business also continued to achieve year-on-year profit growth and narrowed its loss margin. Both for truck and bus tires and retail tire operations aim to achieve sustained profitability for the fourth year.
In the passenger car tire business, we achieved both higher revenue and profit compared to the prior year, continuing to expand sales focused on higher rim diameter tires. The premium tire business as a whole achieved a profitability level of approximately 5%. By the end of 2025, we will thoroughly complete business rebuilding, and in the next phase, we will strive to achieve growth with quality. The Asia-Pacific, India, and China business, our second home market, we achieved a solid operating profit margin of 12% after adjustments and reported an increase in operating profit compared to the prior year. Consumer tire business in India, positioned as a growth market, achieved expanded sales and increased market share in the premium segment of high-rim diameter tires compared to the prior year. Additionally, Thailand is strengthening its business rebuilding efforts and improving profitability.
The specialty tire and solutions business maintained robust sales in mining and aviation, sustaining a high-profit structure with an adjusted operating margin of 20%. Furthermore, B2B solutions are steadily expanding through co-creation with customers. However, rising raw material prices, time lag, and price adjustments linked to raw material and exchange rate indices for mining tires, and significant declines in profits and losses for agricultural machinery tires have dragged down performance, resulting in a year-on-year decline in profits. Next, I will explain the progress of our defense and offense activities for 2025. Our defense involves business rebuilding, which is the second stage. Bridgestone West has consolidated European retread production facilities, reduced production capacity of European truck and bus tire business, closed Laverne plant in the U.S., and optimized workforce across various functions in North America.
Bridgestone East has announced the transfer of shares of a domestic logistics subsidiary and the transfer of the in-house carbon black business in Thailand and Mexico. We will continue to review and implement measures for 2025, including streamlining the multi-layered structure of the Japanese tire business and rebuilding a diversified product business. At the core of our offensive strategy is the expansion of our Dantotsu products. Without Dantotsu products, there can be no growth with quality as our guideline. We are enhancing the Dantotsu product power globally. In 2025, in the premium tire segment for passenger cars in North America, we launched two models of Turanza equipped with ENLITEN® in the first half of the year, and in September, we plan to launch a new Alenza product. Firestone also launched the new Affinity S, all-season Affinity in April.
In India, we launched a new product last year that led to sales increase in 2025. In Japan, under the premium tire brand Regno and the winter tire Blizzak, we will launch new Dantotsu products to improve the sales mix, expand sales, and market share. In the truck and bus tire segment in North America, Japan, and Europe, we expanded Dantotsu products by launching new products equipped with ENLITEN® in 2025. Expanding our product lineup, we will strengthen our business in collaboration with retread and fleet business expansion. We are continuously pursuing and strengthening steady global business cost reduction to support performance. For the full year of 2025, we anticipate an effect of approximately JPY 61 billion over the previous year.
Cumulatively, from 2024, the overall effect of these activities is projected to reach around JPY 136 billion, which is one year ahead of the target of approximately JPY 100 billion set in the 2024 midterm business plan. In BCMA, we are focusing on improving production costs through the Gembutsu Gemba approach. We anticipate an annual effect of approximately JPY 1.5 billion over the previous year, and in 2026, we will expand the benefits to procurement and logistics, accelerating the increased contribution to performance. Turning to markets to grow, in our U.S. business, we are anticipating changes in market structure and are promoting consumer tire business rebuilding. The Bridgestone brand will maintain its premium focus and will link the expansion of Dantotsu products and strategic customer channels to drive growth. Regarding the Firestone brand, in the Better and Good Plus segments, where we anticipate changes caused by U.S. tariffs, we aim to expand our presence. Firestone is a traditional American brand founded in 1900 and celebrating its 125th anniversary in August 2025. Under the theme "Since 1900," we would re-strengthen collaboration with the US Indy Series Motorsports and other initiatives, enhance brand strength, and promote enhancement of Dantotsu products, including the launch of new products. Starting in 2026, we plan to expand new products equipped with ENLITEN® regarding channels. We are advancing the development of new family channels. The Firestone brand channels have 2,200 outlets nationwide. Firestone Complete Auto Care Equity Retail Network and Firestone Family Channel Dealers ratio exceed 80%, which is a key strength of our company. In the second quarter, direct retail sellout of the Firestone brand expanded year- on- year, and we will comprehensively reinforce the Firestone brand for the second half of 2025 and beyond.
For commercial B2B solutions with mining and aviation solutions at the core, we are expanding our offerings based on co-creation with our customers. In the mining sector, we deployed our Dantotsu product, Bridgestone Mastercore, to approximately 130 mines and driving the expansion of our solutions through Gembutsu Gemba approach. In aviation solutions, as a new co-creation initiative, we launched a new solution with Cebu Pacific Air. For the first time, we have officially launched our proprietary individual tire management system, Easy Track, supporting the efficiency and accuracy of tire inventory management. Going forward, we will continue to expand our solutions by fusing real and digital capabilities and amplify the value of Dantotsu products while increasing its contribution to the company's business performance. This is the first half of the financial results summary by business portfolio reflecting these activities. The premium tire business achieved an adjusted operating profit margin of 13.5%.
The solutions business, which is our growth business, continued to improve profitability. It achieved a 145% increase in adjusted operating profit over the previous year, an improvement of an adjusted profit margin of 2.2%. In retail, commercial B2B solutions saw an adjusted operating profit increase of 149% year- on- year. Retail and services also saw an increase of profit driven by improved European retail operations, an increase of 143% over the previous year. On the other hand, the diversified products business maintained profitability but continues to face significant challenges. Strengthening and accelerating business rebuilding efforts are now urgent priorities. Finally, I shall give you the fiscal 2025 guidance. Assuming that we counter the direct impact of U.S. tariffs, there is no change in the fiscal guidance announced in February with the adjusted operating profit of JPY 505 billion and profit from continuing operations of JPY 253 billion.
The dividend per share forecast remains at JPY 230. Capital policy is being implemented as originally planned. Regarding U.S. tariffs, while uncertainty remains high, the impact on adjusted operating profit due to direct effects was estimated to be around JPY 45 billion in the May guidance. Based on our latest assumptions as of August 5, this has been revised to approximately JPY 25 billion. In the first half, the impact was minor due to maritime transportation and inventory lead time, but the second half is expected to see impact across the board. In response, we are advancing additional business rebuilding measures as well as optimizing global sourcing. In addition, we've started compiling and implementing strategies tailored to each country and market in response to changes in business structures.
At the same time, in the second half of 2025, we will reinforce commercial business, rebuild the consumer tire business in the U.S., promote premium and mass strategy in the Indian consumer business, expanding sales of mid and small tire of our expand ORAC solutions. We will begin growth with quality in the markets to grow. In the Asian market, we will further strengthen our solid business foundation to adapt to changes. In our home market, for the Japanese REP, we will expand sales centered on our Dantotsu products while enhancing sales power through the Gembutsu Gemba approach, and we would thoroughly defend the family channel by reinforcing the best, better, good categories. Additionally, we would pursue steady global business cost reductions, business rebuilding in Europe, and other additional rebuilding initiatives and carry through what we have decided to do, turning changes into opportunities.
Meanwhile, given the ongoing high level of uncertainty in the business environment, we are also anticipating risks and opportunities. These factors are not incorporated in our fiscal guidance. As for risks in our May guidance, we reflected potential economic slowdown in the U.S. economy and anticipated an indirect negative impact of around JPY 20 billion on adjusted operating profit. This estimate has been scrutinized based on the latest U.S. GDP growth rate and other factors and revised this to approximately JPY 10 billion. Additionally, we view delay in business rebuilding of diversified products business as a risk factor. Of course, we will closely monitor changes in the business environment and take appropriate measures promptly. Regarding opportunities, we will primarily focus on further accelerating the initiatives we have previously outlined, and we would strengthen our business quality to counter risks.
I've summarized our performance for the first half and our outlook for the full year. First, in 2025, the year that we have designated as emergency and crisis management, we will carry through what we have decided to do and launch growth with quality, starting in the second half, so as to evolve into a strong Bridgestone that can thrive in turbulent times. I kindly ask for your continued understanding and support. Thank you very much for your attention.
That was Mr. Ishibashi, our Global CEO, on the first half results and the guidance on the four-year basis. Next, we move on to Global CFO, Mr. Naoki Hishinuma, who will talk on the financial results for the first half of fiscal 2025.
Hello, everyone. I am Hishinuma in charge of finance. This is my agenda today. I now begin with an explanation of the consolidated financial results for the first half of 2025. For the first half of 2025, consolidated revenue decreased year-on-year while operating profit increased. The adjusted operating margin improved by 0.6 percentage points year-on-year, landing at 11.1%. Net income attributable to the owners of the parent amounted to JPY 115.5 billion. We have steadily advanced the second stage of business rebuilding, aimed at reinforcing business quality while recognizing approximately JPY 70 billion in related expenses as adjustment items. However, due to factors such as the recognition of approximately JPY 63 billion in gains from the sales of fixed assets in the prior year, the net income decreased year-on-year. I will now explain the factors contributing to the year-on-year change in adjusted operating profit.
Cost increases due to rising raw material prices, particularly natural rubber, and inflation, as well as reduced profits in the Brazil business and the UPI for the inventory, were offset by improvements in selling prices and product mix. Steady progress in business rebuilding to reinforce business quality and the effects of global business cost reductions resulted in a year-on-year increase in adjusted operating profit. Consolidated financial results by segment. In the Japan segment, sales remained steady, particularly in mining tires, resulting in an increase in revenue. However, the segment was impacted by reduced profits in the chemical and industrial products business and the sports and cycle business, as well as the effects of the strong yen and overseas export transactions, resulting in a year-on-year decrease in profits.
In the three overseas segments outside Japan, business cost reductions, along with business quality reinforcement through business rebuilding, contributed to the increased profits compared to the prior year, even in a business environment where inflation in raw materials and costs continued and profitability also improved. In the Americas, the North American truck and bus tire business contributed to increased profits and improved profitability. Europe increased sales of passenger car tires for the aftermarket segment, particularly high-rim diameter tires, and improvements in the sales price mix contributed to improved profitability. Performance by product. Passenger car and light truck tires saw sales of aftermarket tires remaining at the previous year's level, but a decrease in sales volume of regional equipment tires led to a decline in revenue. With the higher raw material costs, the segment reported a year-on-year decline in profit.
However, the expansion of premium tires such as high-rim diameter tires and an increase in their weightings in the overall sales mix continued profit margin of over 10% in par with the prior year. Truck and bus tires saw continued sales growth centered on North American retail tires, resulting in an increase in profits compared to the prior year. The effects of business rebuilding are also emerging gradually. Specialty segments saw a significant decline in sales volume of agricultural machinery tires, resulting in a year-on-year decrease in profits. Sales of mining tires remained steady, and B2B solutions expanded, though the impact of rising raw materials was there. Overall, the specialty segment maintained a high profitability of 21.2%. Diversified products and businesses do follow.
In the chemical and industrial products business, sales volume dropped over the previous year in the hydraulic coast and coal business due to a decline in demand for construction and agricultural machinery, leading to a decline in both sales and profit. In sports and cycle business, while the domestic golf business remained steady, reduced sales in the United States significantly impacted the top and bottom line, resulting in a decrease in revenue and profit. In the cycle business, although the sales volume exceeded previous year's level, the impact of the rising costs due to the exchange rate led to an operating loss. As for the diversified products business in the Americas, despite the continued challenging business environment, profitability of business for new cars improved. This is the adjustment guidance. The total up to the first half, restructuring business rebuilding costs of approximately JPY 70 billion were accounted for.
The main breakdown was, for example, including the Laverne factory in the United States and other expenses for business rebuilding in America, South America, and Europe. Turning to balance sheet and cash flow highlights, total assets decreased to JPY 5.4811 trillion compared to the end of the previous year, partly due to the yen's appreciation. The ratio of cash and cash equivalents to monthly sales is temporarily high at the end of the first half due to the impact of fundraising in April. We will continue to promote lean management to achieve the year-end target of 1.5 months. For Finnish products, continued lean inventory management, excluding the FX impact, saw a reduction over the previous year. Free cash flow amounted to JPY 158.2 billion, with an improvement of operating cash flow over the previous year and selective investments increased by JPY 49.4 billion year- on -year.
Regarding the capital policy announced in February, we are steadily advancing share buybacks and debt utilization. The share repurchase program has progressed to approximately 47% as of the end of July, in line with our plan. Turning to the 2025 fiscal guidance. As previously explained by our CEO, the four-year guidance remains unchanged from the figures announced in February. The dividend forecast also remains unchanged at JPY 230/ share. Even if risks such as economic downturn in the U.S. that haven't been incorporated in our guidance materialize, resulting in a risk of about JPY 10 billion impact, we plan to maintain the dividend of JPY 230/ share, and we will maintain this, implement the capital policy. This concludes my presentation. Thank you for your attention.
That was our CFO, Mr. Naoki Hishinuma, talking on the financial results for the first half of fiscal 2025. Let us have questions and answers.
In order to proceed, we are going to designate and ask the questions from the previously designated analysts, and then we will move on to take questions from the media members. In the interest of time, one question per person to ask questions. I will call your name, so please mute your microphone. If you are able to do so, please turn on the camera and then start asking questions. Let's start with Mr. Maki from SMBC Nikko Securities. Please.
Maki from SMBC Nikko. Thank you. Thank you. I have two points that I would like to raise here. First of all, truck and bus tire business. It's been a while since you had such positive numbers to report in the U.S. The last minute in demand before the U.S. tariffs would start to take effect.
Would you analyze the reasoning behind the good performance in the truck and bus tires? Any concerns? Is it okay that I ask?
Rather than going into the second question, let me answer the first question. You basically are asking about our North American business. Last minute in demand before the U.S. tariffs were enforced. That did not happen. It's business as usual. North America as a whole, as I explained, truck and bus tire business, with such that new tires, retread, national fleet, maintenance service, we have a very strong package of the offerings. Whereas last year and the year before last did not really give us the best anticipated results, it is turning around so that we are starting to enjoy the better performance. Customers are coming back to us. The growth of our business exceeds the market growth.
Also, the structural changes of the market I talked about for the truck and bus tires, the major brands and non-major brands. For the major brands, the demand is starting to increase in the first half. In the second half, we anticipate the trend to become even more preeminent. The tailwind will continue to blow for us as we continue in the truck and bus tire business in North America. Thank you. Also, the major, non-major, the ratio between the two does not really change. Of course, the sense of the level of U.S. tariffs, we feel it more clearly. However, we really do not anticipate direct changes in the structure. Rather, between tier two and tier three, between those tiers, there probably will be changes which will become more noticeable in the second half.
The overall weighting or composition between the different tiers may not change, but between the tier two and tier three, that is where the changes will become much more noticeable. That is the tiers of our strength. Regardless of whichever tier, there are the particular competitors who are really honing into the particulars of the particular tier that they focus on. We are aware of that. Be it commercial tires or the consumer tires, it's been a while, but the good performance was there in the first half and is trying to continue in the second half. Now, the second half, North America, whatever will be the operating profit margin, either constant or a little bit better than in the first half is our good sense. The truck and bus tire business will continue to perform strongly.
For the consumer tire business in the second half, that is the segment where we will put further emphasis to grow. I would like to ask Mr. Hishinuma to share the numerics.
Right. Basically, as the CEO explained, the market conditions are such. The business, the rebuilding is continuing. We talked about the beginning of the good benefits of rebuilding efforts, whose benefits will become bigger in the second half than what we experienced in the first half.
The truck and bus tire business environment changes, be it U.S. tariff?
I guess there have been, there will be certain trigger points on which you'd move the members. I talked about the ratio changes between members, non-members, or the different tiers. Really, you know the total number of truck and bus tires in the market, such as in North America, is gigantic. It's within the gigantic base of automobiles.
Also, each company has its own areas of strength and areas to adapt.
Thank you. I think I understand. As we move on to the 2026 midterm business plan, what factors do you have in mind on the tire business or diversified products and business? There are different sets of factors. The structural changes and rebuilding efforts are starting to yield well. You said that the benefits will accrue even more largely in the second half than in the first half. What about the next year? 13% or whatever will be the roundabout percentage that you have in mind?
I don't think I am prepared yet to quote any particular numerics, but the final year of the 2024 midterm business plan is next year. We have been making various efforts to make better the business quality, to re-enhance our business quality.
North America and Europe business rebuilding has been attended to. For a solid Asia, Brazil, the diversified products, there are remaining issues to be tackled. For the business in Brazil, our expectation is that it will become improved to the break-even level by the end of the final quarter. The macro- view is that as 2024- 2025 years were spent with the deployment of much resources for business rebuilding, next year, which is the final year of the current round of MVP, we all enjoy the good fruits of that. We move on to the next round of MVP. It is not only the defense, but also the mantra of offense as well. The kind of products and services which will be a good match to our aspiration next year will be there. North America and Europe, in Europe, India, mining and aircraft premium tires.
Towards the end of next fiscal year, we believe that we will start to see the growth with profit. Right now, they're still attending to the needs for business rebuilding. Going beyond that phase, what to do specifically, we have to work it out. That's the overall landscape to make it better, obviously. Thank you.
Thank you very much. I place great expectation on the outcome.
Mr. Maki, thank you very much. Please limit your question to just one because of the interest of time. Now, turning to Mr. Sakamaki of Daiwa Securities.
Thank you. Good afternoon. My name is Shiro Sakamaki. Can you hear me? Yes. Good afternoon. I have a question about the changing market structure. Looking at the material of Mr. Naoki Hishinuma in the first half, the NDCs are linked. Increase in profit is the majority. To counter the tariff is what you said. What specifically do you plan to do to counter the tariff? The price increase may be more modest than your competitor. You produce locally and sell locally. Are you adapting better to the changing market structure? How specifically are you going to counter U.S. tariffs?
If you can do that well, do you think you can expand the market share? What do you anticipate by countering U.S. tariff direct impacts?
I'm sorry, Mr. Sakamaki, about pricing. I cannot really disclose in detail. There are various reasons, especially in relation to the European business. I cannot be specific about pricing. The market situation and market environment is carefully monitored to take action. Of course, we are always carefully balancing pricing with the volume. Firestone branding starts with better zone to good plus of tier two. To cover this better and good plus, we can have volume here. We're going to increase the Bridgestone brand and also the Firestone brand. In the first half, Bridgestone brand for consumer tires. Talking about the Firestone brand, it is increasing dramatically. I anticipate that this would grow even more in the second half.
For truck and bus, in the first half for both Bridgestone and Firestone, the volume has increased.
It's exactly what our CEO had stated. I hope this answer would suffice.
Okay. Understood. Thank you very much.
Mr. Sakamaki, thank you for your question. From Morgan Stanley MUFG Securities, Mr. Kakiuchi?
Yes, Kakiuchi from Morgan Stanley MUFG Securities. Listening to you, you covered a broad front about the North American, the passenger car tire business with a particular emphasis on the Firestone brand. It sounds quite interesting because obviously you feel encouraged. You see strong prospects going forward for that brand, and you introduced some numbers to us as well. Can you become a little bit more specific? Where in particular do you feel particularly encouraged about the prospect of the brand? Is it the products? Is it the relationships with your customers? I'm sure that you cover a wide spectrum of the factors. As you move towards next year, what particular areas would you focus more?
Firestone revival, if I may. Since the last half of the second half of last year, we've been working on that. The U.S. meeting, national data meeting I attended that was in the U.S., and I met with quite a few dealers indeed. We had active interactions. I made a commitment to them saying that, yes, we're going to do it. As to the directly owned and operated the family channel, those stores are doing quite well, much better. I met with them as well. The new modality of business that we can work with them. In all regards, that was the better level of customer satisfaction. Everyone is working. The Firestone network is going to be reignited. That per store, the revenue and profitability will be boosted. At the same time, I would like to increase the total number of directly owned and operated stores that's in the U.S., family channel stores.
We need the new products, not ENLITEN® yet, but Firestone the Affinity is the new model tire which is going to be deployed. Inclusive of what we can look to for next year. Those are all the opportunities with the Firestone. 80% of the Firestone business comes from the family channel. Why not focusing on the family channel on the stores to make them stronger? As they become much stronger, and then the brand gets stronger. The Indy had a car racing, that's a very strong opportunity. The Indy 500 and the US Trade America, there's a close ties between the two. As I go to many places, I listen to those linkages, linkage ideas and arrangements more and more. I talked about the national, the family channel stores and the need for the new D products step- by- step. Also the Indy 500.
Please do not remember that Firestone is enjoying its 125-year anniversary. That's a big celebration. The best zone is going to be covered by Bridgestone, but better and good growth. I believe that Firestone is going to have opportunities there. That is what we mean by turning changes into our opportunities going forward.
Thank you. Okay. Why Firestone so much? Is that perhaps because you feel that is the brand where there are certain missing pieces still?
Actually, last summer I had a sense of urgency because that is when I started to feel that relationships with dealers were perhaps starting to wane a little bit. That made me think that, first of all, we need to regain the trust from those family dealers. The new product in April, that was fine, but not sufficient. One after another, those dealers need the Firestone branded new products. The same for Bridgestone.
We have to expedite. We have to enhance the speed of the launch of new products. R&D as well. We are allocating more and more resources to the R&D operations. The U.S., after all, is a growing market. New products, channel relationships, dealers, whatever that we can do, we should.
It's very clear. Thank you very much.
Thank you very much, Mr. Kakiuchi. Now, Mr. Sakaguchi of Mizuho Securities, please.
Thank you. Thank you very much for your support. My name is Sakaguchi of Mizuho Securities. Adjusted operating profit of JPY 505 billion. That is the fiscal guidance. How confident are you to realize this? In implementing various measures, what do you think are effective? I think there are some measures that don't have enough effect. In the second quarter, JPY 45 billion was a direct impact coming from U.S. tariffs. You said that this would counter implementing this direct impact. This has been reduced to JPY 25 billion. If you have continued implementing measures against this JPY 505 billion of adjusted operating profit, there may be accumulated effect that you have realized. Maybe the impact coming from tariffs is now getting smaller. What is the certainty of this achievement of the fiscal guidance?
The point is, with the better market structure, I believe the profit would be able to cover a higher volume of business. What do you anticipate? JPY 45 billion of direct impact coming from tariffs was reduced to JPY 25 billion. The major impact would be coming in the second half. Changing the tariffs rate means that the terms of competition are going to change. With the changing terms of competition, there would be a change in the business environment. We are not the only company to take measures to counter this direct impact of JPY 45 billion. We have to adapt to the changing market structure and implement a series of measures. Therefore, this JPY 25 billion direct impact, of course, this would be countered. This requires measures that would be most appropriate for the changing terms of competition.
About the level of certainty, as mentioned earlier, OR, the mining tires, and APAC Asia and India have this solution that is growing very smoothly. Also, in North America, it is improving finally. Truck and bus, and also for the second half, the consumer tires would improve further. Last year, the European business had a very tough situation, but we promoted business restructuring. On an annualized basis, the European business outcome would be better. However, Brazil and also diversified products still have challenges. Therefore, we have to really offset the negative impact coming from these challenging businesses so that we are committed to this adjusted operating profit and our fiscal guidance. I talked about risks and opportunities towards the end of my presentation. For opportunities, in addition to what you see on the screen, we are accumulating various positive impacts coming from various business units.
Possible economic slowdown in the U.S. is unforeseeable. Even if this would materialize, we are accumulating effects on various aspects of our business so that we can surely counter these negative impacts.
Understood. Thank you very much.
Mr. Sakaguchi, thank you for your question.
Now let us change the gear. We would like to take questions from media reporters. Please make sure that you can show which media you're with and your name as well. Please press the button to let us know that you have a question. In the interest of time, once again, one question per media. Yamamoto-san from Diamond, please.
Yamamoto speaking from Diamond.
Yes, I can hear you.
Hello. Numbers were covered in your presentations as well as the questions by analysts, and I was able to have deepened understandings. Qualitatively, you did not suffer from business losses. The U.S. tariff impact, it seems that you're confident enough that you'll be able to counter the tariff as a source of the pressure. To carry out what you have decided to do and to counter back and so on, you seem to use particular expressions of deep phrasing.
I feel that you probably have the implied meaning there is that to the internal members within the organization or to the market?
Back in 2020, we were hit by COVID-19. For the first time in 69 years, we suffered from business losses. In the subsequent two years, we were able to accomplish a V-shaped recovery. Then came 2023, 2024, when in North America and Europe, what happened was that the targets that we aspired for fell short of our executions. The business performance was the level of JPY 480 billion or so, not reaching the level that we advocated. We've been through those experiences to remind us of the fact that it's in North America and Europe that we have to be able to carry out much more reliable business execution so that we can generate JPY 500 billion yen or over the developing profit.
The management and the operational quality, the focus on Gembutsu Gemba, all of those expressions that we always used in Bridgestone Corporation, the meaning and the significance was starting to weigh a little less. I felt that that was critical. If we associate, I still feel that there's a sense of the commitment and the responsibility so long as an associate belongs to this overall organization. All the more, we have to be worthy of showing the value to the market. The value to the market means that there are customers in the market who expect that Bridgestone will be able to deliver to their needs. We have accumulation of various legacy aspects. Those are nowadays, these days are turning into our decisions to close down the plans. The 2026, 2025, we have been through different phases.
We are at the second phase now so that we will be able to fare well to the negative legacy from the past. Only after we do that, we will be able to truly move on to the brighter future. In order to fare well to the past negative legacy, everyone who is a member of this global team and organization has to recognize that and has to commit himself or herself to that. Those are the reasons why I've been using particular slogan words.
Okay, very clear. Thank you very much. Thank you.
Mr. Yamamoto, thank you for your question. Mr. Kawahara of Nihon Keizai Shimbun.
Thank you. My name is Kawahara of Nihon Keizai Shimbun. Thank you very much for your presentation. I have a question. In the previous fiscal presentation, as measures against U.S. tariffs, I think you said that you would improve, increase the production of tires by 2 million units. I think the direct impact numbers had been revised downwards. Did you change the measures in the United States?
Bridgestone historically produced locally and sold and consumed locally. For the U.S. tariffs this time, I believe we are one of the companies with minimal negative impact. Enterprise imbalance is to be rectified, and we are to increase the production of tires by 2 million. That is unchanged. This requires productivity improvement, and the cost would be reduced. Also, the business quality can be improved, and we can reinforce our principle of producing locally and consuming locally. Therefore, this would allow us to improve the business quality.
I believe this is a very important step. Thank you.
Mr. Kawahara, thank you for your question. With this, we would like to close off the Q&A session. Ladies and gentlemen, thank you very much for attending this presentation meeting for the financial results of the first half of fiscal 2025. Thank you very much for attending the presentation meeting.