Recently, Bridgestone announced its 2024 performance. Following sales and profits falling short of target expectations, the company has accelerated its group restructuring plans.
Profit falls short of expectations
In 2024, Bridgestone's revenue was approximately 210.354 billion Chinese yuan, an increase of 2.7% year-on-year; however, operating profit decreased by 8% to 21.59 billion Chinese yuan, and the net profit attributable to the parent company's shareholders declined by 14% to 13.681 billion Chinese yuan.
The company stated that despite the increase in sales proportion of high-value-added products, the soaring costs of raw materials (especially synthetic rubber, carbon black) due to global inflation and the expenses related to the restructuring of European operations have eroded profit margins.
Simultaneously, the strong rise of the Chinese electric vehicle market has accelerated the change in the demand structure for traditional tires, with the market demand for original equipment tires for passenger vehicles slowing down, forcing companies to accelerate their shift towards the high-end segment of the replacement tire market.
In the Japanese market, the company's revenue slightly decreased by 1%, but by cutting low-margin product lines and focusing on the high-end replacement tire market, the operating profit margin remained at 15.3%. However, the concern lies in the significant decline in export business, indicating the pressure on Japanese companies from the localization trend of Asian supply chains.
In the Americas region, the North American market has been impacted by the influx of low-cost imported tires from Thailand and South Korea, resulting in a loss of market share for replacement tires. However, through channel optimization, the proportion of high-value-added products has increased to 42%. Simultaneously, Latin American operations have become the greatest drag, with the depreciation of the Argentine peso and economic stagnation in Brazil leading to increased losses in the region.
Europe, the Middle East, and Africa market, the company's operating profit surged by 155% year-on-year, mainly due to cost optimization after exiting the Russian market and the transformation towards "premiumization + service orientation". In particular, the penetration rate of electric vehicles in Europe has exceeded 35%, forcing the company to accelerate the development of low rolling resistance tires, and the advantages of technological reserves are gradually being released.
New restructuring targets, South America layoffs imminent
According to its 2025 business plan, Bridgestone will focus on increasing the sales of high-end tires while reducing costs and restructuring its operations in key markets.
The plan to expand the sale of high-value tires aims to ensure increased adoption of Enliten technology, which the company describes as a lightweight and sustainable tire technology. Bridgestone's goal is to equip Enliten technology tires on 170 vehicle models by 2025, up from 117 models in 2024.
Bridgestone is also focused on large-sized tires, with plans for sales of original equipment tires in the 18-inch and above segment to exceed 70% in North America and Europe. For the replacement market, Bridgestone aims to achieve a sales rate of over 45% for large-sized tires.
Furthermore, the group has implemented cost reduction plans in global procurement, supply chain management, and on-site productivity.
In Europe, Bridgestone has integrated its retreading business: it will close its Lanklaar plant in Belgium by 2024 and consolidate operations into Poland. In 2025, the group is reviewing plans to further optimize European production, sales, technology centers, and corporate activities under the "Rebuild Business" plan. This includes an assessment of truck and bus tires and retail operations, as well as measures that could potentially increase efficiency.
In the United States, Bridgestone has stated that the focus is on simplifying its business footprint to enhance its position in the production of high-end tires. These measures include the recent announcement of the closure of the LaVergne tire plant, a reduction in capacity at its Des Moines agricultural tire plant, and layoffs across the company, sales, and operations departments.
According to the statement, the group also plans to "rebuild" its diversified product business in North America by 2025. For Latin America, Bridgestone stated that its goal is to "transform" the business model: by reducing production capacity and labor, focusing on cost optimization in Argentina and Brazil.
In Asia, the group aims to simplify its "multi-layered" structure in Japan and reorganize its wholesale and retail operations for replacement tires in Japan and Thailand. Furthermore, the group will strengthen its focus on the sale of high-end passenger car tires in China.
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