Financial Report. (January 1 ~ December 31, 2016)

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1 Financial Report (January 1 ~ December 31, ) February 14, 2017

2 Key Subjects Annual Financial Results Summary Changes in Scope of Consolidation, Affiliated Companies Financial Results Summary Impact from Adoption of IFRS (International Financial Reporting Standards) 2017 Annual Financial Results Forecast Financial Results Forecast Summary Capex / Depreciation, Tire Production Capacity etc. 1 Adoption of IFRS Sumitomo Rubber Industries, Ltd. adopted IFRS from this fiscal year ended December 31, Purpose To enhance the international comparability of financial information in capital markets To improve the quality of business management of the Group companies Notes on Disclosure Established Business Profit as original indicator to manage business performance ( Business Profit is Sales Revenue subtracted by COS and SGA) Sales Revenue and Business Profit shown in Japanese GAAP tables and graphs in this presentation are equal to Net Sales and Operating Income in previous reporting 2

3 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww wwwwwwww wwwwwwww wwwwwwww wwwwwwww wwwwwwww wwwwwwww wwwwwwww wwwwwwww w Changes in Scope of Consolidation Newly Included Consolidated Subsidiaries 73 ( (4)) +2 Excluded (6) Kuo-chu Rubber Co., Ltd. Dunlop Goodyear Tires, Ltd. (Taiwan/Sales company of tires) (Japan/Merged with Sumitomo Rubber Industries, Ltd.) Newly Included Equity-method Affiliates 3 ( (2)) - Excluded (2) Aono Resort Co. Ltd. Dunlop Motor Cycle Retail, Ltd. Tire SRITP Limited Dunlop Tire Trading (Shanghai) Co., Ltd. Dunlop Tire Trading (Tianjin) Co., Ltd. Dunlop Tire Trading (Dalian) Co., Ltd. Dunlop Tire Trading (Guangzhou) Co., Ltd. Sports Cleveland Golf Korea Co., Ltd. (South Korea/ Sales company of golf goods) Industrial & Other 3 Affiliated Companies (Consolidated Subs: 73, Equity-method Affiliates : 3) Manufacturing Companies Sales Companies Other Companies Domestic 1 Domestic 11 Domestic 7 Tire Overseas 8 Overseas 15 Overseas 5 Asia Pacific 4 Asia Pacific 10 Asia Pacific 1 Europe and Africa 2 Europe and Africa 3 Europe and Africa 2 Americas 2 Americas 2 Americas 2 Sports Domestic 2 Domestic 1 Domestic 5 Overseas 2 Overseas 10 Overseas - Thailand, U.S. Malaysia, U.K., Australia Canada, China, Hong Kong, South Africa, South Korea, Thailand - Domestic - Domestic 3 Domestic - Industrial & Other Overseas 4 Overseas 1 Overseas 1 Malaysia, China, Vietnam, Switzerland Hong Kong Switzerland TOTAL 76 Domestic 30 Overseas 46 4

4 Consolidated Financial Results Actual Actual 2015 Nov. 7 th Forecast Actual Actual 2015 Net Sales % 81 Operating Income (%) Ordinary Income (%) 74.3 (9.2%) 71.0 (8.8%) 77.1 (9.1%) 78.9 (9.3%) 96% 7 (8.6%) 90% 66.0 (8.1%) Profit % 53.5 Equity Income 5.6 (5.5) 0.1 ROE 11.7% 13.3% 13.5% D/E Ratio Japanese GAAP Forecast Feb. 12 th May. 10 th Aug. 8 th Nov. 7 th Net Sales Operating income Ordinary income Profit Sales Revenue % Business Profit (%) Operating Profit (%) 74.9 (9.9%) 73.3 (9.7%) 78.9 (9.9%) 89.2 (11.2%) 95% 82% Profit % Equity Income (5.6) ROE 9.7% 17.5% D/E Ratio Profit : Profit attributable to owners of parent The above note applies throughout this report 5 Major Differences between Japanese GAAP and IFRS Operating Income 2015 Increase (Decrease) (2.7) (1.2) IFRS Business Profit Increase (Decrease) 2015 (4.0) (5.5) (11.0) Decrease of Equity in earnings of affiliates Increase of tax burden Dissolution of the alliance with GY (2015 s profit under IFRS) (5.6) (12.7) (9.6) Impact relating to dissolution of the alliance with GY Gain on sales of GY and other companies investment securities ( s profit under Japanese GAAP) One-time amortization of Goodwill (2015 s loss under Japanese GAAP) Significant differences between Japanese GAAP and IFRS 21.9 Billion Yen 1.1 Others (5.9) 2015 Profit Increase (Decrease) (24.7) (30.6) Increase (Decrease) 2015 Profit 6

5 Impact from Adoption of IFRS on Consolidated Statements of Income Impact Main Factors Sales Revenue Net Sales (48.3) Offset of Sales revenue and Incentive bonus (46.8) Business Profit (%) 74.9 (9.9%) Operating Income (%) 74.3 (9.2%) +0.6 Cessation of amortization of Goodwill Operating Profit (%) 73.3 (9.7%) Profit 41.4 Profit 49.9 (8.6) Recognize Gain on sales of investment securities as Other comprehensive income (Non-recognition in P/L) (8.3) 7 Consolidated Financial Results by Quarter Jan.-Mar. Apr.-Jun. Jul.-Sep. Oct.-Dec. Actual Net Sales % (2.5) % (12.8) % (14.3) % (14.1) % (43.7) Operating Income (%) 13.7 (7.5%) 113% (9.0%) 100% () 11.7 (6.3%) 88% (1.6) 31.9 (13.0 %) 92% (2.7) 74.3 (9.2%) 96% (2.7) Ordinary Income (%) 12.6 (6.9%) 105% (7.9%) 79% (4.0) 12.0 (6.4%) 96% (0.5) 31.3 (12.8%) 89% (4.0) 71.0 (8.8%) 90% (7.9) Profit % % (1.0) % (9.2) % (4.8) % (5.9) Equity Income (1.1) () (0.9) (3.1) () (0.4) (5.5) 8

6 Consolidated Sales Revenue / Profit Billions of Yen %:Profit % :Record High % % % % % % 9.3% % % % % % % % Net Sales(JGAAP)/Sales Revenue(IFRS) : Left Operating Income(JGAAP)/Business Profit(IFRS) Operating Profit(IFRS) Ordinary Income(JGAAP) Profit attributable to owners of parent (JGAAP)/(IFRS) 9 Consolidated Net Sales / Operating Income by Reportable Segment Jan.-Sep. Oct.-Dec. Actual Actual 2015 Tire % % % Net Sales Sports % % % Industrial & Other % % % Total % % % Operating Income Tire % % % Sports % % % Industrial & Other % % % Total % % % 10

7 Consolidated Sales Revenue / Business Profit by Reportable Segment Actual Actual 2015 Actual Actual 2015 Sales Revenue Tire % Sports % Industrial & Other % Total % % % % % Business Profit Tire % Sports % Industrial & Other % Total % % % % % 11 Consolidated Business Profit by Reportable Segment Billions of Yen Tire Sports Industrial & Other Operating Income(JGAAP)/Business Profit(IFRS) 12

8 Consolidated Business Profit by Geographic Areas Billions of Yen (0.1) (1.4) 1.5 (1) Sales Revenue Japan Asia Others Total Japan Asia Others Operating Income(JGAAP)/Business Profit(IFRS) Overseas Sales Revenue Billions of Yen Consolidated Sales Revenue % of Overseas North America Europe Asia Others % 51% 53% 56% 57% 59% 59% 14

9 Consolidated Operating Income Walk ( Oct.-Dec.) Oct.-Dec Raw Material Raw Material Natural Rubber Pet. Related Others Price (5.2) Natural Rubber + Pet. Related Others Price +5.8 Volume& Mix Volume & Mix +0.6 Direct Fixed (1.0) Tire (2.1) Total (2.7) FOREX Average Exchange Rate USD EUR Expense Sports Direct Fixed FOREX Expense Sports Blue=Increase Red=Decrease Industrial & Other Industrial & Other 31.9 Nov. 7 th Forecast 3.3 (5.0) (0.7) (4.7) (1.7) (1.5) 0.5 (7.0) 2014 Q Q4 7.2 (6.3) (4.3) 1.8 (1.2) 1.2 (0.4) 0.2 (0.8) (2.6) 15 (3.2) (2.5) (0.6) () Oct.-Dec. Total Consolidated Operating Income Walk ( Annual) Raw Material (20.7) Natural Rubber Pet. Related (11.6) (8.7) (5.2) Others Natural Rubber Pet. Related Others Raw Material Price Price Volume& Mix Volume & Mix Direct Fixed Tire (5.2) Total (2.7) Price Q1 Q2 Q3 Q4 Ave. Natural Rubber ($/kg) (TSR 20) Crude Oil (DUBAI) ($/bbl) Average Exchange Rate USD EUR Direct Fixed FOREX Expense Sports Industrial & Other Nov. 7 th Forecast 26.4 (20.5) (11.3) (10.2) (4.4) (7.1) FOREX Expense Sports Blue=Increase Red=Decrease Industrial & Other Total (26.7) (7.3) 3.0 (5.8) 0.1 (6.3) (1.2) (2.7) (9.2) 16

10 Consolidated Business Profit Walk ( Annual) Raw Material Price (20.7) Natural Rubber Pet. Related Others Volume& Mix +2.7 Direct Fixed (11.6) Price Q1 Q2 Q3 Q4 Ave. Natural Rubber ($/kg) (TSR 20) Crude Oil (DUBAI) ($/bbl) (8.7) (5.2) Average Exchange Rate USD EUR Blue=Increase Red=Decrease FOREX Expense Sports Industrial & Other 5 4 Raw Material Price Volume & Mix Tire (6.1) Total (4.0) Direct Fixed FOREX Expense Sports Industrial & Other Nov. 7 th Forecast Total Consolidated Operating Income Analysis by Factors Period Operating Income Raw Material Price Volume & Mix Direct Factors Fixed FOREX Expense Sports Industrial & Other Q (6.4) 8.3 (6.0) (3.1) 0.3 (0.9) (2.0) (1.2) (0.9) (0.9) Q (7.4) (0.5) 0.8 (1.6) 0.1 (4.7) 0.4 (0.4) Q (0.7) 8.3 (7.0) (2.1) 0.8 (0.9) (0.7) Q (2.6) 7.2 (6.3) (4.3) 1.8 (1.2) 1.2 (0.4) 0.2 (0.8) Annual 77.1 (9.2) 37.7 (26.7) (7.3) 3.0 (5.8) 0.1 (6.3) (1.2) (2.7) Q (4.7) (0.1) 0.7 (3.6) (0.4) (2.6) 1.1 (0.1) Q () 7.7 (6.2) (4.1) (0.4) Q (1.6) 4.1 (4.6) (2.9) (4.7) (0.3) Q (2.7) 3.4 (5.2) (1.0) (3.2) (2.5) (0.6) () Annual 74.3 (2.7) 26.5 (20.7) (11.6) (8.7) (5.2) (vs Nov. 7 th Forecast) (0.2) 4.0 (0.3) (0.3) 1.5 (0.8) 0.9 (0.5) 18

11 Consolidated Statement of Financial Position Actual Actual 2015 Main Factors Current assets (8.8) Non-current assets (26.0) Total assets (34.8) Current liabilities (33.2) Non-current liabilities (9.4) Total liabilities (42.5) Shareholders equity Non-controlling interest Total equity Total liabilities and equity (34.8) Equity Ratio 47.8% 45.3% +2.5P Cash and cash equivalents Trade and other receivables Inventories Other current assets Property, plant and equipment Intangible assets( including Goodwill) Other financial assets Net defined benefit asset Interest-bearing debt ( ) Trade and other payables Income tax payable Net defined benefit liability Profit Dividends paid (7.1) (5.5) (7.5) (7.8) (0.1) (15.5) (3.5) (57.6) (0.6) (15.7) Currency translation differences of foreign operations (17.4) 19 Forecast Consolidated Financial Results Annual Forecast 2017 Actual First half Forecast 2017 Sales Revenue % Business Profit (%) 5 (5.9%) 74.9 (9.9%) 67% 15.0 (3.9%) Operating Profit (%) 5 (5.9%) 73.3 (9.7%) 68% 15.0 (3.9%) Profit % 1 ROE 8.0% 9.7% ROA 5.5% 8.2% D/E Ratio ROA : Business Profit / Total Assets 20

12 Forecast Consolidated Sales Revenue / Profit Billions of Yen % % % % % % 9.3% % % % 49.9 %:Profit % :Record High % 9.9% % % % % Net Sales(JGAAP)/Sales Revenue(IFRS) : Left scale Operation Income(IFRS) Profit attributable to owners of parent (JGAAP)/(IFRS) Forecast Operating Income(JGAAP)/Business Profit(IFRS) Ordinary Income(JGAAP) 21 Forecast Consolidated Sales Revenue / Business Profit by Reportable Segment Sales Revenue Annual Forecast 2017 Actual First half Forecast 2017 Tire % 33 Sports % 38.0 Industrial & Other % 17.0 Total % Business Profit Tire % 12.5 Sports % 1.5 Industrial & Other % 1.0 Total %

13 Forecast Consolidated Business Profit Walk (2017 Annual) Billions 8 of Yen Raw Material (55.1) Raw Material Natural Rubber (24.9) Pet. Related (29.1) Others (1.1) Price Price Natural Rubber Pet. Related Others Volume& Mix Volume & Mix +4.3 Direct Fixed (5.1) Average Exchange Rate USD EUR Tire (23.9) Total (24.9) Price Q1 Q2 Q3 Q4 Ave. Natural Rubber ($/kg) (TSR 20) Crude Oil (DUBAI) ($/bbl) +0.3 (5.9) (1.3) Direct Fixed FOREX Expense Sports Blue=Increase Red=Decrease +0.3 Industrial & Other (20.7) (11.6) (8.7) (5.2) (4.0) FOREX Expense Sports Industrial & Other Total 23 Tire Sales Volume (Comparison %) 2015 Actual Actual 2017 Forecast Jan-Mar Apr-Jun Jul-Sep Oct-Dec Annual Jan-Mar Apr-Jun Jul-Sep Oct-Dec Annual Jan-Jun Jul-Dec Annual Domestic O.E. Domestic Rep. Overseas O.E. Overseas Rep. North America Europe Asia Others Total Total Tire Sales (000 Units) 98% 89% 89% 92% 92% 87% 92% 100% 108% 96% 106% 101% 103% 81% 107% 101% 89% 93% 101% 101% 100% 101% 101% 102% 103% 103% 104% 99% 90% 111% 101% 106% 101% 114% 102% 105% 102% 111% 107% 101% 105% 107% 110% 106% 109% 106% 106% 98% 104% 108% 114% 112% 104% 127% 131% 154% 129% 118% 108% 105% 91% 104% 105% 99% 102% 98% 81% 74% 78% 82% 97% 114% 105% 118% 108% 139% 174% 158% 104% 98% 103% 97% 100% 99% 94% 101% 99% 98% 103% 106% 105% 97% 105% 113% 106% 105% 119% 112% 113% 96% 109% 102% 109% 105% 97% 102% 101% 102% 100% 104% 102% 105% 100% 103% 106% 110% 108% 24,640 26,150 27,250 31, ,620 25,510 26,780 28,620 31, ,640 55,420 66, ,700 24

14 Tire Overseas Rep. Volume by Regional Segment 000 units 70,000 North America South & Central America ,000 Europe (including Russia) Middle East Oceania Africa Asia ,000 40,000 30,000 20, , Forecast Forex(USD) Numbers shown in the bar graph are yoy % by region 25 Equity / Interest-Bearing Debt Billions of Yen 50 Times Equity Ratio 2012/ / / /12 /12 Equity Interest-bearing debt D/E Ratio 2015/12 / % 38.0% 42.5% 45.3% 48.0% 45.3% 47.8% 26

15 Cash Flows Billions of Yen (5) (33.0) (42.1) (30.7) (42.1) (62.2) (68.3) (71.6) () Cash flows from operating activities Cash flows from investiong activities Free cash flow 27 Capex and Depreciation (Tangible Assets Only) Billions of Yen Forecast Total Capex Overseas Depreciation 28

Tire Production Capacity 107% 105% 104% 111% 101% 102% t/mth 60,000 50,000 40,000 30,000 20,000 10,000 60,600 61,500 62,800 2,400 2,400 2,700 450 900 1,700 54,400 950 1,400 1,400 52,150 1,700 1,700

750 9,350 9,350 9,350 9,350 9,350 9,350 6,150 6,150 6,150 6,150 6,150 6,150 Overseas Domestic U. S.

16 Tire Production Capacity 107% 105% 104% 111% 101% 102% t/mth 60,000 50,000 40,000 30,000 20,000 10,000 60,600 61,500 62,800 2,400 2,400 2, ,700 54, ,400 1,400 52,150 1,700 1, ,700 49, , ,500 14,500 14,550 10,800 11,400 12, ,300 1,900 1,900 1,900 2,050 6,650 6,650 6,650 7,000 7,000 7,000 5,100 5,100 5,100 5,100 5,100 5, ,350 9,350 9,350 9,350 9,350 9,350 6,150 6,150 6,150 6,150 6,150 6,150 Overseas Domestic U. S. Turkey South Africa Brazil Thailand China(Hunan) China(Changshu) Indonesia Izumiotsu Miyazaki Nagoya Shirakawa 10,350 10,350 10,350 10,350 10,350 10,350 0 % of Overseas 2012/ / / /12 / /12 Forecast 47% 49% 51% 56% 57% 58% 29 Tire Production Volume and Operating Ratio 102% 102% 110% 102% 106% 104% 000 units % Forecast Total Production Volume Overseas Operating Ratio(%) 40 30

17 New Products / New Technologies SRIXON Soft tennis ball NEW XXIO PRIME NEW SRIXON Z-STAR SRIXON REVO CX 31 Market Price : Natural Rubber / Crude Oil / Naphtha US /kg 500 NR SICOM TSR20 (Ave.) /kl Crude Oil (DUBAI) Naphtha Price (prod. in Japan) US $/bbl

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Financial Report. (January 1 ~ September 30, 2012) Sumitomo Rubber Industries, Ltd.

Financial Report. (January 1 ~ September 30, 2012) Sumitomo Rubber Industries, Ltd. Financial Report (January 1 ~ September 3, 212) Sumitomo Rubber Industries, Ltd. Key Subjects 212 3 rd Quarter Financial Results Summary Changes in Scope of Consolidation, Major Affiliated Companies Financial