News Release

Sales Increase 10.1% in Latest Fiscal Year at Yokohama Rubber

Tokyo - The Yokohama Rubber Co., Ltd., announced today that its net sales rose 10.1%, to 497.4 billion yen, in the fiscal year ended March 31, 2007. That sales total was the company's highest ever. The sales growth resulted from unit sales gains and from the weakening yen, which amplified the yen-denominated value of sales outside Japan. Sales increased in Yokohama's Tire Group and in its Multiple Business (diversified products) Group.

Operating income declined 4.0%, to 21.1 billion yen, as raw material costs outpaced the increase in net sales, and net income declined 23.7%, to 16.4 billion yen. The decline in net income also reflected a tax benefit recorded in the previous year in connection with earlier write-downs of equity in a U.S. subsidiary.

By segment, sales increased 11.0% in Yokohama's Tire Group, to 372.7 billion yen, led by growth in Europe and in Australia and other markets of Oceania. Yokohama's tire sales also increased in Japan, led by growth in sales to automakers. Business in replacement tires declined because of a slump in demand for winter tires, which resulted from reduced snowfall. Operating income in the Tire Group declined 19.0%, to 14.7 billion yen, diminished by surging prices for natural rubber and for other raw materials. Sales increased 7.3%, to 124.7 billion yen, in Yokohama's Multiple Business Group, led by growth in high-pressure hoses, marine fenders, and aircraft products. Operating income in the group rose 72.5%, to 6.8 billion yen, largely on the strength of improved profitability in aircraft products.

Yokohama's projections for the year to March 31, 2008, call for net sales to increase 7.0%, to 532.0 billion yen, and for operating income to increase 35.3%, to 28.5 billion yen. The company is increasing its supply capacity by expanding the production capacity of its tire plants in Thailand and the Philippines. A decline in foreign exchange gains and other nonoperating factors appear likely to restrain the growth in pretax income, and management projects that net income will rise 6.9%, to 17.5 billion yen.

Management has proposed a year-end dividend of 7 yen. Together with the interim dividend of 5 yen, that would bring the annual dividend to 12 yen.

Financial Highlights