Highlights in FY2013 (ended Dec. 2013)

Financial Overview (Consolidated)

(in millions of won)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012 (*)	Rate of change (%)	Remarks
Sales	7,069,237	2,317,223	205.1	-
Operating income	1,031,006	308,592	234.1	-
Net income	735,031	231,014	218.2	-

*Due to corporate divestiture, fiscal year 2012 was from Sept. 1, 2012 to Dec. 31, 2012.

Contracts

BMW
-The Company will supply the Ventus S1 evo2 SUV tires for the BMW X5 as standard equipment. The X5 will be the fifth BMW model following the MINI, 1 Series, 3 Series and 5 Series, for which Hankook Tire has received orders. (From a press release, November 27, 2013)

-The Company's Ventus S1 evo2 225/50R17W tires were chosen as original equipment tires for the BMW 5 series, including the 520i, 528i, 530i, 535i, and 520d. Deliveries of these tires have already begun in August 2013. (From a press release, September 2, 2013)

Daimler
-The Company's Ventus Prime2 245/55R17W tires were chosen by Daimler as original equipment tires for the Mercedes-Benz S-Class. Deliveries of these tires already began in June 2013. The tire supplier has also been supplying the Ventus S1 evo2 225/50R17W tires for the Mercedes-Benz E-Class since September 2013. (From a press release, September 2, 2013)

Toyota
-The Company's Optimo H426 tires were selected by Toyota for the 2014 model-year Corolla for the North American market. Deliveries of the tires have already begun in July 2013. The tire size is 195/65R15S. (From a press release, September 2, 2013)

Nissan
-The Company's Optimo H426 tires were selected by Nissan for the 2014-model-year Altima for the North American market. Deliveries of the tires have already begun in July 2013. The tire size is P215/60R16T. (From a press release, September 2, 2013)

Honda
-The Company's Optimo H426 P205/55R16H tires are fitted on the 2013-model-year Honda Civic sold in North America. Deliveries of the tires began in January 2013. (From a press release, September 2, 2013)

R&D Structure

Facility	Location
Main R&D Center	Daejeon, Korea
Akron Technical Center	Ohio, USA
China Technical Center (CTC)	Jiaxing, Zheziang Province China
Europe Technical Center (ETC)	Hannover, Germany
Japan Technical Liaison office (JTC)	Osaka, Japan

-In September 2013, the Company has signed a memorandum of understanding (MOU) with Sangju City in Gyeongsangbuk-do to establish Hankook Tire Test Engineering Center in the city. The company intends to invest 253.5 billion won in this project by 2020 to construct a 1,320,000 square meter testing facility, which will become one of the largest of its kind in Korea. The new facility will be able to design, test and analyze ultra-high performance tires and truck and bus tires. In addition, it will be capable of producing test tires. Hankook Tires is also working on a new project to set up a central research center in Daejeon City. (From a press release, September 12, 2013)

-In January 2013, the Company announced that it would establish the Central Research Center at the Daeduck Research Complex, Daejeon City. The new facility is expected to be completed in 2015 having the total floor area of 99,174 square meters. (From a press release, January 8, 2013)

R&D Expenditure

(in millions of won)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Amount	123,936	47,558	116,721
% of sales	1.8%	2.1%	1.8%

R&D Activities

-In September 2013, the Company announced that it has developed a low-cost separator for a fuel cell by utilizing its original carbon composite materials and molding technology. Mixing carbon black with other particles improved electric conductivity. Mass producing the new separator reduced cost significantly. (From a press release on September 10, 2013)

Capital Expenditure (FY ended Dec. 31, 2013)

(in millions of won)

		Planned amount of investment	Amount invested
Korea	New facilities and equipment	51,977	40,308
	Maintenance and repair	328,820	141,681
China	New facilities and equipment	69,628	30,480
	Maintenance and repair	101,717	95,561
Hungary	New facilities and equipment	240,450	80,637
	Maintenance and repair	15,256	13,755
Indonesia	New facilities and equipment	50,643	40,050
	Maintenance and repair	-	-
Total		858,491	442,472

 

Investment Projects

<USA>
-In October 2013, the Company  announced that it will invest approximately USD 800 million to establish a new tire plant in Tennessee U.S.A. Construction is scheduled to start at the end of 2014, and tire production is slated to begin during 2016. The plant's yearly production capacity is expected to reach 11 million units by December 2018. (From a press release, October 14, 2013)

<Indonesia>
-In September 2013, the Company held a ceremony to celebrate the completion of its new plant in Bekasi, West Java, Indonesia. Approximately USD 353 million was invested in this facility that will have the capacity to produce 6 million ultra high-performance tires, passenger car tires, and light-truck tires per year. The new plant is expected to increase the Company's annual global production volume to 93.8 million tires per year. (From a press release on September 17, 2013)

<China>
-In June 2013, the Company's new plant in Chongqing, China started producing truck and bus tires. The factory is capable of making 2,400 tires per day. Hankook Tire plans to add another production line to this facility to manufacture passenger vehicle tires as well. (From a press release, July 31, 2013)

<Hungary>
-In May 2013, the Company has signed a memorandum of understanding with the Hungarian government to expand its plant in Hungary. The company is intending to invest 3.13 million euros by 2015, planning to start construction work in July 2013 and launch new operations in 2015. The expansion is expected to increase the plant's tire production capacity to 17 million units a year. The existing factory, which commenced operations in 2007, produces tires for passenger vehicles, SUVs and light trucks. It has been raising its production capacity in steps, from 6 million units in 2010, 9 million units in 2011 and 12 million units in 2012. (From a press release, May 30, 2013)