Financial Overview

(in millions of JPY)

	FY2010 (ended Mar. 2011)	FY2009	Rate of change (%)	Factor
Overall
Sales	519,742	466,358	11.4	-
Operating income	29,490	21,454	37.5	-
Ordinary income	23,356	18,744	24.6	-
Current net income	13,923	11,486	21.2	-
Tire Operations
Sales	413,372	369,210	12.0	Sales of tires for new vehicles marketed in Japan surpassed those of the previous year in terms of both production volume and sales turnover. In the first half of the year, with the approaching end to eco-car sales incentives, there was last-minute demand for new cars. In the second half of the year, initiatives the Company took to increase tire content responding to new business, and measures to combat stagnating sales, were successful.
Operating income	24,952	20,646	20.9	-

Contracts

-Toyota
In February 2011, the Company announced that it has started to supply its original equipment tires to both the new Vitz and the new Lexus CT200h manufactured by Toyota Motor Corporation. The Vitz uses the 165/70R14 S73BluEarth tires. In addition to incorporating the basic and material technology of the BluEarth brand, the tires offer advanced safety feature and riding comfort. The new Lexus CT200h, on the other hand, is equipped with the dB E70 tires based on a concept of quiet driving. The tires are 205/55R16 and 215/45R17 in size. Being developed exclusively for the luxury model, the tires can provide enhanced driving stability and riding comfort, while contributing to improving fuel economy to support the hybrid technology. (From an article in the Nikkan Jidosha Shimbun on February 22, 2011)

-Audi
In January 2011, the Company announced that its ADVAN Sport tires have been chosen as original equipment on the Audi A7 Sportback launched in Europe. The tires used in the A7 Sportback were developed jointly with Audi based on Yokohama Rubber's ADVAN Sport designed for high-end vehicles. The 265/35R20 tires (for both front and rear) provide stable running at extreme speeds of over 300 kilometers/hour, together with good dry and wet grip, and a comfortable, quiet ride. In addition, they achieve a high level of environmental friendliness, offering improved wear and reduced rolling resistance. For Yokohama Tire, this is the fourth time that its tires have been used as OE equipment on Audi vehicles. (From an article in the Nikkan Jidosha Shimbun on January 11, 2011)

-Porsche
In August 2010, the Company's ADVAN Sport tires, in sizes 275/45R20 110Y XL and 295/35R21 107Y XL, have been selected as original fitment for the new Porsche Cayenne. The tires, based on ADVAN Sport technology, were jointly developed by Porsche and Yokohama Rubber. The ADVAN Sport tires were also used on first generation Cayenne models. The new Cayenne was launched worldwide in 2010. (From a press release on August 3, 2010)

Business Plan

The Yokohama Rubber Co. Ltd. President Tadanobu Nagumo spoke to the press on Dec. 15 and revealed that the company will start studies on building new tire plants in several developing countries including Brazil from 2012 and another plant in China. With booming demand in emerging countries, supply deficiency of its current production network is expected in the medium term. The tire manufacturer, therefore, will aggressively increase facility investment. It is currently carrying on the Phase II of the Grand Design 100 project in its mid-term management plan through FY 2011, and will enter the Phase III in the next mid-term plan starting in FY 2012. "Considering the possible demand in FY 2014, the last year of the Phase III, the current production capacities will be short of 10 million tire supply per year." The Yokohama Rubber, therefore, has decided that further expansion of its production network should be necessary.  (From an article in the Nikkan Jidosha Shimbun on December 17, 2010)

Outlook for FY2011

(in billions of JPY)

	FY2011 (Mar. - Dec.)	FY2010 (Apr. - Mar.)
Sales	471.0	519.7
Operating income	21.0	29.5
Ordinary income	19.0	23.4
Net income	11.0	13.9

*The fiscal year reporting period will be from January through December, starting in FY2011.

Tire Production Capacity (Number of tires)

(unit: ten thousand tires)

	2010年	2011年	2012年
Japan
Mie （Truck&Bus, Light Truck）	590	590	590
Mishima （Passenger）	1,390	1,390	1,390
Shinshiro （Passenger）	1,410	1,410	1,410
Shinshiro Minami （Passenger）	240	280	280
Japan Total	3,630	3,670	3,670
Overseas
U.S.A （Passenger）	560	620	620
U.S.A （Truck&Bus）	50	50	58
Philippines （Passenger）	700	700	700
China （Passenger）	310	510	510
China （Truck&Bus）	34	34	34
Thailand （Passenger, Light Truck）	240	320	400
Thailand （Truck & Bus）	35	35	35
Russia	-	70	100
Overseas Total	1,929	2,339	2,457
Total	5,559	6,009	6,127

R&D Expenditure

(in millions of JPY)

	FY2010	FY2009	FY2008
Overall	12,747	13,280	15,277
Research Headquarters	1,316	1,517	1,829
Tire Operations	7,946	7,944	9,098

R&D Structure

facility	Location
RADIC (Research & Development Integrated Center)	Kanagawa, Japan
D-PARC (Daigo Proving-Ground and Research Center)	Ibaraki, Japan
T*MARY (Takasu Motoring and Researching Yard)	Hokkaido, Japan
Tire Test Center of Asia	Rayong, Thailand

Capital Investment

(in millions of JPY)

	FY2010	FY2009	FY2008
Overall	24,900	17,500	43,300
Tire business	22,200	14,800	38,400

-The Company invested 6.6 billion yen to enhance production facilities and improve productivity and product quality in order to produce new products. This enabled the Company to produce high-performance products.

-The Company further invested 6.5 billion yen in Yokohama R.P.Z. L.L.C (Russia) to increase passenger-car-tire and truck-tire production facilities.

Investments Outside Japan

Philippines
In February 2011, the Company announced it will boost tire production capacity in the Philippines by 10 million by 2017 with a total investment of some 50 billion yen. This is a measure taken to augment supply capacity to satisfy a steadily growing demand for tires worldwide. Yokohama Rubber’s local subsidiary Yokohama Tire Philippines will increase its production capacity. A new production facility will be built at the site of about 300,000 square meters adjacent to the existing tire plant. The expansion is taking place in two phases. The first phase construction will begin this month for production of additional 3 million tires in 2013, followed by the second phase construction starting in 2014 for production of further 7 million tires in 2017. (From an article in the Nikkan Jidosha Shimbun on February 2, 2011)

U.S.A
The Company is set to increase production of passenger car tires in the U.S. Its U.S. subsidiary, Yokohama Tire Corporation, will boost the annual production capacity at the Salem, Virginia Plant from the current 5.6 million to 6.2 million tires. Sales of tires have been so brisk in North America, including the U.S., that supply has not been able to catch up with demand. In view of this situation, the tire company has decided to expand the production capacity.(From an article in the Nikkan Jidosha Shimbun on November. 4, 2010)

Thailand
In June 2010, the Company announced the third expansion project at its plant in Thailand for production of passenger-car and light truck tires to meet growing demand in the global market. With an investment of about 9.7 billion yen, its annual production capacity will be boosted by 1.4 million to 4 million. Along with the second expansion now in progress, the third expansion will set in. Production after the third expansion is scheduled to begin in April next year. The expansion project is launched at the plant of Yokohama Tire Manufacturing (Thailand) Co., Ltd., which is the company's largest tire production site with the area of 420,000 square meters in Rayong Province. (From an article in the Nikkan Jidosha Shimbun on June. 30, 2010)

Russia
In April 2010, the Company announced that it held a groundbreaking ceremony for a new tire plant in Lipetsk, Russia. The ceremony was attended by more than 50 people including the governor of Lipetsk, government officials, the Minister of the Japanese Embassy, and executives of Yokohama Rubber. The company is investing 4.8 billion ruble (approximately 14.8 billion yen) in the new passenger car tire plant, which is scheduled to start production by the end of 2011. The facility will be operated by Yokohama R.P.Z., a tire production and sales company jointly established by Yokohama Rubber and Itochu Corporation in December 2008. Located in the Lipetsk Special Economic Zone (SEZ) in the suburbs of Moscow, the plant will be equipped with the latest technology giving much consideration to environmental conservation and energy saving. Its initial production capacity is expected to reach 1.4 million tires per year. (From an article in the Nikkan Jidosha Shimbun on April. 6, 2010)

Planned Capital Investments (Tire business)

(As of Mar. 31, 2011)

Facility (Location)	Business	Expected Investment (millions of yen)	Start	Planned completion	Increased capacity after completion
The Company
Hiratsuka Plant (Kanagawa, Japan)	Manufacturing	2,155	Apr. 2010	Dec. 2011	-
Mie Plant (Mie, Japan)	Manufacturing	2,091	Apr. 2010	Dec. 2011	-
Mishima Plant (Shizuoka, Japan)	Manufacturing	2,265	Apr. 2010	Dec. 2011	-
Shinshiro Plant (Aichi, Japan)	Manufacturing	12,579	Apr. 2010	Dec. 2011	-
Onomichi Plant (Hiroshima, Japan)	Manufacturing	751	Apr. 2010	Dec. 2011	-
Yokohama Tire Corporation Salem Plant (Virginia, USA), etc.	Manufacturing and other business	3,458	Apr. 2010	Dec. 2011	-
Yokohama Tire Manufacturing Thailand Headquarters and Plant (Rayong, Thailand)	Manufacturing and other business	6,167	Apr. 2010	Dec. 2011	-
Hangzhou Yokohama Tire Co., Ltd. Headquarters and Plant (Zhejiang Prov, China)	Manufacturing and other business	7,016	Apr. 2010	Dec. 2011	-
L.L.C. Yokohama R.P.Z. Headquarters and Plant (Lipetsk, Russia)	Manufacturing and other business	14,828	Jul. 2009	Sep. 2011	1.4 million passenger car tires
Yokohama Tire Philippines, Inc. Clark Special Economic Zone, Philippines)	Manufacturing and other business	19,700	Feb. 2011	Dec. 2013	3.0 million passenger car tires