Financial Overview

(in millions of JPY)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of change (%)	Factors
Sales	44,522	37,652	18.2	1)
Operating income	3,519	1,172	200.3	-
Ordinary income	3,996	1,536	160.2	-
Net income	2,130	729	192.2	-

Factors
1) Sales
<Japan>
-Vehicle production in Japan had decreased significantly due to the termination of the eco-car subsidy. Monthly production, however, started to pick up since July 2013 and continued to exceed the previous year's results since October 2013. Due to the lower yen, the Company's overall sales in Japan for 2013 totaled JPY 18,290 million, down 8.7 percent year-on-year.

<North America>
- Sales in North America reached JPY 11,348 million, up 30.3 percent year-on-year. 

<China>
- The Company had suffered a tough situation in the Chinese market due to a boycott on Japanese good. Production and sales volumes, however, recovered since October 2013. Sales for 2013 climbed 43.2 percent year-on-year to JPY 5,912 million.

<Asia>
- Business was supported by strong sales of both vehicles and motorcycles. Turning Nichirin (Thailand) into a subsidiary also boosted the Group's revenue in the region. Overall sales in Asia totaled JPY 7,414 million, up 100.9 percent from the previous year.

<Europe>
-Sales in Europe rose 42.5 percent year-on-year to JPY 1,557 million thanks to new orders.

Outlook for FY ending Dec. 31, 2014

(in millions of JPY)

	FY ending Dec. 31, 2014 (Forecast)	FY ended Dec. 31, 2013 (Actual Results)	Rate of change (%)
Sales	47,000	44,522	5.6
Operating income	4,000	3,519	13.7
Ordinary income	4,400	3,996	10.1
Net income	2,300	2,130	8.0

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

Mid-term Management Plan

-In Phase ll (2010-2014) of the current mid-term business plan called the "Nichirin Progressive Globalization" for 2010-2014, the Company is focusing on the following objectives.

• Commencing production at new plant in Indonesia
• Mass-producing new products in Vietnam
• Starting joint business in Spain with Hutchinson S.A.
• Turning its Thai affiliate into a consolidated subsidiary
• Strengthening and improving profitability of North American business by closing down Nichirin Inc. in Canada

R&D Expenditure

(in millions of JPY)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	879	824	794

R&D Facilities

-Major R&D activities are carried out at Nichirin R&D Center located on the premises of the Himeji Plant.

R&D Activities

Automotive hoses
-The Company developed low-expansion hydraulic brake hoses for automobiles. Delivery of the new brake hoses is expected to begin in 2014 or later.
-The Company developed barrier-type hoses for air conditioning systems. The new barrier hoses are already supplied to customers outside Japan.
-The Company developed new fuel hoses for compressed natural gas vehicles. The fuel hoses are already supplied to customers outside Japan.

Technology Licensed-out Agreement

(As of Dec. 31, 2013)

Company	Country	Content of Contract	Period of Contract
			From	To
Hwaseung R&A Co.,Ltd.	South Korea	Manufacturing technology for air conditioner hoses used in automobiles	Mar. 5, 2013	Mar. 4, 2016
		Manufacturing technology for automotive brake hoses	Mar. 5, 2013	Mar. 4, 2016
		Manufacturing technology for automotive power steering hoses	Mar. 5, 2013	Mar. 4, 2016

Capital Expenditure

(in millions of JPY)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Japan	980	517	516
North America	320	254	105
China	167	107	161
Asia	115	301	328
Europe	48	39	11
Total	1,632	1,219	1,121