Financial Report (January 1 ~ December 31, 2017)

February 14, 2018

Key Subjects

2017 Annual Financial Results Summary Changes in Scope of Consolidation, Affiliated Companies Financial Results Summary

2018 Annual Financial Results Forecast Financial Results Forecast Summary Capex / Depreciation, Tire Production Capacity etc.

2 Changes in Scope of Consolidation

Consolidated Subsidiaries 90 Equity-method Affiliates 3 (vs 2016 year-end : +17) (vs 2016 year-end : - ) Newly Newly +19 Excluded (2) - Excluded - Included Included Micheldever Group Ltd. Micheldever Tyre Services Ltd. Fleet Tyre Network Ltd. T

i U.K./Sales company of tires r （ ） e s

Dunlop International Co. Ltd. Cleveland Golf Korea Co., Ltd. Merged with Dunlop Sports （Japan/ Sporting goods business） （ S Korea Co., Ltd.） p Dunlop International 1902 Limited o

r and 13 consolidated subsidiaries t s （U.K. and other/Sporting goods business）

Lonstroff Medical Elastomer d.o.o. Lonstroff Holding AG I

n Slovenia/ Manufacturing company Merged with Lonstroff AG

d （ （ ） O u of medical rubber parts） s t t h r e i a r l

&

3

Affiliated Companies (Consolidated Subs: 90, Equity-method Affiliates : 3)

Manufacturing Companies Sales Companies Other Companies

Domestic 1 Domestic 11 Domestic 7

T Overseas 8 Overseas 18 Overseas 5 i r e Asia Pacific 4 Asia Pacific 10 Asia Pacific 1 s Europe and Africa 2 Europe and Africa 6 Europe and Africa 2 Americas 2 Americas 2 Americas 2 Domestic 2 Domestic 2 Domestic 5

S Overseas 3 Overseas 15 Overseas 7 p o r

t Malaysia, U.K., s Australia, Canada, China, Hong Kong, Thailand, U.S., Philippines U.K. South Africa, South Korea, Thailand, France, Germany

Domestic － Domestic 3 Domestic － I n d O u Overseas 5 Overseas 1 Overseas － s t t h r e i a r l

Malaysia, China, & Hong Kong － TOTAL 93 Vietnam, Switzerland, Slovenia Domestic 31 Overseas 62

4 Consolidated Financial Results Billions of Yen Actual Actual Nov. 8th Actual YOY 2017 2016 Forecast 2015 Sales Revenue 877.9 756.7 116% 860.0 798.5

Business 67.0 74.9 89% 63.0 78.9 Profit (%) (7.6%) (9.9%) (7.3%) (9.9%) ※1 Operating 67.4 73.3 92% 63.0 89.2 Profit (%) (7.7%) (9.7%) (7.3%) (11.2%)

Profit 114% ※2 47.0 41.4 41.0 72.0 ROE 10.6% 9.7% 9.0% 17.5% ROA ※3 7.0% 8.2% 6.5% 8.4% D/E Ratio 0.6 0.5 0.6 0.6

2017 Forecast Feb. 14th May 10th Aug. 8th Nov. 8th ※1. Business Profit : Sales Revenue – (COS + SGA) ※2. Profit : Profit attributable to owners of parent Sales Revenue 850.0 850.0 860.0 860.0 ※3. ROA : Business Profit /Net Assets

Business Profit 50.0 50.0 63.0 63.0 ○ The above notes apply throughout this report. Operating Profit 50.0 50.0 63.0 63.0 Profit 33.0 33.0 41.0 41.0 5

Consolidated Financial Results by Quarter

Billions of Yen 2017 2017 2017 2017 Actual vs vs vs vs vs Jan.-Mar. 2016 Apr.-Jun. 2016 Jul.-Sep. 2016 Oct.-Dec. 2016 2017 2016

Sales 108% 117% 122% 117% 116% Revenue 192.1 13.7 211.3 30.7 214.9 39.4 259.6 37.3 877.9 121.2

Business 12.2 86% 9.7 60% 8.4 71% 36.7 112% 67.0 89% Profit (%) (6.3%) (2.0) (4.6%) (6.5) (3.9%) (3.4) (14.1%) 4.0 (7.6%) (7.9)

Operating 11.8 88% 9.4 60% 8.8 70% 37.4 118% 67.4 92% Profit (%) (6.2%) (1.6) (4.4%) (6.3) (4.1%) (3.7) (14.4%) 5.8 (7.7%) (5.8)

105% 39% 48% 215% 114% Profit 8.6 0.4 3.9 (5.9) 4.6 (4.9) 30.0 16.1 47.0 5.6

6 Consolidated Sales Revenue / Profit

%：Profit % ：Record High Billions of Yen Japanese G A A P I F R S

900.0 837.6 848.7 877.9 805.0 798.5 100.0 800.0 780.6 10.5% 11.2% 756.7 88.0 9.3% 9.9% 9.2% 89.2 9.9% 700.0 77.1 78.9 86.3 74.3 74.9 7.7% 80.0 10.3% 78.9 600.0 77.1 9.9% 67.4 74.6 72.0 73.3 9.1% 71.0 9.6% 9.7% 67.0 500.0 8.8% 60.0 60.0 7.6% 55.8 400.0 53.2 49.9 44.8 47.0 40.0 300.0 41.4

200.0 20.0

100.0

0.0 0.0 0.0 2013 2014 2015 2016 2015 2016 2017 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) 7

Consolidated Sales Revenue / Business Profit by Reportable Segment

Billions of Yen

2017 2017 Actual Actual YOY Jan.-Sep. vs Oct.-Dec. vs 2017 2016 2016 2016 Tires 530.7 117% 225.9 117% 756.6 648.4 117% S a l e

s Sports 108% 124% 112%

58.7 23.0 81.7 72.8 R e v Industrial e

n 28.9 116% 10.6 101% 39.6 35.5 111%

u & Other e Total 618.3 116% 259.6 117% 877.9 756.7 116%

Tires 65% 112% 86% B 24.3 34.1 58.3 67.9 u s i n

e Sports 3.0 94% 1.4 123% 4.4 4.3 102% s s

P Industrial r

o 3.0 191% 1.3 113% 4.3 2.7 159%

f & Other i t Total 30.3 72% 36.7 112% 67.0 74.9 89% 8 Consolidated Business Profit by Reportable Segment

Billions of Yen Japanese G A A P I F R S 100.0 86.3 77.1 78.9 80.0 77.1 74.3 74.9 78.4 67.0 73.1 74.0 69.9 67.9 60.0 67.9 58.3

40.0

20.0

4.0 4.7 4.4 2.6 4.3 4.4 4.3 3.2 3.2 2.01.9 2.0 2.2 2.7 0.0 2013 2014 2015 2016 2015 2016 2017

Tires Sports Industrial & Other Operating Income (JGAAP) / Business Profit(IFRS) 9

Consolidated Business Profit by Geographic Areas Billions of Yen Japanese G A A P I F R S 90.0 77.1 77.1 78.9 86.3 74.3 74.9 67.0 70.0 59.3 56.0

50.0 43.4 44.7 38.8 40.5 30.8 30.7 29.1 30.0 25.4 27.1 26.1 22.5 21.1 16.8

10.0 7.5 7.7 4.1 1.5 3.8

(1.4) Japan Asia Others Operating Income (JGAAP) / Business Profit (IFRS) 2013 2014 2015 2016 2015 2016 2017 Sales Revenue Japan 466.6 484.1 466.4 421.1 417.7 375.3 400.4 Asia 144.7 156.7 163.7 149.0 164.2 148.5 169.5 Others 169.3 196.9 218.5 234.9 216.6 232.9 308.1 Total 780.6 837.6 848.7 805.0 798.5 756.7 877.9 ※Sales and Profit for geographic areas on this page are based on sales company’s location. 10 Overseas Sales Revenue

Billions Japanese G A A P I F R S of Yen 600.0 554.1

500.0 477.4 470.5 116.6 458.4 441.5 449.4 398.5 114.3 112.6 400.0 105.6 104.2 117.8 92.2 177.5

300.0 173.7 158.1 174.1 157.3 150.8 164.8 200.0 106.2 57.2 55.5 57.0 55.1 66.3 67.3 100.0 153.7 132.2 139.2 126.8 132.8 89.2 91.5

0.0 2013 2014 2015 2016 2015 2016 2017 North America Europe Asia Other Consolidated Sales Revenue 780.6 837.6 848.7 805.0 798.5 756.7 877.9 % of Overseas 51% 53% 56% 57% 59% 59% 63% ※Overseas Sales on this page are based on customer’s location. 11

Consolidated Business Profit Walk (2017 Oct.-Dec.)

Average Exchange Rate ※Blue Increase Billions Natural Rubber (0.9) USD 109 → 113 ＝ F Red Decrease i ＝ of Yen Pet. Related (2.5) x EUR 118 → 133 e E Others d

(0.4) x

C p o +1.3 e n s

R +0.2 t

+1.9 s s a e +0.3 +0.2 40.0 w +7.1 2017 F

M D

o Oct.-Dec. & I r S V 2016 i a n e r P p t o

e x d e O r o l Oct.-Dec. c u i r

u (0.6) c r t t i s

m h t a e C t s l e (2.6) r e o i

30.0 r a

s & l t s

M i (3.8) x

20.0 36.7 32.8 Natural Rubber (1.1) Pet. Related (1.7) Others (0.4) 10.0

Tires +3.5 Total +4.0 0.0 Volume & Industrial & Raw Material Price Mix Direct Costs Fixed Costs Forex Expense Sports Other Total Nov. 8th Forecast (3.2) 7.6 0.4 1.9 (1.1) (0.6) (3.8) (0.6) (0.6) (0.0) 2015 Q4→2016 Q4 ------12 Consolidated Business Profit Walk (2017 Annual)

Price Q1 Q2 Q3 Q4 Ave. Natural 2017 1.77 2.10 1.64 1.48 1.75

Billions Natural Rubber (15.5) F Rubber

i ($/kg) of Yen Pet. Related (19.4) x (TSR 20) 2016 1.22 1.24 1.38 1.38 1.31 e

Others (1.1) d Crude Oil 2017 45 50 53 48 49

80.0 C (DUBAI) 2016 46 34 35 45 40 ($/bbl) +4.6 o s t 2016 E s +1.5 ※Blue＝Increase x

+19.7 p +1.6 Red＝Decrease e

70.0 n +0.1 F s 2017 D e V o r o i R e r & I S l e n x u a p c

d w m O

(3.6) o t u

r C e 60.0 t M s t h

s t o & (5.3) e r a s i r a

t t M e s l

r +9.5 i i a x

50.0 l Average Exchange Rate

P USD 109 → 112

74.9 r

i EUR 120 → 127 c

e 67.0 40.0 Natural Rubber (15.7) Pet. Related (18.6) (36.0) Others (1.1) 30.0 Tires (9.6) Total (7.9) 20.0 Volume & Industrial & Raw Material Price Mix Direct Costs Fixed Costs Forex Expense Sports Other Total Nov. 8th Forecast (35.4) 10.0 18.2 5.2 (4.1) 0.7 (6.5) (0.8) 0.8 (11.9) 2015→2016 26.5 (20.7) 10.9 2.7 (11.6) (8.7) (5.2) 1.6 0.5 (4.0) 13

Consolidated Business Profit Analysis by Factors

Billions of Yen Factors I

Period Business Profit M E & n V & S D F F C C d x P o R

a p O o i u p i r l o o t M x r a o u i r s e e s s e t c e e w r t m r n h t t c i e r t d x i vs s s x s s e i

t a e a e r l

previous l year Jan.-Mar. 14.2 ------

2 Apr.-Jun. 16.2 ------0

1 Jul.-Sep. 11.8 ------6 Oct.-Dec. 32.8 ------Annual 74.9 (4.0) 26.5 (20.7) 10.9 2.7 (11.6) (8.7) (5.2) 1.6 0.5

Jan.-Mar. 12.2 (2.0) (6.9) (2.0) 6.3 1.3 (1.0) (0.3) (0.4) 0.4 0.6 Apr.-Jun. 2 9.7 (6.5) (15.2) 1.2 7.3 1.0 (0.6) 0.8 (1.2) (0.3) 0.5 0

1 Jul.-Sep. 8.4 (3.4) (10.1) 3.2 4.2 1.0 (1.4) 0.8 (1.1) (0.3) 0.3 7 Oct.-Dec. 36.7 4.0 (3.8) 7.1 1.9 1.3 (0.6) 0.2 (2.6) 0.3 0.2 Annual 67.0 (7.9) (36.0) 9.5 19.7 4.6 (3.6) 1.5 (5.3) 0.1 1.6

(vs Nov. 8th Forecast) 4.0 (0.6) (0.5) 1.5 (0.6) 0.5 0.8 1.2 0.9 0.8 14 Consolidated Statement of Financial Position

Billions of Yen Actual Actual YOY 2017 year-end 2016 year-end Main Factors

Current assets 466.0 412.6 +53.4 Trade and other receivables + 26.5 Inventories + 20.0 Non-current assets 552.3 485.1 +67.2 Property, plant and equipment Total assets 1,018.3 897.6 +120.6 + 16.5 Intangible assets + 48.4 (including Goodwill) Current liabilities 303.3 252.0 +51.3 Net defined benefit asset + 4.7

Non-current liabilities 224.1 186.1 +38.0 Interest-bearing debt + 69.2 (273.5← 204.2) Total liabilities 527.4 438.1 +89.3 Trade and other payables + 15.9 Total equity attributable to owners of parent 459.9 429.3 +30.6 Profit + 47.0 Dividends paid (13.1) Non-controlling interest 31.0 30.2 +0.8 Treasury stock (17.1) ※ Other components of equity + 8.9 Total equity 490.9 459.5 +31.3 ※Common stock of SRI allotted to Total liabilities and equity 1,018.3 897.6 +120.6 shareholders of Dunlop Sports Co. Ltd. effective January 1st 2018. Equity ratio 45.2% 47.8% (2.6)P

15

【Forecast】Consolidated Financial Results

Billions of Yen

Annual Forecast Actual First half vs YOY 2018 2017 Forecast 2018 2017 Sales Revenue 910.0 877.9 104% 430.0 107% Business Profit 73.0 67.0 26.5 109% 121% (%) (8.0%) (7.6%) (6.2%) Operating Profit 73.0 67.4 26.5 108% 125% (%) (8.0%) (7.7%) (6.2%)

Profit 48.0 47.0 102% 16.5 133%

ROE 10.1% 10.6% ROA 7.2% 7.0% D/E Ratio 0.5 0.6 16 【Forecast】Consolidated Sales Revenue / Profit %：Profit % ：Record High Billions of Yen Japanese G A A P I F R S 1,000.0 910.0 120.0 877.9 837.6 848.7 780.6 805.0 798.5 800.0 10.5% 756.7 100.0 11.2% 9.9% 88.0 9.3% 9.2% 9.9% 8.0% 77.1 78.9 89.2 86.3 74.3 74.9 7.6% 73.0 80.0 600.0 10.3% 78.9 67.0 77.1 9.9% 74.6 73.3 9.1% 71.0 72.0 73.0 9.6% 67.4 60.0 8.8% 9.7% 8.0% 7.7% 400.0 53.2 55.8 49.9 48.0 44.8 47.0 40.0 41.4

200.0 20.0

0.0 0.0 2013 2014 2015 2016 2015 2016 2017 2018 Forecast 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) 17

【Forecast】Consolidated Sales Revenue / Business Profit by Reportable Segment

Billions of Yen Annual Actual First half vs Forecast YOY Forecast 2017 2017 2018 2018

S Tires 785.0 756.6 104% 367.0 106% a l e s

Sports R 85.0 81.7 104% 44.0 116% e v

e Industrial n 40.0 39.6 101% 19.0 99%

u & Other e Total 910.0 877.9 104% 430.0 107%

B Tires 65.0 58.3 111% 22.0 126% u s i n

e Sports 4.0 4.4 91% 3.0 120% s s

P Industrial r o & Other 4.0 4.3 94% 1.5 78% f i t Total 73.0 67.0 109% 26.5 121%

18 【Forecast】Consolidated Business Profit Walk (2018 1st half) F

Natural Rubber + 7.6 i Billions x ※Blue＝Increase Pet. Related (0.9) e d Red＝Decrease

of Yen Others + 0.0 C

40.0 o

+1.9 E s F t x s

+1.9 o p r e +4.3 e n x & I s D n e

d i O V r u e t o +6.7 s h c t l t e r u +0.5

30.0

i 2018 C r m (3.1) a P l o

e (1.4) r s Jan.-Jun.

i t & S c s e p

2017 M o r i Jan.-Jun. t x (5.7) s (0.4) R

20.0 a w Average Exchange Rate

M USD 112 → 110 a t

e EUR 122 → 130 r i

a 26.5 l 10.0 21.8

Tires +4.6

0.0 Total +4.7 Volume & Industrial & Raw Material Price Mix Direct Costs Fixed Costs Forex Expense Sports Other Total 2016→2017 (22.1) (0.8) 13.6 2.3 (1.6) 0.5 (1.6) 0.1 1.1 (8.5) 2015→2016 ------19

【Forecast】Consolidated Business Profit Walk (2017 Annual)

Price Q1 Q2 Q3 Q4 Ave. F

Natural Rubber + 8.7 i Natural x Rubber 2018 1.50 1.50 1.50 1.50 1.50 Pet. Related (5.2) e Billions d (TSR 20) 2017 1.77 2.10 1.64 1.48 1.75 ($/kg)

Others + 0.0 C Crude Oil 2018 53 63 63 60 60

of Yen o

+4.9 s (DUBAI) t 2017 45 50 53 48 49 ($/bbl) s

90.0 +8.7 F o & I E n r ※Blue Increase

e ＝

d x O D S x u p Red＝Decrease p t i s e

+5.3 h r o t n

80.0 e e r r s i c r t a e s t

+3.5 l

V (5.6) C 2018 o

o (2.6) l u s 70.0 P 2017 t m s r i R e c (7.5)

e a (0.4) (0.3) & w

60.0 M M i

a Average Exchange Rate x t e

r USD 112 → 110 50.0 i a l EUR 127 → 130 73.0 67.0 Natural Rubber (15.5) 40.0 Pet. Related (19.4) Others (1.1) 30.0 Tires +6.7

200..00 Total +6.0 Volume & Industrial & Raw Material Price Mix Direct Costs Fixed Costs Forex Expense Sports Other Total 2016→2017 (36.0) 9.5 19.7 4.6 (3.6) 1.5 (5.3) 0.1 1.6 (7.9) 2015→2016 26.5 (20.7) 10.9 2.7 (11.6) (8.7) (5.2) 1.6 0.5 (4.0) 20 Tire Sales Volume (Comparison %)

2016 Actual 2017 Actual 2018 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. 87% 92% 100% 108% 96% 113% 111% 111% 107% 110% 105% 96% 100% Domestic Rep. 101% 101% 100% 101% 101% 103% 114% 106% 100% 105% 98% 99% 99% Overseas O.E. 106% 101% 114% 102% 105% 114% 107% 113% 104% 109% 105% 128% 117% Overseas Rep. 109% 106% 106% 98% 104% 112% 112% 112% 109% 111% 106% 105% 106% North 118% 108% 105% 91% 104% 121% 102% 107% 112% 110% 98% 101% 99% America

D 97% 114% 105% 118% 108% 130% 182% 173% 137% 154% 123% 101% 111% e Europe t a i l s Asia 99% 94% 101% 99% 98% 106% 102% 104% 98% 102% 108% 112% 110%

Others 119% 112% 113% 96% 109% 98% 105% 97% 101% 100% 103% 106% 105%

Total 104% 102% 105% 100% 103% 111% 112% 111% 106% 110% 104% 106% 105%

Total Tire Sales (000 Units) 25,510 26,780 28,620 31,740 112,640 28,230 29,920 31,810 33,510 123,470 60,730 69,260 129,990

21

Tire Overseas Rep. Volume by Regional Segment

000 units 106 70,000 North America South & Central America 111 Europe (including Russia) Africa Middle East Asia 104 60,000 Oceania 106 99 113 110

50,000 101 104 108 129 102 94 102 40,000 101 134 124 111 156 154 108 30,000 101 82 98 102 597 119 114 104 108 20,000 95 109 82 116 93

10,000 110 105 104 100 98 102

0 2013 2014 2015 2016 2017 2018 Forecast

Forex(USD) 98 106 121 109 112 110 ※Numbers shown in the bar graph are yoy% by region. 22 Equity / Interest-Bearing Debt

Billions of Yen Japanese G A A P I F R S 500.0 x2.0 459.9 431.9 429.3 413.4 423.9 422.3 400.0 x1.6

329.8 302.1 295.7 300.0 273.5 x1.2 260.6 261.9 0.9 203.0 204.2 200.0 0.7 x0.8 0.6 0.6 0.6 0.5 0.5

100.0 x0.4

0.0 x0.0 2013/12 2014/12 2015/12 2016/12 2015/12 2016/12 2017/12 Equity Interest-bearing debt D/E Ratio Equity Ratio 38.0% 42.5% 45.3% 48.0% 45.3% 47.8% 45.2% 23

Cash Flows

Billions of Yen Japanese G A A P I F R S 128.2 128.2 120.0 108.9 87.0 86.0 86.9 86.0 77.0 76.1 80.0 54.0 56.2 37.4 40.0 8.7

0.0

(40.0) (33.0) (30.7) (24.6) (42.1) (42.1)

(80.0) (68.3) (71.6)

(100.7) (120.0) 2013 2014 2015 2016 2015 2016 2017

Cash flows from operating activities Cash flows from investing activities Free cash flow 24 Capex and Depreciation (Tangible Assets Only)

Billions of Yen Japanese G A A P I F R S 80.0 74.0

70.0 62.8 62.5 60.0 58.6 58.9 58.9 53.0 49.6 49.6 50.2 50.0 46.5 45.8 41.4 40.0 37.5 45.9 45.7

30.0 55.6 42.7 20.0 38.1 39.5 39.5 41.8 29.0 29.0 10.0

0.0 2013 2014 2015 2016 2015 2016 2017 2018 Forecast Total Capex Overseas Depreciation 25

Tire Production Capacity

YOY 105% 104% 111% 101% 103% 103%

t/Mth O v e r s e a s D o m e s t i c

% of Overseas 49% 51% 56% 57% 58% 59% 26 Tire Production Volume and Operating Ratio

YOY 102% 110% 102% 106% 107% 105% 000t ％ 900 100 95 92 93 800 90 91 87 90 700 710 679 600 636 80 588 598 500 534 70 400 452 415 374 300 324 60 295 200 250 50 100

0 40 2013 2014 2015 2016 2017 2018 Forecast Total Production Volume Overseas Operating Ratio(%) 27

New Products / New Technologies

“XXIO X (TEN)” SRIXON “REVO CX” Babolat NEW “Pure Drive” ※Dunlop Sports Marketing Co. Ltd. is the sole selling agent of Babolat in Japan. 28 Market Price : Natural Rubber / Crude Oil / Naphtha

US￠/kg 500 NR SICOM TSR20 (Ave.) 451.9 400 338.0 315.6 300 251.7 215.3 194.6 200 253.0 171.1 165.1 138.6 137.5 120.7 137.4 100.4 180.4 100

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

¥000/kl US $/bbl 90 140

80 Crude Oil (DUBAI) 68.9 109.1 105.1 69.7 120 70 Naphtha Price (prod. in Japan) 105.9 57.0 100 60 65.3 49.3 78.0 96.6 50 46.0 80 39.2 93.6 61.7 54.5 55.1 40.3 40 46.3 32.8 30.8 60 68.4 30 25.4 61.5 36.0 49.3 51.1 53.2 40 20 26.8 33.6 41.4 10 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 29

END

30