Yokohama Business Results and New Management Organization

The Yokohama Rubber Co., Ltd., announced its consolidated results for fiscal 2004, ended March 31, 2004. Owing in part to favorable export sales, net sales increased 0.3%, to 401,718 million yen. However, operating income declined 9.1%, to 21,073 million yen, owing mainly to an increase in the volume of tire exports and higher prices for shipping and raw materials, such as natural rubber. Ordinary income decreased 8.2%, to 17,258 million yen. On the other hand, a tax reduction helped boost net income 1.8%, to 10,331 million yen.

Sales of the Tire Group gained 0.6%, to 288,629 million yen, thanks to favorable export demand in Europe, Asia, and Oceania. Sales of original equipment tires increased from the previous year, and sales of replacement tires were basically unchanged, though demand was slow in Japan. Group operating income fell 11.5%, to 15,280 million yen, primarily because of high raw materials prices.

Multiple Business (MB) Group sales slipped 0.3%, to 113,089 million yen, and operating income dropped 9.0%, to 5,759 million yen. High-pressure hoses and sealing materials sold favorably, and DUO series of golf drivers also became a hit seller contributing to increased sales of golf products. However, sales of antiseismic rubber bearings for bridges fell amid lower public-sector investments. Demand for Yokohama‘s aircraft components was also sluggish, owing mainly to the lingering effects of the war in Iraq and the SARS outbreak of 2003, which reduced sales of new aircraft.

In fiscal 2005 (April 1, 2004 to March 31, 2005), a continuing rise in raw materials prices and the high yen will affect Yokohama’s operations. Management forecasts that net sales will increase 2.1%, to 410 billion yen, while ordinary income will decrease 7.3%, to 16 billion yen, with net income declining 12.9%, to 9 billion yen.

Yokohama Rubber Introduces Corporate Officership

The Yokohama Rubber Co., Ltd. announced that it would introduce corporate officership into its new management organization immediately after the 128th regular general meeting of shareholders to be held on June 29, 2004, in order to further strengthen corporate governance and improve the efficiency and transparency in corporate management.

1) Intention of introducing corporate officership:

Directors will constitute the Board of Directors and take responsibility for corporate decision-making and carry out supervisory functions. Corporate officers, in commission from the Board of Directors, will assume responsibility for business operation. In this way, introducing corporate officership will contribute to the clarification of the responsibility of corporate decision-making and business operation.

2) Purpose of introducing corporate officership:

Corporate officership is introduced to make the board meeting more active, business operation more efficient, and YRC group management stronger.

3) Establishment of Corporate Officer and Director Personnel/Remuneration Committee:

Corporate Officer and Director Personnel/Remuneration Committee will be established as an advisory panel of the Board of Directors for the purpose of securing transparency and fairness in personnel and remuneration decisions in connection with directors and corporate officers.

4) Management structure after the introduction of corporate officership:

After the introduction of corporate officership, the number of directors will be reduced to 7 from current 19, while the number of corporate officers will be 19 (including 5 officers who will be also in the position of directors). The tenure of a corporate officer is one year, the same as that for a director.