Sumitomo Rubber Industries, Ltd.
Financial Results Briefing for Six Months Ended June 30, 2024
August 7, 2024

Event Summary[Company Name]

Sumitomo Rubber Industries, Ltd.

[Company ID]

5110-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for Six Months Ended June 30, 2024

[Fiscal Period]

FY2024 Q2[Date]

August 7, 2024

[Number of Pages]

48[Time]

16:00– 17:25(Total: 85 minutes, Presentation: 39 minutes, Q&A: 46 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers][Analyst Names]*

4
Satoru Yamamoto
Hidekazu Nishiguchi
Naoki Okawa
Hitoshi Hino

Shiro Sakamaki
Kazunori Maki
Tairiku Sakaguchi
Shinji Kakiuchi

President and CEO, Representative Director
Director, Managing Executive Officer
Director, Senior Executive Officer
Executive Officer, General Manager of
Accounting & Finance Headquarters

Daiwa Securities
SMBC Nikko Securities
Mizuho Securities
Morgan Stanley MUFG Securities*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or
whose questions were read by moderator/company representatives.

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Presentation
Inoue: Ladies and gentlemen, thank you all for your patience. We will now begin the presentation of theSumitomo Rubber Industries, Ltd. financial results briefing for six months ended June 30, 2024.
My name is Inoue from the Investor Relations Office of Sumitomo Rubber Industries, and I will be themoderator for today's presentation. Thank you very much.
First of all, I would like to introduce the attendees for today's meeting.
President and CEO, Sumitomo Rubber Industries, Satoru Yamamoto.
Yamamoto: My name is Yamamoto. Thank you.
Inoue: Director and Managing Executive Officer, Hidekazu Nishiguchi.
Nishiguchi: My name is Nishiguchi. Thank you very much.
Inoue: Director, Senior Executive Officer, Naoki Okawa.
Okawa: My name is Okawa. Thank you.
Inoue: Executive Officer, General Manager of Accounting & Finance Headquarters, Hitoshi Hino.
Hino: My name is Hino. Thank you.
Inoue: Today's announcement will be made in accordance with the presentation materials available on our
website. For those attending the venue, we have distributed the financial statements, financial resultspresentation materials, and the medium-term management plan progress report materials. If there are any
discrepancies, please inform the staff present in the hall.
President Yamamoto will give an overview of the financial results, and then Senior Executive Officer Okawa
will give a detailed explanation of the financial results. Thereafter, Yamamoto will explain the progress of themedium-term management plan. After the presentation, we would like to take questions from the audience.
Thank you.
Now, Yamamoto will begin the presentation.
Yamamoto: My name is Yamamoto, President and CEO. Thank you very much for taking time out of your busy
schedule today to participate in our financial results briefing for six months ended June 30, 2024.
I will now give an overview of our business results for H1 of FY2024 and explain our current major initiatives.
For those of you attending the meeting on-site, please refer to the financial results presentation materials inthe booklet that are available to you. For those of you who are attending online, we will be sending you a chatwith the address where the documents will be posted.

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I would now like to turn to slide six.
In H1 of FY2024, our group's revenue, business profit, operating profit, and profit attributable to owners ofparents all reached record highs. These are the financial targets set forth in our medium-term management
plan. Business profit improved by 4.2 percentage points YoY to a level of 7.2%.
Both revenue and operating profit in the tire business and revenue and operating profit in the sports businessreached new record highs.
In the tire business, we increased sales of overseas REP in Europe. In addition, sales of tires for new vehicles
for overseas O.E. increased in North America.
In Europe, sales of all-season tires, one of FALKEN's strengths, remained strong. We will continue to expand
sales based on our brand strength, which has been steadily improving.
In North America, sales of tires for new vehicles remained strong and increased due in part to their adoptionof new models. Although sales of products for REP decreased YoY, sales of the FALKEN WILDPEAK series, ourmainstay products for pickup trucks and SUVs, continued to be strong.
In the sports business, sales of golf clubs increased in the core markets of North America, Japan, and Europe.
Sales of XXIO 13, launched in December last year, also grew steadily. Sales of tennis products increased inJapan.

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In the industrial and others segment, sales decreased due to the sale of a medical rubber products subsidiaryin Europe at the end of January. However, the profit margin of the industrial and others business improved
due to the profit improvement resulting from the sale of the European subsidiary.
As for our current main efforts, we are continuing to move forward toward the goal of achieving the North
American business by the end of this year, which is the highest priority issue in our structural reforms. We arealso working on the other businesses that we have already started, and we are aiming to complete them by
the end of this year.
In addition, on July 22, we held a product announcement for the next-generation all-season tire SYNCHRO
WEATHER, which incorporates our proprietary Active Tread Technology. Nearly 200 people attended theevent to hear about the product concept, new technology, and sales strategy, and we also announced that
we had signed an advertising contract with Shohei Ohtani.
Thanks in part to the effect of having SYNCHRO WEATHER featured in many media and motor journals, theinquiries and responses from dealers and consumers have exceeded our expectations. We are once again
convinced that this will be an unprecedented major hit product.
We hope you will look forward to our next-generation all-season tire, SYNCHRO WEATHER, which maintains
its grip in response to all types of road surfaces to provide a safe and reliable driving experience.
We have been conducting demonstration tests of our other proprietary tire sensing technology, Sensing Core,with various manufacturers and companies. The Sensing Core enables the detection of tire pressure, load,
wear, road surface conditions, and signs of wheel fall, thereby improving safety. Starting this year, we willoffer this Sensing Core for passenger cars. In the future, we will expand the product to heavy-duty vehicles as
well.
Active Tread and Sensing Core, two unique technologies that will play a key role in our growth strategy, willcontribute to a new future for automobiles.

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I would like to turn to slide 16.
For the full year of FY2024, we forecast revenue of JPY1.2 trillion, 102% YoY; business profit of JPY80 billion,
103% YoY; operating profit of JPY61 billion, 95% YoY; and net profit of JPY41 billion, 111% YoY. We haverevised our net income forecast upward from the one announced in May of this year.

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I would like to continue with slide number 30.
The interim dividend for FY2024 will be JPY29 per share, as initially forecasted. As initially forecasted, the yearend dividend will also be JPY29 per share, bringing the annual dividend to JPY58 per share.
Although this is slightly below the consolidated dividend payout ratio of 40%, which is our guideline fordividends, we have decided on this figure at this time because we are currently working on structural reforms.
We will strive to pay stable dividends as much as possible.

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Finally, I would like to turn to slide 33. I would like to introduce our most recent efforts to promote ESG
management.
Toward the realization of carbon neutrality by 2050, we have been working on tire production using hydrogenenergy since 2021. In May of this year, Yamanashi Prefecture and MHI concluded a basic agreement on Japan's
decarbonization through green hydrogen. The Yamanashi Model P2G System is a technology that realizes
decarbonization by producing hydrogen from electricity derived from renewable energy sources and usinghydrogen as heat energy.
By introducing this system to our Shirakawa Plant, we will further decarbonize the industry by combining solar
power generation and hydrogen boilers, which we have been promoting, toward local production for local
consumption of energy, which is our ideal future vision; we will strive to further decarbonize the industry.
This concludes my explanation. Thank you very much.
Inoue: Next, Senior Executive Officer Okawa will explain the details of the financial results ending December
31, 2024.
Okawa: My name is Okawa. Thank you for attending our financial results meeting today. I would like to takethis opportunity to thank all of our stakeholders for their continued support. Thank you very much for yourcontinued support.
I will now explain the details of our financial results for H1 of FY2024.

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First of all, please refer to slide seven.
As you can see in the blue box, our consolidated business results for H1 of FY2024 were as follows: net salesof JPY587 billion, business profit of JPY42.3 billion, operating income of JPY42 billion, and profit of JPY38.7
billion, all of which were record highs for H1 of the fiscal year.
The business profit margin improved from 3% in the previous fiscal year to 7.2% this year, and although thedepreciation of the Japanese yen is a major factor, the effects of our previous efforts to improve profitability
are gradually becoming apparent.

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Please refer to slide nine.
Revenue and business profit by segment are as shown in the blue box for H1 of the fiscal year.
Although unit sales of tires decreased YoY, both revenue and profit reached record highs in H1, with revenueof JPY496.1 billion, up 105% YoY, and business profit of JPY34 billion.
In the sports business, net revenue was JPY71.6 billion, 105% YoY, and business income was JPY7 billion, 108%
YoY. Both net revenue and business profit reached record highs due to steady initial sales of XXIO 13, which
was launched at the end of last year.
In the industrial and others segment, net revenue was JPY19.4 billion, 88% YoY, and business profit was JPY1.3
billion, 149% YoY. Net revenue declined, but business profit increased due to the sale of a European
manufacturing and sales subsidiary for medical rubber products at the end of January.

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Please see slide 12. This is an analysis of the factors behind the change in business profits for H1 as comparedto the same period of the previous year.
First, raw material prices increased by JPY3.5 billion, partly due to stable prices of petroleum-based raw
materials.
Volume & mix increased by JPY18.6 billion. The details are shown in the balloon in the upper left corner, of
which ocean freight rates increased by JPY4.4 billion in H1, partly because we were able to conclude contract
unit prices at low levels. North American anti-dumping duties were plus JPY3.2 billion in Q1, partly due torefunds resulting from sales price optimization. Unrealized profit was plus JPY10.6 billion, a large difference
from the negative impact of the previous year.
Foreign exchange rates were JPY12.9 billion in H1 as the Japanese yen depreciated against many currencies
in addition to the US dollar and the Euro.
Despite other negative factors, such as higher costs due to a decrease in the number of tires produced andhigher labor costs, the tire business as a whole increased its profit by JPY24.3 billion. With the addition of a
JPY0.5 billion increase in the sports business and a JPY0.4 billion increase in the industrial products business,
total company-wide profit increased by JPY25.2 billion.

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10Please see slide 13. I will explain the main difference factors for the items under business profit in the
consolidated income statements.
The main component of financial income of JPY15.8 billion in item four is, as shown on the right side of theslide, due to valuation gains and losses on foreign currency bonds resulting from the depreciation of theJapanese yen and gains from the revaluation of assets to fair value due to continued super-inflationary
accounting in Turkey.
In addition, income tax expense came out slightly lower at a tax rate of 23.2%, but this is due to the inclusionof future tax payment reductions following the completion of the sale of the European medical rubber
subsidiary business this year, which had been impaired at the end of last year.

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Please see slide 14. This is the consolidated balance sheet.
Total assets amounted to JPY1,355.7 billion, and the ratio of liabilities to equity was almost equal to half, andthe equity ratio was 51.4%, up 2.1% from the end of the previous fiscal year, due to an increase in the selfassessment of foreign currency assets resulting from the depreciation of the Japanese yen.

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Please see slide 16. This is the consolidated earnings forecast for FY2024.
As shown in the blue box, we have projected revenue of JPY1.2 trillion, 102% YoY; business profit of JPY80
billion, also 103% YoY; operating profit of JPY61 billion, 95% YoY; and net profit of JPY41 billion, 111% YoY.
In anticipation of a recovery in performance compared to the forecast for Q1, only the net has been revised
upward by JPY3 billion.

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Please turn to slide 18. This is the forecast of segment sales revenue and business profit for FY2024.
The fourth line from the bottom of the blue frame shows the profit of the tire business, which is on the rightside, forecast to increase from the actual profit of JPY63.6 billion in 2023 to JPY67.5 billion, an increase of 6%.
Below that, the sports business is expected to see a decrease in profit, while the industrial and others businessis expected to see an increase in profit.

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Please see slide 19.
Next, I will explain the analysis of factors behind the increase or decrease in business profit in H2 comparedto the same period of the previous year.
First of all, raw material prices are projected to be minus JPY10 billion, a turnaround from the positive situationin H1. In addition to higher unit prices for natural rubber due to EUDR compliance and other factors, thisreflects the current situation for petroleum-based raw materials such as butadiene, which is currently
experiencing a supply-demand gap.
Volume & mix is expected to increase by JPY2.7 billion. The breakdown is as shown in the balloon below, withan increase of JPY1.4 billion for the North American anti-dumping duties, which we expect to receive
additional refunds in Q3 and thereafter. The other items for volume & composition are JPY3.1 billion. The
positive figure is mainly due to volume effects, but we have included a certain amount of unexpected risks inthe composition. In terms of product mix, we expect to increase sales of our mainstay WILDPEAK series inNorth America, and in Japan, we will further focus on expanding sales of high-performance tires by launching
the all-season tire SYNCHRO WEATHER, a revolutionary new product that features Shohei Ohtani in its
advertising.
Direct costs are expected to decrease by JPY5.9 billion due to increased labor and energy costs, as well as theprolonged strike in Turkey, and fixed costs are expected to decrease by JPY4.6 billion due to increased laborcosts in Turkey and other countries. The forecast for the foreign exchange rate is JPY4.7 billion, but since theassumption is based on the average US exchange rate of JPY15.4 billion, we have not factored in the current
situation, but we are working to hedge risk through forward exchange contracts and other means as
appropriate.
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As for expenses, we have factored in an increase in advertising expenses and an increase in DX expenses as a
strategic upfront investment for the new company-wide ERP system, which is scheduled to go live next fall.
As a result of the above, the tire business as a whole is expected to post a negative JPY20.4 billion profit.
In the sports business, we project a negative JPY3 billion impact from softening market conditions in North
America and South Korea in the golf products segment.
In the industrial & others segment, we forecast an increase of JPY0.5 billion for a total company-wide decreaseof JPY22.9 billion. We will work to minimize the decrease in profit in H2 of the fiscal year by controlling costs
and expanding sales.

Please refer to slide 20. This is an analysis of the factors behind the change in business profit for FY2024 fromthe previous year. This is the total of the increase/decrease analysis for H1 and H2 of the fiscal year as I
explained earlier.
The forecast for the current fiscal year is JPY80 billion, an increase of JPY2.3 billion from the previous year's
JPY77.7 billion.
Please refer to the table on the lower right for the price changes of raw materials, natural rubber and crude
oil.

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Please turn to slide 21. Here, at the bottom of the table, I will explain the Q1 forecast, that is, the items withlarge differences from the previous announcement.
First, in addition to the deterioration of raw material costs due to the high price of EUDR natural rubber, thedelayed progress of improvement in North America strikes in Turkey, and higher labor costs, direct costs were
negatively affected at a negative JPY7.5 billion, while volume & mix were positive JPY4.2 billion, due to sales
expansion of new products in Japan and high-performance tires such as AT4W in North America, as well as
the additional refund of anti-dumping duties in North America. Furthermore, the positive effect of thedepreciation of the Japanese yen in H1, plus JPY5.6 billion, etc., will be covered, and the total amount of theentire company will be the same as the previous forecast, but we are aiming for further increase in profit.

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Please see slide 22. This is the YoY change in unit sales of tires.
As shown on the left blue box at the bottom, unit sales of mainstay products totaled 24.87 million tires, 93%
YoY.
By market, domestic O.E. sales were 90% due to production cutbacks by some O.E. manufacturers, domestic
rep sales were 97% due to a reaction to the rush demand before the price hike in the previous year, andoverseas O.E. sales were 89% due to a decrease mainly by Japanese OEMs in Southeast Asia, while sales ofoverseas rep sales were 93%.
Looking at overseas sales by region, North America accounted for 86%, Europe for 105%, Asia for 89%, andother regions for 93%, with a decrease in North America due to the impact of increased imports of low-priced
tires. However, sales of the mainstay WILDPEAK series increased, and the new product AT4W also expanded
its sales. While sales in Europe grew favorably, sales in Asia, where the economy is sluggish, declined, resulting
in lower overall sales in overseas markets YoY.
As for the annual sales volume for FY2024, as shown on the right, in the blue box at the bottom, we forecast
105.48 million units, a 3% decrease YoY.
By market, domestic O.E. sales are expected to be 88% YoY due to the significant impact of production
cutbacks by O.E. manufacturers, and overseas O.E. sales are expected to be 90% YoY due to the impact of
production cutbacks by Japanese OEMs in China and Southeast Asia. Domestic rep sales are expected to be
102%, partly due to the launch of new products, and overseas rep sales are expected to be 101%. Comparedto the Q1 forecast on the far right, we expect a 3% decrease for the year as a whole.

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Please see slide 23.
The blue frame shows the composition of the FY2024 January to June results, with passenger car tires
accounting for the majority of the total, at 88%. Advanced tires account for 39% of this total. Since they aremainly for North America and Europe, we are increasing sales of advanced performance tires.
Looking at the composition ratio of advanced tires by fiscal year on the bottom of the slide, we forecast 39%
for the year, an increase of 1 percentage point over last year's results.

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Continuing on, please see slide 26. This is the trend of cash flow.
On the far right, the operating cash flow for H1 of FY2024 is positive JPY59.5 billion. While there was atemporary inventory stockpiling in response to the EUDR and an increase in tax payments for the previous
year, the business profit margin increased due in part to the incorporation of improved profitability, resulting
in an increase of JPY3.6 billion against the previous year.
Net cash used in investing activities amounted to negative JPY36.3 billion, mainly due to capital renewal, ESGresponsive investments, and DX-related intangible investments.
As a result, free cash flow was positive JPY23.1 billion.

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Please see slide 27. This slide shows changes in CapEx and depreciation.
For FY2024, the far right, we expect a CapEx of JPY76.8 billion and a depreciation of JPY57.7 billion. From Q1
forecast, overseas CapEx will be an additional JPY1 billion.

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Finally, please see slide 29. This chart shows trends in facility utilization rates and production volume for tires.
The annual production volume for FY2024 on the far right of the table is projected to be 606,000 tons, thesame level as the previous year, with an annual capacity utilization rate of 80%, and the production volume
has been reduced from Q1 forecast in line with the decrease in sales.
This concludes my explanation. Thank you very much.
Inoue: Next, Yamamoto will explain the progress report of the new medium-term management plan.
Yamamoto: I will now explain the progress of the medium-term management plan. I would like to refer you
to the medium-term management plan progress report.

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Today, I would like to proceed with the contents of this report.

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23This is the outline of the medium-term management plan and the financial targets for 2027.
Toward 2025, which we see as a turning point, we are promoting the selection and concentration of existing
businesses and the establishment of foundations for growth businesses while at the same time making
company-wide efforts to achieve a recovery in current performance.
In particular, we intend to achieve the financial targets of the medium-term management plan ahead ofschedule by steadily targeting major structural reform projects and bringing them to fruition as soon as
possible. We are also working to build a foundation for growth and will pursue strategic investment
opportunities to strengthen our competitiveness in the future.

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24Here is a chart of our management indicators.
The figures for FY2024 are shown in blue in the middle of the slide. Overall, we are on the road to
improvement, and we will continue to pursue our medium-term management plan to achieve our 2027 target
ahead of schedule.

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Next, I would like to discuss the progress of selection and concentration in structural reforms.
In order to optimize our business portfolio, we are currently promoting structural reforms targeting
approximately 10 businesses and products by 2025. With regard to six of them, we have already decided towithdraw from the gas pipe business and to sell the medical rubber business in Europe, and we are now
proceeding with the remaining four with a target date of 2024.
Regarding our business improvement plan for 2022, as shown in the graph below, in addition to the JPY8.5
billion in improvements that we have already estimated, we expect to see an additional JPY20 billion to JPY25
billion for a total effect exceeding our initial projection of JPY23 billion.
We have begun to shift the resources created by the divestiture to high value-added medical rubber andSensing Core, which will be developed mainly in Japan.
We will continue to shift resources to growth businesses in line with the promotion of structural reforms.

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Next, I will explain our initiatives in North America.
We have positioned the North American business as our top priority and are working to improve it. We willconsider all options to maximize earnings and will set a goal by the end of 2024.
In terms of business profit, we were able to return to profitability in 2023, and we expect to increase profit
further this year due to an increase in profitable imports.
In terms of sales, the mainstay, the FALKEN WILDPEAK series, especially the new AT4W, has been selling well,and sales have increased faster than the growth in demand.
Taking 2019 results as 100, a comparison of the demand for light trucks for commercial use in the US in 2024
and the sales volume of our WILDPEAK series for commercial use in the US shows that the demand growth is108, while the sales volume of the WILDPEAK series is 175, which is significantly higher than the demand
growth, contributing to the increase in profit.
In terms of production, we are considering all options while working to improve our US plant.

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Next, I will explain how we are building a foundation for growth businesses that will realize our philosophy,
outlined in the medium-term management plan.
First, I would like to talk about Active Tread Technology. On this slide, I would like to explain our first productincorporating Active Tread Technology, SYNCHRO WEATHER, which was announced on July 22.
SYNCHRO WEATHER is a next-generation all-season tire that can be used on a variety of road surfaces,
including dry, wet, icy, snowy, and sherbet surfaces in winter. SYNCHRO WEATHER is not an evolution but aninnovation.
The tire slides on water and on ice. It is a new genre of tire that overturns the conventional wisdom that tires
must be changed to match the environment. As an all-season tire, it is the first in the world to be stampedwith the Ice Grip Symbol, while at the same time achieving quietness and abrasion performance equal to or
better than summer tires, giving us confidence in its performance.
Thus, the SYNCHRO WEATHER is a completely new genre of product, and we believe it will revolutionize theconcept of automotive tires in the future.
In Europe, the percentage of all-season tires has nearly doubled over the past four years to 21%. As in Europe,
we aim to create an unprecedented all-season tire market in Japan by stimulating demand to replace summer
tires and establishing the SYNCHRO WEATHER as the de facto standard.
In addition, we will introduce an authorized dealer system to properly explain product features andperformance so that our dealers can offer tires based on a thorough understanding of customers' tire usage
and needs.
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Since the product announcement, we have received a far greater response from dealers than we had expected.
Our directly managed stores began accepting advance reservations the day after the product was announced.
We have already received many reservations, mainly in the Tokyo metropolitan area. We have also received
requests from dealers who have not had dealings with us before to join our authorized stores, which showsthat SYNCHRO WEATHER has attracted a great deal of attention.
We have also set a new suggested retail price for SYNCHRO WEATHER to reflect the product's value. Regarding
this price level, we have received positive feedback that it is commensurate with the product's value. We arelooking forward to the launch of the product on October 1 and hope that everyone will be excited about it.

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Next, I will explain our future plans for Active Tread Technology.
We will continue our efforts to further advance Active Tread Technology. By 2027, we plan to further evolve
the Water Switch and Temperature Switch of the SYNCHRO WEATHER and to expand the product overseas,
mainly in Europe and the United States.
In the future, we will start developing the third and fourth switches following the Water Switch andTemperature Switch, aiming for further evolution of the Active Tread Technology.

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Next, I will explain our cutting-edge materials research related to Active Tread Technology.
In April this year, the 3GeV high-brilliance synchrotron radiation facility NanoTerasu started full-scale
operation. We have been conducting experiments at this facility from an early stage, and in May, we wereable to hold the first event using NanoTerasu and the first presentation of the results.
The other day, I visited NanoTerasu myself. After listening to various explanations, I was convinced that it canreally speed up the speed of analysis and visualization, and that it can accelerate the speed of development,
including our company's active treads in these areas.
Going forward, we intend to use NanoTerasu to improve the water switch level of our Active Tread Technology.
We will also work on analyzing the mechanism of water penetration path and speed into rubber, aiming to
improve tire performance through new knowledge.

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Next, I will explain the commercialization of the Sensing Core business.
In the Sensing Core business, we will promote our business with a focus on new car delivery and failure
prediction business.
In the new car delivery business, deliveries to overseas manufacturers will start within this year.
In the failure prediction business, we will start Tire Replacement Optimization and Vehicle Failure Prediction
Service in Q1 of 2025 in collaboration with Viaduct, Inc. Starting with North America, we plan to expand thebusiness to Japan and Europe. Prior to the start of business in North America, we will open a new base in
North America by the end of this year.
In addition, we have started a demonstration test of Tire Pressure and Temperature Management Service
using TPMS with a domestic transportation company.
For the future, we aim to connect this to the development of Sensing Core and related services.

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Next, I will explain our sports business.
In the golf segment, we are stepping up sales activities in North America, focusing on new golf courses, andwe are steadily increasing the number of customers for golf balls.
Our contracted players are also performing well in various tournaments, and the number of victories byplayers using SRIXON balls on European and US tours has increased by approximately 1.5 times compared to
H1 of the previous year.
We are also focusing on technological innovations to increase the distance of golf clubs. The XXIO 13,
announced last year, is equipped with the new BiFLEX FACE technology that widens the core, expanding thehigh initial velocity area by 25%. We will continue such technological innovations to enhance customer
satisfaction in the future.
By differentiating ourselves through such technological innovations, we will steadily make progress toward
becoming a global top three player.
In the tennis business, we were able to sign a partnership agreement with the US Collegiate Tennis Associationin recognition of our products being used at the Australian Open and being the number one tennis ball on the
ATP Tour. Going forward, Dunlop products will be used in tournaments hosted by the US Collegiate Tennis
Association.
We will continue to expand our business globally based on the high quality of our tennis balls.

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Finally, I will explain our industrial products business.
In the vibration control damper business, we confirmed that 495 houses with MIRAIE vibration control units
for detached houses were completely or partially destroyed in the Noto Peninsula earthquake of 2024 in anarea where the vibration level was six or higher.
This result is supported by our proprietary high-damping rubber technology that instantly absorbs shaking
energy by converting it into heat. This technology is not only safe but also durable for more than 90 years.
In the future, we intend to apply this technology to buildings overseas and to earthquake-resistantreinforcement of historical buildings.
In the medical rubber business, we have the top share of the domestic market for vaccines for influenza andantibiotics.
This high market share is supported by our low-elution rubber technology, which prevents the release of
impurities.
We will concentrate our management resources in the Japanese and Asian markets and focus on high-valueadded markets with our unique rubber technology.
We will promote our business by steadily building a foundation for growth businesses through initiatives suchas Active Tread and Sensing Core.
This concludes today's presentation. Thank you very much.
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Question & Answer
Inoue [M]: We would now like to take questions from you.
We will take turns assigning those attending at the venue and those attending online.
We are sorry, but due to time constraints, we will limit each person to two questions.
If you have any questions, please raise your hand.
Now, the person in the front row, please.
Sakamaki [Q]: My name is Sakamaki of Daiwa Securities. Thank you very much for your presentation.
The first question is about the plan that you have revised this time. On page 21 of the financial results, thedifference between the previous forecast and the revised forecast is shown below. Where are the risks andopportunities? Mr. Okawa strongly stated that he would like to aim for an upward swing.
Originally, when listening to the past financial results, I heard that the battle against imports from Goodyear
and Michelin was getting tougher, so the Company lowered its forecast, and I thought that if you were goingto lower the forecast for H2, you would lower the volume and prices, but the prices are rather positive, withmore entries than before.
I think the EUDR also has some aspects that were already known originally, so what additional costs havebeen incurred here? Since the figures have been left somewhat unchanged, should we understand that they
have been left unchanged for the time being simply because the strike in Turkey is uncertain? I would
appreciate it if you could supplement this figure with what kind of image you had in mind when you set up
or revised this H2 of the fiscal year.
Yamamoto [M]: Thank you for your question. I think I would like to have Okawa answer your question.
Okawa [A]: Thank you for your question.
To be honest, there was some debate within the Company as to what we should really do about the JPY80
billion per year, and to be honest, we could have gone a little higher or a little lower, but at this point in
time, everyone agreed that we should start with this as the minimum commitment line.
That said, I will briefly explain where the upside and downside factors lie. First, as for the minus 21
difference from the Q1 raw material price, we were aware of the EUDR, but surprisingly, we were able tosecure the EUDR rubber in the end, but there was a sudden increase in the demand for EUDR rubber, which
resulted in a slightly higher price than we had expected. Therefore, we have included the risk of EUDRs in
our calculations based on the fact that this cost may be slightly higher than anticipated.
Regarding the price, we did have our doubts about this as well, but considering that the situation in North
America is a little more difficult, we have included a minus figure for the price, but this is the same as lastyear, which in the end did not appear, so maybe it will not appear here either, but it will depend on thesituation in North America.

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35However, as I explained earlier, for North America, based on the information that Tier 4 is flowing in andprices are being pulled down slightly, we cannot say so suddenly and confidently at this point, so we haveincluded this in our forecast.
Also, regarding direct costs, as explained earlier, it is true that SAT(Turkey) costs have increased due in partto the strike. This was a little unexpected. Although there was a strike this year, price revisions are madeonly once every two years, so we consider this to be a one-time event. Therefore, we have included this costin the calculation based on the understanding that it is a cost that will not affect the next fiscal year and that
we had no choice in the matter and the capacity utilization rate has been lowered, so we have included thisin the calculation.
As for the exchange rate, I am sorry, but H2 is almost in line with the forecast, but I understand that theamount for H1 is included as it is, and the exchange rate for H1 from April to June was higher than the initial
forecast. You may ask what would happen if the exchange rate were to change now, so let me say that theexchange rate would be JPY147 as of today. If JPY147 were to remain at JPY147 from today until the end of
the year, we would have a negative balance of several billion yen.
However, as I mentioned earlier, we have a feeling that this plus 42 will increase because of the increase involume & mix, etc. On the other hand, we did not know whether the exchange rate would rise or not, but
based on this understanding, we have included some of the usual items in the composition, and we feel that
we can cover this JPY147 level.
However, if it were to fluctuate to JPY130 or so, we would have to give up, so please understand that we will
be fine at the current level.
So, in the end, sports, as always, have a habit of taking a hard look at things, and although the numbers area little tight, we have reached a consensus within the Company that the minimum commitment line is JPY80
billion.
However, we still have some thoughts about tires, so I will now turn to Nishiguchi.
Nishiguchi [A]: Since you have appointed me, I think it is because Okawa does not trust me.
On page 19, it appears to be a little bit uneven. In H1, volume & mix, and technology were not coincidental,
and we did a very good job of inventory control in H1. I think this is a real benefit of establishing the Tire
Business. Processes are now very well connected, and the unrealized profit has turned out to besignificantly positive.
I believe that this will be the case in H2 as well, but with regard to opportunities, I think that suchopportunities will probably appear in the management section, and market conditions were quite negativein all regions in H2 of last year. As you can see on page 22, our plan for this year is 102 in terms of thenumber of units for H2 alone.
Since last year and the year before, we have reduced the number of low-profit SKUs, and this is the basis of
our plan for H2, which is 102, so we plan to increase the number of profitable items. If you look at page 19,
the volume & mix section, it says that a little more will come out, but since the CFO has already said this, I
can no longer go against it, so I will just do my best in my own way.
Also, I would like to talk about opportunity in terms of SYNCHRO WEATHER. I will say this before you ask,
but the response has been quite positive, and the product's performance has been well communicated.
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36Regarding the price, as Yamamoto explained earlier, the suggested retail price is the highest price forsummer tires, which is accepted as a matter of course, and we are setting up a certified store system for the
first time. According to our current plan, we were thinking that there would be about 8,000 storesnationwide, but within two weeks of the launch, we have already received a large number of requests tobecome certified stores, and we estimate that we have already planned for about 5,000 stores in ourcurrent plan.
In terms of promotion, Ohtani has already hit the jackpot, and his popularity has been spread all over SNS,so I think this was a very good thing, and I would like to do my best in this area. I went to Hokkaido two
weeks ago, and I thought we could sell these tires instead of summer tires in Hokkaido. I was told that evenduring Golden Week, it snows on the Nissho Pass and the Karikatchi Pass. Instead of selling summer tires,
we could sell these tires, and during the winter, we could sell WINTER MAXX tires, and this was exactly what
we wanted to convey to people. I think this was thanks to social networking services.
In this sense, as an opportunity, we would like to sell this high-value-added product, SYNCHRO WEATHER,
well before the end of this year, and we would like to make a firm connection to next year's spring sales.
It seems that Yamamoto wants to talk.
Yamamoto [A]: Sorry, I was holding the microphone.
The response to SYNCHRO WEATHER was really beyond our expectations. What made me very happy wasthat dealers understood our concept very well. In particular, we targeted summer tires. When using summer
tires, they are used all year round, but if it snows even for a week, they have no choice but to stop the car.
So, the idea is that this will be eliminated. Dealers understand the value of this concept, so we need tocommunicate that value to our customers.
Also, we have set a price that is commensurate with the value. This also means that the dealers understandthat the price is commensurate with the product's value.
So, as explained earlier, in Europe, the all-season category has doubled in the past four years. In Japan, I am
guessing, but I would say that it is around 1 million units. We would like to increase this number significantlywith this product. In this context, we will firmly capture market share with SYNCHRO WEATHER. We will dobusiness at prices that are recognized for their value. One point is that we want to make a profit here.
Another thing is that I have high expectations for the US market. Economic indicators in North America havecaused the recent stock market volatility, but I believe the most important thing is to check the actual
situation in North America and the actual state of business.
I am constantly checking with local managers, and they tell me that the tire market in North America is still
strong. The local manager said the overall industry demand, including imports from China and othercountries, is not bad. However, Chinese manufacturers and other Asian manufacturers are attacking withlow prices, so we are trying to find a way to overcome this situation.
Naturally, we will balance price and volume, but what will be useful in this situation is the WILDPEAK series,
which we have developed over the years. The WILDPEAK series accounts for a large percentage of our
profits in North America, and thanks to this series, we achieved 120% YoY growth for the entire year lastyear. Based on this foundation, H1 of this year has also exceeded the previous year's level.

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Thanks to your support, the new product AT4W is doing very well. This is because we have a complete
lineup of sizes and product lines. Therefore, we are able to meet the needs of North America, such as
pickups and SUVs.
In addition, the performance of the previous model, the AT3W, was also highly evaluated for its
performance on snow and ice, wet grip performance, and abrasion resistance. Abrasion resistance
performance is a significant demand.
The AT4W has further improved this abrasion resistance. We have received a very high evaluation, so wehave also adapted the sidewall design to American specifications to meet American needs, although it wasdifficult to do so. We are confident that this will take root and expand sales in North America, and I expect
there is still a lot of potential for further profit improvement in this area.
I apologize. I'm sorry I've gone on for so long.
Sakamaki [Q]: Thank you very much.
Mr. Okawa, the direct cost part of the strike is over and has been signed, so it will not expand any further.
Are you inflating this much with some buffer?
Okawa [A]: No, we are done.
Sakamaki [Q]: It's done. No more.
Okawa [A]: Yes.
Sakamaki [Q]: The buffer is especially thick.
Okawa [A]: This is normal.
Sakamaki [Q]: So, it is normal. I understand. Thank you very much.
One more point. Sorry, this is getting long. On page five of the medium-term management plan, there is afigure of JPY8.5 billion and another JPY20 billion to 25 billion for the future. Please supplement this with alittle more information on the contents of this, such as what parts of the 8.5 billion have already beenrealized and how much of the 8.5 billion is accounted for last year or this H1, or what you are seeing on theupside.
There was a comment that Buffalo has been a little slow to improve, so I would like to know if there isanything there, as well as if you have anything to go along with the numbers here.
Yamamoto [M]: Thank you very much. Let us begin with an explanation from Okawa.
Okawa [A]: As the President explained, first of all, the base of this figure is the comparison with FY2022. So,
please understand that in FY2022, the total deficit of the businesses we have chosen as our structuralreforms was JPY23 billion.
In contrast, the projects that we have already announced to the public in 2024 and how much of an
improvement they had totaled JPY8.5 billion. Therefore, the remaining improvement and reform effects,
including the North American plant, are expected to total another JPY200 million to 250 million. We will
announce the estimated amount by the end of this year, but please understand that this does not mean all

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of these effects will be realized this year. It is my understanding that this will be done over the course of thisyear and next year.
Sakamaki [Q]: So, the JPY8.5 billion is the figure for the European subsidiaries, and the reduction of SKUs,
which we have already seen, and the real improvement of Buffalo is still to come. I heard a comment thatyou are a little behind in this area.
Okawa [A]: The delay is due to the delay in improvement activities, not the delay in structural reforms. We
are steadily preparing for the structural reforms, but the certainty of Buffalo's cost reductions, as we expect,
is a little higher than expected, which is the reason for the delay.
Sakamaki [M]: Thank you very much.
Yamamoto [M]: Thank you very much.
Inoue [M]: We would like to continue with questions from those who are participating online.
Mr. Maki of SMBC Nikko Securities, please.
Maki [Q]: My name is Maki of SMBC Nikko Securities. Thank you. I would like to ask two questions as well.
First, as mentioned earlier, in terms of volume and composition, you mentioned that the full-year plan has
been lowered considerably and that there may be some wrinkles, but I think that H1 has also been relatively
weak compared to your expectations.
Since you have lowered the volume plan for all markets except Japan, including the US, could you tell us why
you lowered the volume plan for these two quarters or why it was lower than the plan? Also, I would like tounderstand a little more about whether H2 will be like this or not.
In addition, you mentioned earlier about Active Tread. Currently, demand is very strong, and since there arepreorders, I think that starting in October, the contribution will still be small. For example, if we do well thisfiscal year, we may be able to add this much, or if next fiscal year, we may be able to expect a good
performance line; for example, if there is something like a performance line for SYNCHRO WEATHER, wewould like to know about it.
Yamamoto [M]: Thank you for your question. Nishiguchi will answer this matter.
Nishiguchi [M]: Thank you for your question.
I had difficulty understanding your question, so I would like to confirm it; first, H1 volume was a little weak,
but what is the situation in that area, and second, how much of an upward swing do we expect from theSYNCHRO WEATHER, is that correct?
Maki [M]: That is correct. I am sorry. Thank you very much.
Nishiguchi [A]: First of all, in H1, the sales applications are shown on page 22, but starting from the top, as
you already know, the production volume for new vehicles in Japan and for JOE Japan dropped significantly,
which had a serious effect, and the sales of H1 were affected by this drop in production volume.
In the domestic market, in H1 of last year, there was a large price increase for summer tires in March and a
price increase for winter tires in July, so there was a large temporary demand in June. As a result of thetemporary demand for summer tires and the subsequent price increase for summer tires in H1 of last year,
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as well as the temporary demand for winter tires, H1 of last year was very high, and H1 of this year is below
the previous year's level.
As for new vehicles overseas, sales in the US and Europe were strong. In the US, we were able to deliver four
new models that were profitable, which was good, but as you know, H1 was very difficult for Japanese
automakers in China, ASEAN, and other regions. In China and ASEAN countries, Japanese-affiliatedcompanies had a tough time, and H1 of the fiscal year was largely affected by the sluggish sales of newvehicles overseas.
As for the overseas after-market portion, we are selling various brands of tires, though we are putting themout by region for overseas after-market. In this context, in North America, there has been a temporary dropof 4% to 6%. This is due to a drop in sales of our mainstay products other than the FALKEN WILDPEAK tires
that Yamamoto just mentioned, such as the Dunlop brand tires that we supply to certain companies andtires for major dealers that we export directly. As for our mainstay, the FALKEN brand, sales of WILDPEAK
have been growing. That had a bit of an impact on H1 and the customer part of those areas.
Sales in Europe were firm. In terms of YoY, sales of winter tires were positive because the winter season has
been delayed since the beginning of this year.
In Asia, H1 was not so good due to the sluggish performance of Japanese-affiliated companies, the waiting
period for the election, and the difficulty in deciding on preferential policies for replacement, as well as
inflation and the poor economic environment.
As for other regions for us, Brazil and Australia have been our strong points, and have been performing well.
In this sense, while H1 had some shades of gray, H2 is likely to drag on in the areas I just mentioned, namely,
new vehicles in Japan and new vehicles overseas in China. I think this area is still a little weak, but I think all
markets will recover in the replacement area, and since H2 of last year was quite bad, I think H2 of this year
will be over 100 compared to the previous year.
Is this sufficient?
Maki [Q]: Just to confirm, you are saying that WILDPEAK is selling well, but there is competition in terms ofprice, and you are maintaining the 120% level that President Yamamoto mentioned earlier in H1, is myunderstanding, correct?
Nishiguchi [A]: In the US, we lowered the price of WILDPEAK in June this year while keeping an eye on thesurrounding market conditions. We are managing the situation well in a competitive environment while
keeping an eye on the balance between price and volume.
Maki [M]: I understand. Thank you very much.
Nishiguchi [A]: The second one is SYNCHRO WEATHER. In fact, I would like to say a lot about the numbers,
but we have only just begun. I can't give you specific figures, but as I mentioned earlier, the response has
been better than expected, or rather, as expected, and things are going well. Although I cannot give you
specific figures for the four quarters we have set for this year, I have the impression that we will be able toincrease the number quite a few times, which is what I would like to do.
Also, the thing that we feel the most responsive to is that we want to sell the most in the spring of next year.
The concept is to replace summer tires with these tires. In order to build a foundation for spring demand, I
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40believe that we will be able to make good progress from this October to the beginning of February next
year. We would like to do our best to meet Okawa's expectations in this upward direction in terms ofvolume and composition in that way.
I am sorry, but I can only say so much now. I hope you understand that we are on schedule.
Maki [Q]: Thank you very much. Regarding the stores you mentioned earlier, I couldn't quite catch thenumbers, but I think you said that 5,000 stores or something was contracted, but how many of these areexisting stores, and how many are new stores?
Nishiguchi [A]: Since it's only been two weeks, we haven't done it yet, but in our plan, we thought the scale
would be roughly around 8,000 stores in terms of having them become certified stores.
In this context, responding to the feedback we have received over the past two weeks, we are also receiving
reverse requests from customers who would very much like to become certified stores. Calculating thenumber of stores that have such customers, we estimate that there are roughly 5,000 stores that have thepotential to become certified stores, so we will be holding workshops and working toward certification
while keeping an eye on these areas.
Maki [Q]: I see. I understand. Thank you very much.
The second point is regarding the next fiscal year, especially in terms of costs. In the future, raw materials
and other costs will fluctuate, so it is difficult to say for sure, but when we look at freight costs, for example,
the agreement was reached fairly cheaply this fiscal year, but if this situation continues into the next fiscal
year, I wonder if this will be a factor that will increase costs a little.
In such cases, what kind of controls will be put in place? I am wondering if there are any measures that canbe taken to learn from the past and control the situation in any way. I think there is a possibility that you will
also increase exports from Thailand to the US in the future, so please tell us how you plan to control costs.
Also, there is talk that the EUDR will have an impact on factories that export to Europe in general, so pleasetell us how much has been put in this fiscal year and how much impact it will have for the full year, and what
is your perspective on the EUDR in terms of costs.
Yamamoto [M]: Thank you for your question. Regarding your first question, Nishiguchi will answer.
Nishiguchi [M]: The first one is about freight rates, ocean freight rates, is that correct?
Maki [M]: Yes, that's right.
Nishiguchi [A]: We have launched the tire business division, and since this January, we have also included
this supply chain division in my organization. We really had a tough time with this fare during COVID-19.
Based on that study, we have taken various measures to control marine freight rates.
We have already seen results for H1 of the fiscal year, and we are also looking at H2 of the fiscal year,
including the normal annual contract, but it is difficult to say at this point. We have already taken steps toprevent the situation from worsening due to the sharp rise in freight rates, and we feel that we are almost
on track to achieving our goals. While I cannot give you specifics, we would like to make sure that thenegative effects of external factors will not be unexpected, and I have a feeling that we will be able to do so.

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In terms of the volume of goods to the US, we had a very difficult time during COVID-19 because we could
not transport more goods than the rising cost of freight. I am unsure what will happen in the presidential
election, but everyone is concerned about the tariff issue. Rather than the risk of higher tariffs at that time, I
think we will probably see some places during the year that want to move ahead and transport goods
quickly because tariffs are likely to rise.
In this case, there will be a shortage of containers again, so we are working to ensure that measures havebeen taken and are being completed so that we will not have problems in H2, so I hope you understand that
we are taking steps to deal with areas that you have questioned.
Is this sufficient?
Maki [Q]: Can you explain the EUDR as well?
Okawa [A]: I, Okawa, will explain the EUDR.
I hesitate to be blunt, but please understand that the impact of the EUDR for the current fiscal year is in thelower half of two digits. Next year, the annual impact is expected to be in the middle of the two-digit billion
yen range. However, since we naturally use raw materials for the EUDR, we are naturally consideringreflecting this in our prices.
However, at this point, it is not yet clear whether the EUDR will really come into effect in November, so
negotiations will probably take place after that time. Therefore, regarding costs that will be increased by the
EUDR, please understand that it is not yet clear to what extent the increased costs will be covered by thesales. But of course, we hope you understand that we will not simply increase costs.
Maki [Q]: I understand that you have reduced some of the raw materials for H2 of this fiscal year, so am I
correct in assuming that this is mostly the effect of the EUDR?
Okawa [A]: The negative factor in H2 of this fiscal year is that the EUDR has added to what we had originallyplanned.
Maki [M]: I understand. Thank you very much. That is all.
Inoue [M]: Thank you very much.
Now, if anyone in the audience has any questions, please raise your hand.
The person in the front row, please.
Sakaguchi [Q]: My name is Sakaguchi of Mizuho Securities. Thank you very much for your continued
support. I would like to ask you two questions.
First, please tell us your view on dividends. There was a slight comment that in the context of applying a
40% payout ratio this time, there are also structural reforms. I am aware that the forecast for net sales,business profit, and operating income has not changed, so only the net income has changed, which meansthat the dividend remains unchanged, and the dividend payout ratio appears to have decreased. Goingforward, if the business environment changes and the Company lands on its feet, as you have said so far, I
think it is more likely to be on the upside, but at that time, is the idea to pay a 40% dividend on landing?
Or is there a risk that the expenses on the restructuring side will be larger than expected and change? In
conjunction with the comments you just received, could you please reiterate your thoughts on dividends?
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Yamamoto [A]: Thank you for your question.
As for our approach to dividends, we recognize that returning profits to shareholders is indeed a toppriority. As you mentioned, our policy is to pay stable dividends over the long term based on acomprehensive assessment of the consolidated dividend payout ratio, performance outlook, and level ofretained earnings.
Accordingly, although it remains to be seen what will happen with structural reforms, etc., our policy is tomake every effort to achieve stable dividend payments.
Sakaguchi [Q]: I understand. Is it correct to understand that 40% is not a particular change?
Okawa [A]: I, Okawa, would like to add something.
The basic premise of the Company is to maintain a dividend payout ratio of 40%. These are the interim
financial results, and although the structural reforms are still in the process of being finalized, we are notsure which direction they will take, but our message is that we will definitely commit to the minimum of
JPY58, which we set out at the beginning of the year. While we are still trying to keep the final 40%, we are
keeping an eye on how the structural reforms that we have promised will be implemented by the end of thisfiscal year, and we will start by committing to the JPY58 figure, which is the figure that we have set this time.
Ultimately, we believe that 40% is a promise to our shareholders, so we are trying to ensure that both thestable dividend and the 40% payout ratio will be retained.
Sakaguchi [Q]: Thank you very much.
Secondly, you have always said that you would like to achieve a 7% profit margin in the medium-term
management plan, ahead of schedule, and I think that there is a very strong pull for SYNCHRO WEATHER interms of various initiatives during the medium-term management plan period, or that there are somestructural reforms that have been implemented or are on track to be implemented.
Naturally, there are various negative factors in the external environment, such as the cost side, etc., andalthough there are variable factors, from the standpoint of your company's structure, I have the impressionthat you are on track to achieve a 7% margin at the earliest possible date. Perhaps you would like tocomment on your desire to work hard ahead of schedule, but I would appreciate your comments on the
degree of certainty or confidence or what kind of progress you are making.
Yamamoto [A]: Thank you very much.
First of all, the 2027 target is a real commitment, and we are aware that it is the minimum number that we
can achieve. We are currently working on various calculations and measures to see how quickly we canaccelerate and increase the target.
First of all, we will get closer to this goal by firmly implementing structural reforms. In particular in North
America, if we can firmly set a target of 2024 for structural reforms in North America, which is our number
one priority, we will be able to establish a base for going beyond this target.
Besides this, we are also implementing various measures, such as the reduction of SAUs, and I believe that
we are on track to achieve our goals. Naturally, we have various customers and parties to negotiate within
the structural reform process, and we are currently moving forward with structural reform while consideringvarious options, so I think it is important that we keep this time in mind while moving forward.
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We are now moving forward with a daily meeting of the Board of Directors to review the progress ofstructural reforms, and if there are any delays, we will take new measures, so I believe that we will be able
to achieve the 7% target by first completing structural reforms.
In addition, as with the new growth strategy, SYNCHRO WEATHER, how will the seeds that have been sownbear fruit? How can we bring this forward? Depending on this, I believe the direction will be determined as
to how much the business profit margin for 2027 will be able to swing upward, and I will let you know when
the time comes to do so when I have reviewed the situation again.
Nishiguchi [A]: As I am in the tire business, I would like to add that I think 7% is still not enough. In order toincrease our profit margin, we need to sell more high-inch, high-value-added products, such as SYNCHRO
WEATHER, and as shown in today's materials, more than 18 inches, and SUV sizes account for 39%, which isstill low. I think it is still low compared to other companies.
One of the measures we need to take in order to quickly break through the halfway point is to quickly
launch more products like SYNCHRO WEATHER, and since we had a large sales volume of low-inch products,
we are now working very hard to replace them with high-inch products. This will take effect around 2026,
and in some factories, it will start as early as next year.
If we can do that quite well, when we benchmark, our lineup that we have over 18 inches is still by far thesmallest we have. If we can bring it up to the level of other companies, we will be able to reap the demand,and this will emerge around 2026, so we would like to aim to bring it forward, not to say by 2027, and to go
up, not to say 7%, but higher. To do so, we need to sell high-inch and high-value-added products. First of all,we would like to do our best in that area.
Sakaguchi [M]: Thank you very much.
Inoue [M]: Thank you very much.
Are there any other questions online?
Mr. Kakiuchi, please.
Kakiuchi [Q]: My name is Kakiuchi, Morgan Stanley Securities. Thank you. In the factors for the increase or
decrease for the full year, on slide 20, I would like to ask two questions.
The first one is on the refund of anti-dumping duties. Is this a positive or an increase in refunds compared tothe previous assumption? Please tell us how that works as well. I would also like to know if the increase wasparticularly large for H2 or if there were many refunds from H1.
Yamamoto [M]: Thank you for your question. Regarding anti-dumping, Mr. Okawa will answer yourquestion.
Okawa [A]: Thank you for your question, Mr. Kakiuchi. I thought you hit the nail on the head.
Originally, three months ago, anti-dumping duties were refundable. As for H2, there is no such thing, and I
told you that it would be slightly worse than last year, but in fact, the anti-dumping figures were updated
again a few days ago, and it was decided that we will receive anti-dumping at a very low rate.
In response to this, we have come to realize that we can eliminate our provisional anti-dumping allowance,
which we have already paid provisionally, so we have added a few billion more in H2. As you have pointed
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out, the actual situation is that we have added back the anti-dumping duty allowance for H2 of the fiscal
year.
Kakiuchi [Q]: Thank you very much. Can you not do this for the next fiscal year as well?
Okawa [A]: The amount that is down this time will also appear in the next fiscal year, but I am sorry, we
have not yet calculated what will happen in the next fiscal year, so please understand that it is difficult togive an answer in terms of numbers at this time.
Kakiuchi [Q]: I understand. Thank you very much.
The second point is, and I apologize for being so numerical, but as you have explained before, the direct costof personnel expenses has increased from JPY7 billion to more than JPY7 billion, but is there any breakdownof the increase for the full year from the previous year? I think this is due to the use of funds, delays in
Buffalo, etc., as well as the overall wage rate, which I think was also estimated to a certain extent, but thedifference from the forecast is quite large, so please tell us if there is any particular benefit that you think is
the greatest.
Okawa [A]: I will answer again.
Regarding your question about what is the major difference from the forecast, first of all, the wage rate has
actually increased due to the SAT and the strike in Turkey. Since inflation in Turkey is very high, we wereasked to raise wages more than before, and the wage rate has increased compared to our initial forecast.
So, although there was an increase at the beginning, it has been higher than initially expected. However, as
for Turkey, the exchange rate has depreciated the Turkish lira, so the increase in labor costs mentioned here
does not affect all of our business performance, but about 40% of the increase is offset by the depreciationof the Turkish lira, so the first major impact was in Turkey.
In addition, labor costs in the US have increased compared to our initial forecast. In the US, there was sometrouble with equipment in the first part of Q2 in April, May, and June, resulting in a drop in productivity, andthis had a negative impact on costs, which also increased personnel expenses.
In addition to these two major factors, the wage rate has been increasing in general, affecting othercompanies gradually. As such, we are in a situation where labor costs have become larger than the initial
figures.
Kakiuchi [Q]: Thank you very much.
So, you are saying that the Turkish part is not entirely effective if we consider both sides of the exchange
rate?
Okawa [A]: Yes. I would say that about 40% of the currency is returned.
Kakiuchi [Q]: I understand.
I'm sorry, but if you do know, in terms of the current labor cost, is there a risk that it will remain in the next
fiscal year, or is there a risk that it will have an impact on the next fiscal year?
Okawa [A]: In Turkey, the increase in labor costs will have a ripple effect. However, the negative impact of
the strike will no longer spill over. In the US, labor cost increases are due to temporary machine

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breakdowns, so there will be no ripple effects. Therefore, I think it is safe to say that only the additional cost
increase over the wage rate increase we had expected in Turkey will spill over into the next fiscal year.
Kakiuchi [M]: I understand. Sorry for the details. Thank you.
Inoue [M]: Thank you very much.
Now, if anyone in the audience has any questions. Are there any other questions online as well?
Since there are no more questions, this concludes the presentation of the financial results briefing for the six
months ended June 30, 2024, of Sumitomo Rubber Industries.
Thank you very much for taking time out of your busy schedule to join us today.
Yamamoto [M]: Thank you very much.
[END]______________
Document Notes
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