RIKEN CORPORATION

Investor Relations

Top Messages

Noritada Okano, Chairman & CEO

To Our Shareholders

At the outset, I would like to express my heartfelt gratitude for your continued support and understanding of our company.

Our company completed the closing of its financial accounts for the fiscal year 2015 ending March 31, 2015.

During the fiscal year 2015, the US and European economy maintained stable growth throughout the year, but the emerging economies showed signs of slowdown.

At the beginning of the year, the Japanese economy was steady due to the weak yen and high stock prices. However, during the latter half of the year, the economy turned downwards resulting in a strong yen and low stock prices.

With regards to the automotive industry, which is our primary market, the domestic car production was 9.18 million units, about 4% decrease year on year. This is mainly due to a 20% drop of mini vehicle "Kei" production, affected by the consumption tax increase at the start of the year. The automotive sales in the US, Chinese and Indian market continued to grow. However, sales in the ASEAN markets, especially in Indonesia and Thailand, dropped drastically compared to the previous year.

Under such a business environment, our consolidated sales were 73,292 million yen, increased by 1.1% year on year, mainly because of the weak yen impact. The consolidated operating profit was 5,579 million yen, decreased by 0.6% year on year, due to the increase in enterprise system renewal cost and so on. Ordinary profit was 6,163 million yen, decreased by 9.5% year on year mainly due to currency exchange loss. As recognized a provision for the voluntary repairs cost in the anechoic chambers business, net profit dropped to 3,524 million yen, a 12.8% decrease year on year.

Since the beginning of the fiscal year 2016, our group has been implementing its "PLAN 2020" under the theme "Advanced Solutions for Tomorrow's Challenges". Through the activities of "PLAN 2020", we will pursue the position of global top supplier of key components in automotive and machinery industries, in line with the three basic policies, "Growth through Diversification", "Advancements in Monozukuri", and "Pioneering Technologies".

Our basic dividend policy is to pay stable dividends with an adequate payout ratio twice a year, taking into account our company's performance. The by-laws of our company provide for the payment of an intermediate dividend, which is to be approved by its board of directors and a year-end dividend to be approved by the annual shareholder's meeting.

We will effectively utilize our company's retained earnings for strategic purposes, such as enhancement of overseas operations to implement our global strategies, development of new products and new technologies, productivity improvement and strengthening of the entire groups' competitiveness, all of which will increase our corporate value.

We will also acquire our own shares at a timing that deems optimal in consideration of our overall financial condition and stock price.

We look forward to the continued, long term support and understanding of our shareholders and other investors.

Sincerely,

June 2016
Noritada Okano, Chairman & CEO