The financial crisis that unraveled during the autumn of 2008 continued to affect the Group’s business climate in fiscal 2009. Although the economy showed signs of recovery as governments and monetary authorities around the world took steps to stabilize the financial system and stimulate their economies, the economic outlook remains uncertain with no clear evidence of a full-fledged recovery in demand. While the Group promoted various efforts including productivity improvements and cost reductions with the primary business objective of securing profits and cash flow, both net sales and operating income during the year under review decreased in each business segment owing to the reduced capital expenditure in the respective markets.

As a result, consolidated net sales totaled 126.2 billion yen (down 20.2% year on year). Consolidated operating income stood at 7.9 billion yen (down 33.7%) and consolidated net income, 4.0 billion yen (down 9.2%). On the other hand, we believe that signs of recovery did emerge during fiscal 2009, with some businesses, including the precision equipment business, seeing a rise in demand during the latter half of the fiscal year and posting profits that exceeded expectations at the start of the term.

In terms of future market conditions, the domestic business environment surrounding the Group is forecast to remain sluggish due to reduced capital expenditure, particularly by companies in the automobile industry. However, we expect international markets to show further recovery, especially in emerging countries. The Chinese market in particular has huge growth potential and is anticipated to show expansion centered on infrastructure demand in the areas of railroads, roads and electricity, driven by economic stimulus packages. The Group will seek to enhance its functions through investment in overseas bases and other activities in order to focus on growth in the railroad vehicle equipment, hydraulic equipment and precision equipment businesses in the Chinese market.

In fiscal 2011, the Company will continue to make efforts in cost reduction with the top priority aim of securing earnings and cash flow. We will also carry out investment based on strict evaluation. Meanwhile, since fiscal 2011 is the final year of the mid-term business plan that kicked off in fiscal 2008, we consider it to be a year for preparing the next mid-term plan and long-term vision. In this sense, we intend to position the current fiscal year as a foundation for recovery to a growth path and to proceed with technology/production reform as well as revamping our sales structure. As part of the technology/production reform, the Company intends to incorporate quality and cost in the initial stages of design in order to satisfy clients’ needs and enhance cost control. We will also aggressively work on redesigning our sales structure. The Company is in a position to obtain the latest information on products, services and market needs from our various customers and excellent partners. In fiscal 2011, we plan to establish a new Marketing & Business Development Department within the Corporate Planning Division. By concentrating this kind of information provided by all our group companies within the new department, we plan to carry out cross-company sales proposals.

As a consequence, consolidated net sales for the year ending March 31, 2011 are expected to amount to 141.0 billion yen (up 11.7% year on year). Consolidated operating income is forecast to total 12.0 billion yen (up 50.7%), and consolidated net income, 8.1 billion yen (up 101.6%). As a top-runner in manufacturing technology, we intend to seek further growth and profitability. We look forward to the continued understanding and support of our stakeholders.