Kenji Minami
President and CEO

I sincerely hope that all of our shareholders are enjoying continuing health and prosperity.

I am also happy to take this opportunity to say that we very much appreciate the exceptional support and understanding that you have always extended to us.

Now, I would like to report Shibaura Mechatronics Group’s consolidated accounts for the Group’s 101st fiscal term, the period from April 1, 2009 to March 31, 2010.

Business Trends and Consolidated Results for the Full Fiscal Term.

In the consolidated fiscal year under review, the Japanese economy showed signs of improvement, including an upturn in exports to Asian countries and improved production figures. However issues still remain to be solved, among them a severe employment situation and a continuing awareness of excess manufacturing capacity. Given this, the future remains uncertain and difficult to predict.

In the business environment in which Shibaura Mechatronics Group operates, a rise in demand for such finished goods as LCD TVs, PCs and personal digital equipment devices prompted the Group’s key customers, manufacturers of LCDs, semiconductors and batteries, to resume investments in plant and machinery. This has lead to an improved environment for receiving orders.

The Group responded to these business conditions by implementing strategies aimed at strengthening our management constitution. These include reinforcing marketing and our ability to win orders, reductions in fixed costs, and promoting cost restructuring through measures for standardization and reductions of lead times. Consequently, second half consolidated sales were 23,243 million yen, the consolidated operating profit was 299 million yen and we returned to profit with consolidated net profit for the period of 124 million yen.

As a result of the foregoing, we recorded full term consolidated sales of 41,095 million yen, a consolidated ordinary loss of 1,611 million yen, and a consolidated net loss of 1,752 million yen.

Future Outlook

The global economy continues its gradual recovery. The condition of the Japanese economy may not yet support an autonomous, self-sustaining recovery in private demand, but there are increasing signs of recovery in overseas economies. As a result of increased demand from sales of new products, such as LCD TVs, PCs and portable digital equipment, we are seeing a gradual recovery in our business.

In the LCD panel industry, increased demand as a result of the Chinese government’s economic stimulus package drove investment in plant and equipment by panel makers. Investment became more active in the last three months of the second fiscal half, and we anticipate an impressive peak in fiscal year 2010. The semiconductor industry is seeing rising demand from digital consumer products and automotive products, as the market enters a recovery phase. Large scale investments in plant and equipment are planned for NAND Flash memory and Logic ICs, and we look forward to rises in orders and sales.

In the vacuum-related business, the future of the market for manufacturing equipment for optical discs remains unclear, but we can expect to see increased sales of touch-panel manufacturing equipment for sophisticated handheld devices. Going forward, demand and sales growth are expected from new business areas, such as manufacturing equipment for photovoltaic cells and rechargeable batteries.

In the vending machine business, demand for cigarette machines continues to decline, but we can anticipate increased demand for ticket vending machines.

Building on our basic policy of “direct cost power and growth capabilities to competing/fighting at the global level” we are looking to expand our business territory in flat-panel displays, semiconductors and optical discs, and in promising growth areas, such as batteries. We are determined to secure sound results in winning orders and generating sales. In order to guarantee profits in FY2010, we wil make every effort to improve the profit ratio, reduce fixed costs and to bring down our break-even point.

Up until now, we have always been able to rely on our shareholders, and I hope that we may look for your continuing support in future.

 

June 2010