Sumitomo Heavy Industries, Ltd.
THIRD QUARTER CONSOLIDATED FINANCIAL REPORT
for the Nine-Month Period from April 1 to December 31, 2007

Note: All financial information has been prepared in accordance with generally accepted accounting principles in Japan. This
document has been translated from the Japanese original as a guide to non-Japanese investors and contains forward-looking
statements that are based on management’s estimates, assumptions, and projections at the time of publication. A number offactors could cause actual results to differ materially from expectations. Amounts shown in this financial statement have beenrounded to the nearest million yen.

Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

SUMMARY OF CONSOLIDATED FINANCIAL STATEMENTS
Third Quarter of the Financial Year ending March 31, 2008
Presented January 30, 2008

Sumitomo Heavy Industries, Ltd.
Listed Exchanges

Tokyo Stock Exchange, Osaka Securities Exchange

Stock Code6302

Head OfficeTokyo

President

Yoshinobu Nakamura

URL

www.shi.co.jp

Inquiries

Hideo Oshima
General Manager, Corporate Communications Dept.

Telephone+81 3 6737 2333

1. FY 2007 Third Quarter Consolidated Results (April 1, 2007 to December 31, 2007)(1) Business Results(Units: millions of yen)
Nine Months

Previous Nine Months

April 1 to Dec. 31, 2007

April 1 to Dec. 31, 2006

Previous Full Term
April 1, 2006
to March 31, 2007

Net Sales

465,524% change
13.4

410,649% change
11.4

600,256

Operating Income

53,32533.9

39,82338.4

64,224

Ordinary Income

53,38728.7

41,46744.2

65,341Net Income

30,521

24.2

24,57532.9

Net Income per Share (yen)Fully Diluted Net Income per Share

37,352

50.56

40.82

61.99

--

--

--

*Note: Percentages for net sales, operating income, ordinary income, and net income represent year-on-yearchanges.

(2) Financial Position(Units: millions of yen)
End of Previous
Third QuarterEnd of Third Quarter
As of Dec. 31, 2007

As of Dec. 31, 2006

End of Previous Full YearAs of March 31, 2007

Total Assets

646,063582,243

600,890

Shareholders’ Equity

235,152

190,984

206,010

34.9

32.6

34.1

374.08314.26338.95Equity Ratio (%)
Shareholders’ Equity per Share (yen)Consolidated Results1Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

2. FY 2007 Consolidated Forecasts (April 1, 2007 to March 31, 2008)(Percentages indicate changes from the previous term.)
Full Year
April 1, 2007 to March 31, 2008

millions of yen% change

Net Sales

660,000

10.0

Operating Income

77,00019.9

Ordinary Income

75,00014.8

Net Income

43,000

Projected Net Income per Share for FY2007 (yen)

15.1
71.24

Consolidated Forecasts for the Full Year
There is no change in the forecasts announced October 31, 2007.
*Note: Forecasts of future operating results represent the Company's rational judgment based on information
available as of the date of release. Consequently, actual results may differ from these forecasts because ofchanges in various factors, such as variations in the economic environment of the principal markets andproduct demand, currency exchange rate variations, and domestic and overseas regulations.

3. Other Information(1) Important changes within subsidiary companies during the term (changes to the scope of consolidation as well aschanges within specific subsidiary companies): yes
New: 1 company (Nihon Spindle Manufacturing Co., Ltd.)

Exclusions: none

(2) Adoption of simplified accounting practices: yes(3) Changes in accounting practices since the most recent consolidated accounting period: yes
Note: For details please see Section 3 (Other Information) under [Qualitative Information and Information on
Financial Statements] on page 4.

Consolidated Results2

Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

Qualitative Information and Information on Financial
Statements
1. Qualitative Information on Operating Results
During this third quarterly period, the Japanese economy tended to lose momentum due to the sharp rise in the crude oil
price and material costs and the unstable exchange fluctuation, creating increasing uncertainty in the outlook. The
overseas economies overall remained robust, buoyed by active investments although the U.S. economy showed aslowdown under the influence of the subprime problem.
In this economic environment, our group conducted successful business operations where we achieved a result higher
than expected in the medium-term management plan “Leap to Excellence ’07” to be concluded in this fiscal year.
All businesses except the segment of environmental protection facilities, plants and other business, remained favorable
for orders, which were ¥542.9 billion, a 7% increase compared with the same period of the previous year. Sales
increased in all the businesses, mainly in the construction machinery business, to ¥465.5 billion by 13% compared withthe same period of the previous year.
Under profit and loss, the operating income increased by 34% to ¥53.3 billion compared with the same period of theprevious year, which was attributable to increased sales and the decreased ratio of cost to sales. Ordinary income
increased by 29% to ¥53.4 billion compared with the same period of the previous year and quarterly net income
increased by 24% to ¥30.5 billion compared with the same period of the previous year.
A review of the operations by segment is provided below: It should be noted that the allocation method of operating
costs is and will be changed for and after the present period as noted in “4. (Summary) Quarterly Consolidated Financial
Statements, (3) Information by Segment”.

1) Mass-Produced Machinery
The power transmission equipment business and plastic injection molding machine business continued to show strong
performances while the other precision equipment business recorded a slight drop in performance from the same periodof the previous year, reflecting a leveling off in the semiconductor and liquid crystal-related market. As a result, orders
were ¥183.4 billion (a 5% increase compared with the same period of the previous year), sales were ¥167.7 billion (a 5%increase compared with the same period of the previous year) and operational income was ¥199 billion.

2) Environmental Protection Facilities, Plants and Others
In the energy plant business, sales increased, reflecting strong orders in the previous year while large-scale orders werefewer than those in the previous year. As a result, orders were ¥65.9 billion (a 9% decrease compared with the same
period of the previous year), sales were ¥57.1 billion (a 19% increase compared with the same period of the previousyear), and operational income was ¥3 billion.

3) Ships, Steel Structures and Other Specialized Equipment
Orders for reactor vessels for petrochemical plants decreased from the same period of the previous year. In the shipbusiness, however, orders increased to eight orders, which were for Aframax tankers, two orders up from the same
period of the previous year, and sales increased to five deliveries, one delivery up from the same period of the previous
year. As a result, orders were ¥83.7 billion (a 20% increase compared with the same period of the previous year), sales
were ¥51.7 billion (a 25% increase compared with the same period of the previous year) and operational income was¥8.8 billion.

4) Industrial Machinery
The transportation machinery business continued to show a strong performance in products for domestic shipbuilding
and steel companies where active investments were made, and the turbine and pump business also remained favorable
in products for overseas. As a result, orders were ¥74.4 billion (an 8% increase compared with the same period of theprevious year), sales were ¥57.6 billion (a 24% increase compared with the same period of the previous year) andoperational income was ¥8.6 billion.

5) Construction Machinery
The hydraulic excavator business remained buoyant in overseas markets other than in North America where we were
adversely affected by the decreased housing-related demand, and notably, both orders and sales increased mainly inEurope and China. Furthermore, the crane business continued to show a strong performance for infrastructure-related
demand in North America, resulting in increases both in orders and sales. As a result, orders were ¥135.5 billion (an11% increase compared with the same period of the previous year), sales were ¥131.4 billion (a 14% increase comparedwith the same period of the previous year) and operational income was ¥12.9 billion.

Consolidated Results3

Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

2. Qualitative Information on Financial Condition
Total assets were ¥646.1 billion, an increase of ¥45.2 billion compared with the end of the previous period. This is
attributable to the fact that factors of inventory assets, and property, plants and equipment increased by ¥34.8 billion and¥ 14.1 billion, respectively, while cash and deposits decreased by ¥12.1 billion. Outstanding interest-bearing debt
increased to ¥100.6 billion, ¥12.6 billion up from the end of the previous period and the ratio of outstanding
interest-bearing debt in total assets was 15.6%, 0.9% up from the end of the previous period. Shareholders’ equity ratio
was 34.9%.

3. Other Information(1) Change in important subsidiary during this period (change in wholly owned subsidiary resulting in change in scope of
consolidation)
We made Nihon Spindle Manufacturing Co., Ltd. our consolidated subsidiary on October 1, 2007 due to the stock
exchange conducted by the company.

Trade Name

Amount of
CapitalMain businesses

Percentage of ourownership in voting
rightsNihon Spindle
Manufacturing Co., Ltd.

¥3,275 million

Environmental equipment, air-conditioning
equipment, industrial equipment, andmanufacturing and sale of construction materials

40.6%(2) Adoption of simplified methods under the accounting policies• Income tax is accounted for by a simplified method based on statutory effective tax rate.
• Some other items of account are accounted for by simplified methods where the adoption of such methods makenegligible effects.
(3) Change of accounting policies from those in the last consolidated financial year
Depreciation of property, plants and equipment acquired on and after April 1, 2007 was accounted for by a new
method of depreciation in compliance with the revised Corporation Tax Law (such revision is under the Law to Amend
Part of Income Tax Law, Law No. 6 legislated on March 30 and the Cabinet Order to Amend Part of the Order for
Enforcement of Corporation Tax Law, Cabinet Order No. 83 enacted on March 30).
It should be noted that this change had only a slight effect on operation income, ordinary income and quarterly net
income before income tax.

Consolidated Results

4Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

4. Quarterly Consolidated Financial Statements (Summary)(1). Quarterly Consolidated Income Statements (Summary)(Units: millions of yen)Previous
Nine Months

Nine Months
April 1, 2007 to
December 31, 2007
Amount%Previous
Fiscal Year
ChangeApril 1, 2006 to
December 31, 2006
AmountNet sales

465,524

Cost of goods sold

355,58076.4%

317,879

Gross profit

109,944

23.6%

92,770

Selling, general &administrative
expenses

56,619Operating income

53,325%

410,649

39,823

AmountAmount%54,875600,256

77.4%

37,701

464,071

77.3%

22.6%

17,174

136,186

22.7%

3,673

71,961

13,50264,22452,947
11.5%

April 1, 2006 to
March 31, 2007

9.7%

10.7%

Non-operating
income:Interest anddividend income
Other
Total non-operating
income

939

538

401

866

3,671

5,688

(2,018)

7,357

4,610

6,226

(1,617)

8,223

884

1,248

(364)

1,666

3,663

3,335

328

5,441

4,547

4,583

(36)

7,107

63

1,643

(1,581)

1,116

11,921

65,341Non-operating
expenses:
Interest expenses
Other
Total non-operating
expensesNon-operating
income/loss
Ordinary income

53,387

11.5%

41,467

10.1%

Extraordinary gains

--

1,579

(1,579)

1,693

Extraordinary losses

3,225

3,808

(584)

4,093

Income before tax andadjustments

50,163

10,92562,940

Corporate income
taxes

19,327

14,1695,158

24,971

(315)

(494)

179

(618)

5,946

37,352

Loss (gain) of
minority shareholders
Net income

30,521

10.8%

6.6%

39,237

24,575

Consolidated Results

5

9.6%

6.0%

10.9%

10.5%

6.2%

Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

(2) Quarterly Consolidated Balance Sheets (Summary)(Units: millions of yen)
End of Third
Quarter
As of Dec. 31,
2007

AssetsCash and deposits

End of Previous
Consolidated
Fiscal YearEnd of Previous
Third Quarter
ChangeAs of Dec. 31,
2006

As of March 31,
2007

36,052

48,155(12,103)36,752

Notes and accounts receivable

166,804

158,376

8,428

139,307

Inventories

135,287

100,519

34,769117,720

27,287

26,236

1,051

27,608

Other
Allowance for doubtful
accounts
Current assets

(645)

(776)

131

(762)

364,786

332,50932,277

320,624

Tangible assets
Intangible assets

199,233
6,701

185,145
6,276

14,088425

184,254
5,646

75,34476,960(1,616)

71,720

Fixed assets

Investments and other assets

281,277

268,380

12,897

261,619

Total assets

646,063

600,890

45,174582,243

Liabilities
Notes and accounts payable

153,752

150,874

2,878

141,195

Short-term bank loans

19,71021,711(2,001)

29,901

Commercial paper
Long-term debt due within one
year
Other

38,00015,00023,00015,0005,255

14,285(9,031)

17,85893,032

95,343(2,310)89,329309,749

297,213

12,536

293,282

Bond
Long-term debt due after one year

10,00027,645

10,00027,049―596

10,00029,196

Other

63,51860,6182,900

58,781

Current liabilities

Long-term liabilities

101,163

97,667

3,496

97,977

Total liabilities

410,912394,880

16,032391,259

Net Assets
Common stock

30,87230,872―30,872

Capital surplus

20,523

20,5185

20,512Retained earnings

130,125

104,950

25,174

92,169Treasury stock(1,403)

(996)

(407)

(873)

Stockholders’ equity

180,116

155,344

24,772

142,681

Unrealized gains on securities

8,001

11,195(3,194)

9,410

Profit/loss on deferred hedge
Pension liability adjustment foroverseas subsidiaries
Revaluation reserve for land
Foreign currency translation
adjustments
Appraisal and translation differences(1,316)(1,652)337(2,636)(1,082)

(772)

(310)

―

40,46540,411

55

40,415

(388)

166

(554)

(61)

45,68049,348(3,667)

47,128

Minority interests

9,355

1,319

8,037

1,175

Total net assets

235,152

206,010

29,142

190,984

Liabilities and net assets

646,063

600,890

45,174582,243

Consolidated Results

6Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

III. Segment Information
1. Segment Information by BusinessCurrent Nine Months (April 1, 2007 to December 31, 2007)(Units: millions of yen)Segment
A

B

C

D

167,720

57,062

51,674

1,968

2,011

169,688

Consolidation

E

Total

F

57,631

131,437

465,524－465,524

639

259

5

4,882

(4,882)－

59,07452,31357,890131,441

470,406(4,882)465,524

149,779

56,04643,55849,310118,588

417,282(5,083)412,199

19,909

3,028

8,755

8,580

12,85353,124201

53,325Item

Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operating income

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or General

Previous Nine Months (April 1, 2006 to December 31, 2006)(Units: millions of yen)Segment
A

B

C

D

159,125

47,87541,395

2,139

2,025

161,264

Consolidation

E

Total

F

46,520115,734

410,649－

410,649

160

292

24

4,639

(4,639)－49,90041,55446,812

115,758

415,288(4,639)410,649

140,899

48,957

39,14440,761

105,881375,643(4,817)

370,825

20,365

943

2,410

6,051

9,876

39,645

178

39,823Item

Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operating income

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or General

Consolidated Results

7Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

Previous Full Year (April 1, 2006 to March 31, 2007)(Units: millions of yen)Segment
A

B

C

D

222,906

79,397

69,491

2,160

2,490

225,066

Consolidation

E

Total

F

68,286160,177

600,256－

600,256

511

423

31

5,615

(5,615)－81,88770,002

68,709160,208605,872(5,615)600,256

195,331

77,251

63,45559,278

146,583

541,897(5,865)536,032

29,736

4,636

6,546

9,432

13,62563,975250

64,224Item

Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operating income

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or General

Notes:
1. Business segment depends on sales total segment.
2. Main products of each business segment:
Businesses

Mass-Produced Machinery
Environmental Protection
Facilities, Plants & Others
Ship, Steel Structure & Other
Specialized Equipment

Main Products

Power transmission & control, plastic injection molding machines, laser
processing systems, cryogenic equipment, precision XY stages, ion
accelerators, plasma coating systems for FPDs, precision forgings, control
components, defense equipment
Power generation systems, industrial waste treatment facilities, water andsewage treatment systems, real estate, software
Ships, pressure vessels, bridges

Industrial Machinery

Forging machines, material handling systems, logistics systems, automatedparking systems, turbines, pumps

Construction Machinery

Hydraulic excavators, mobile cranes, road machinery

3. Changes to the allocation method for operating expenses
Previously, operating expenses associated with our management division have been allocated only tosegments with operating divisions. From the current term, however, a portion of these expenses will beallocated to all consolidated segments. The figures for the corresponding quarter of the previous year aswell as the previous term have been changed to reflect this allocation method.

Consolidated Results8Sumitomo Heavy Industries, Ltd. (6302)
Overview of financial condition and operating resultsin the 3rd quarter of the fiscal year ending March 31, 2008

IV. Orders, Sales, and Balance of Orders by Segment
Orders Received(Units: millions of yen)

Businesses

April 1, 2007 to
December 31, 2007

AmountMass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

April 1, 2006 to
December 31, 2006%

Amount%Y/Y
Change%April 1, 2006 to
March 31, 2007

Amount%183,36433.8

175,080

34.4

4.7

234,735

33.2

65,86912.1

72,035

14.2

(8.6)

89,963

12.7

83,736

15.4

69,561

13.7

20.4

120,971

17.1

74,432
135,52813.7
25

68,974
122,626

13.6
24.1

7.9
10.5

93,615
168,08913.2
23.8

542,931100.0

508,275

100.0

6.8

707,374

100.0

Sales
(Units: millions of yen)

Businesses

April 1, 2007 to
December 31, 2007

AmountMass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

April 1, 2006 to
December 31, 2006%

Amount%Y/Y
Change%April 1, 2006 to
March 31, 2007

Amount%167,72036

159,12538.8

5.4

222,906

37.1

57,062

12.3

47,875

11.6

19.2

79,39713.2

51,674

11.1

41,395

10.1

24.8

69,491

11.6

57,631
131,437

12.4
28.2

46,520115,734

11.3
28.2

23.9
13.6

68,286160,177

11.4
26.7

465,524100.0

410,649

100.0

13.4

600,256

100.0

Balance of Orders Received(Units: millions of yen)

Businesses

April 1, 2007 to
December 31, 2007

AmountMass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

%

April 1, 2006 to
March 31, 2007

AmountY/Y
Change%%April 1, 2006 to
December 31, 2006

Amount%92,59016.5

76,937

16.2

20.3

82,41817.7

97,38017.4

84,10317.7

15.8

97,56320.9

235,45042.0

203,387

42.8

15.8

180,04238.6

97,83437,051

17.5
6.6

81,03329,430

17.1
6.2

20.7
25.9

78,15728,40916.7
6.1

560,304

100.0

474,890

100.0

18.0

466,589

100.0

Consolidated Results

9