Sumitomo Heavy Industries, Ltd.
THIRD QUARTER CONSOLIDATED FINANCIAL REPORT
for the Nine-Month Period from April1 to December 31, 2006

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 managements’ estimates, assumptions and projections at the time of publication. A number of factors could cause actual results
to differ materially from expectations. Amounts shown in this financial statement have been rounded down to the nearest million yen.

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

SUMMARY OF CONSOLIDATED FINANCIAL STATEMENTS
Third Quarter of the Financial Year ending March 31, 2007
Presented January 30, 2007

Sumitomo Heavy Industries, Ltd.
Listed Exchanges

Tokyo Stock Exchange, Osaka Securities Exchange

Stock Code6302

Head OfficeTokyo

President

Yoshio Hinoh

URL

www.shi.co.jp

Inquiries

Hideo Oshima
General Manager, Corporate Communications Dept.

Telephone+81 3 5488 8219

1. Matters related to preparation of quarterly financial information(1) Adoption of simple accounting treatment methods
Based on standards for statutory tax rate, the Company uses fixed simple procedures. As for the other amount thathas less impact, the Company partly uses fixed simple procedures.
(2) Changes in accounting policy since the most recent consolidated accounting period
None(3) Changes in the scope of consolidation and application of equity method:
Consolidated subsidiaries:
Equity method:

New
New

5
--

RemovedRemovedConsolidated Results
131

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

2. FY 2006 Third Quarter Consolidated Results (April 1, 2006 to December 31, 2006)(1) Business Results(Units: millions of yen)

Net Sales
Operating Income
Ordinary Income
Net Income
Net Income per Share (yen)Fully Diluted Net Income per Share

Nine Months

Previous Nine Months

Previous Full Term

April 1 to Dec. 31, 2006

April 1 to Dec. 31, 2005

April 1, 2005
to March 31, 2006

410,649
39,823
41,467
24,57540.82--% change
11.4
38.4
44.2
32.9

368,782
28,76928,75818,48730.74--% change
5.9
(3.5)
(3.7)
17.9

551,339
47,50547,58529,74249.45--*Note: Percentages for net sales, operating income, ordinary income and net income represent year-on -yearchanges.

(2) Financial Position(Units: millions of yen)

Total Assets
Shareholders’ Equity
Equity Ratio (%)
Shareholders’ Equity per Share (yen)End of Third QuarterEnd of Previous
Third QuarterEnd of Previous
Full YearAs of Dec. 31, 2006

As of Dec. 31, 2005

As of March 31, 2006

582,243
190,98432.6
314.26565,984
155,07427.4
257.90579,233
167,74029.0
279.02

3. FY 2006 Consolidated Forecasts (April 1, 2006 to March 31, 2007)(Units: millions of yen)
Full Year
April 1, 2006 to March 31, 2007

Net Sales
Ordinary Income
Net Income

595,000
60,00033,000*Note: Projected net income per share for FY2006 (ending March 31, 2007): ...........................................54.64yen

Consolidated Forecasts for the Full Year
There is no change in the forecasts announced November 9, 2006
*Note: Forecasts of future operating results represent the Company's rational judgment based on information
available as of the release date. Consequently, actual results may differ from the 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 regulation.

Consolidated Results2

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

Consolidated Business Results
In the third quarter, Japan’s economy continued to expand thanks to strong corporate earnings achieved on theback of a weak yen and stable materials prices. Overseas economies were also robust, with fears of an economic
slowdown in the US easing.
In this economic environment, the Group surpassed the targets laid out in its medium-term business plan, “Leap to
Excellence ’07,” which was launched in the previous fiscal year, and business operations went forward smoothly.
Orders increased in all divisions, particularly in the Construction Machinery and Industrial Machinery segments,
resulting in an 18% year-on-year increase to 508.3 billion yen. In addition, sales increased in all divisions,particularly in the construction machinery segment, leading to 11% year-on-year growth to 410.6 billion yen.
On the profit front, as a result of the sales growth operating income surged 38% year-on-year to 39.8 billion yen,ordinary income gained 44% to 41.5 billion yen and net income for the third quarter was up 33% to 24.6 billion yen.

Results for each segment are as follows.
Mass - Produced Machinery
The plastics machinery business launched new machines with aim of improving its market share, but a market
slump kept orders and sales almost unchanged from the previous year’s levels. The power transmission andcontrol business aimed to offset the stagnant domestic market for robots by expanding sales of large-scale gears
overseas. The robust market for cryocoolers and surface grinding machines also contributed to growth in orders
and sales.
As a result, orders received for the entire segment grew 9% year-on-year to 175.1 billion yen, sales rose 3% to159.1 billion yen and operating income stood at 19.6 billion yen.

Environmental Protection Facilities, Plants and Others
Orders received for our energy plant business continued to record growth in boilers for power generation, offsetting
the decline in the water treatment plant business.
As a result, orders received for the entire segment rose 15% year-on-year to 72.0 billion yen, sales were almost
unchanged from the previous year at 47.9 billion yen and operating income stood at 900 million yen.
Ship, Steel Structure and Other Specialized Equipment
As in the previous fiscal period, the ship business secured orders for six Aframax tankers and booked sales for thedelivery of four tankers. However, the higher prices for the tankers resulted in growth in orders and sales. Further,orders for reactor vessels for petroleum and chemical plant recorded growth.
As a result, orders received for the entire segment rose 23% year-on-year to 69.6 billion yen, sales were up 13% to41.4 billion yen and operating income amounted to 2.6 billion yen.
Industrial Machinery
In addition to a spate of large orders from domestic ship builders and steel manufacturers in the materials handlingsystem business, the turbine and pump business benefited from firm economic conditions in Japan and overseas
to record growth in orders and sales.
As a result, orders received for the entire segment were up 29% year-on-year to 69.0 billion yen, sales increased
17% to 46.5 billion yen and operating income amounted to 6.1 billion yen.

Consolidated Results3Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

Construction Machinery
The hydraulic excavator business performed well both in Japan and overseas, and the segment also gained fromthe launch of machines conforming to gas emission standards. As a result, sales and orders grew, particular in
Europe and Asia. With the North American market remaining vibrant, we succeeded in introducing new cranemodels, which led to a sharp rise in orders and sales.
Accordingly, orders received for the entire segment were up 26% year-on-year to 122.6 billion yen, sales increased
29% to 115.7 billion yen and operating income amounted to 10.5 billion yen.

Consolidated Financial Position
Total assets increased by 3.0 billion yen over the end of the last fiscal period to 582.2 billion yen due to a 24.7
billion yen increase in inventory, which outweighed a 7.2 billion yen decrease in cash and deposits and a 19.6
billion yen decrease in notes and accounts receivable. Interest-bearing debt decreased 23.5 billion yen comparedto the end of the previous fiscal period to 102.0 billion yen, leading to a 4.2 point improvement in the debt-equity
ratio over the end of the previous fiscal period to 17.5%. Net assets totaled 191.0 billion yen thanks to strong
earnings, and the ratio of stockholders’ equity to total assets stood at 32.6%.

Consolidated Results4Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

I. Quarterly Consolidated Income Statements (Summary)(Units: Millions of Yen)
Previous
Nine Months

Nine Months

ChangeApril 1, 2006 to
December 31, 2006
Amount%April 1, 2005 to
December 31, 2005
Amount%AmountPrevious
Fiscal Year
April 1, 2005 to
March 31, 2006
Amount%Net sales

410,649100.0

368,782

100.0

41,867551,339

100.0

Cost of goods sold317,879

77.4

289,451

78.5

28,428434,904

78.9

Gross profit

92,77022.6

79,33021.5

13,440116,435

21.1

Selling, general &administrative
expenses

52,947

2,385

68,930Operating income

39,823

11,05547,50550,562
9.7

28,7697.8

8.6

Non-operating
Income:Interest anddividend income
Other
Total Non-operating
incomeNon-operating
Expenses:
Interest expenses
Other
Total Non-operating
expensesNon-operating
income/loss

538

366

171

587

5,688

4,726

962

7,608

6,226

5,093

1,133

8,195

1,248

1,820

(572)

2,384

3,335

3,283

52

5,730

4,583

5,103

(520)

8,114

1,643

(10)

1,654

81

12,70847,585

Ordinary income

41,467Extraordinary gains

1,579

701

878

906

Extraordinary losses

3,808

1,255

2,553

2,425

Income before tax andadjustments

39,237

11,03346,066

Corporate income
taxes

14,169

9,416

4,753

15,871

(494)

(302)

(192)

(454)

6,088

29,742

Loss (Gain) of
minority shareholders
Net income

24,575

10.1

9.6

6.0

28,75828,20518,487

Consolidated Results
5

7.8

7.6

5.0

8.6

8.4

5.4

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

II. Quarterly Consolidated Balance Sheets (Summary)(Units: millions of yen)
End of Third QuarterEnd of Previous
Consolidated Fiscal
Year

As of Dec. 31, 2006

As of March 31, 2006

As of Dec. 31, 2005

AmountAmountAmountEnd of Previous
Third Quarter
ChangeAssetsCash and deposits
Notes and accountreceivable
Inventories
Other
Allowance for doubtful
accounts

Current assets
Tangible assets
Intangible assets
Investments and otherassetsFixed assets
Total assets

36,752

43,917(7,165)34,007

139,307

158,893(19,586)

132,205

117,720
27,60892,981
22,81524,7394,793

115,128
26,562

(762)

(794)

32

(1,632)

320,624
184,2545,646

317,813
181,480
4,789

2,812
2,773
857

306,271
180,121
4,375

71,72075,152(3,432)75,217

261,619582,243

261,421579,233

198
3,010

259,713565,984

141,195
29,901
15,000142,778
28,18820,000(1,583)
1,713(5,000)129,893
26,69020,00017,85830,529(12,671)

40,62689,329293,282
10,00078,052299,547
10,00011,276(6,265)--75,993
293,201
10,00029,19636,787(7,590)43,34758,78197,977391,259--

61,408108,195
407,742
3,752(2,627)(10,218)(16,482)--

60,824
114,171407,3723,537------

30,872
16,80868,84842,142
10,269------

30,872
16,80557,40342,215
9,512

----

(654)
(544)
167,740----(1,293)(439)
155,074--

579,233--

565,984

Liabilities
Notes and accounts payable
Short-term bank loans
Commercial paper
Long-term debt due within one
year
Other

Current liabilities
Bond
Long-term debt due after one
year
Other

Long-term liabilities
Total liabilities
Minority interests
Stockholders’ equity
Common stock:
Paid in capital
Capital surplus
Retained earnings
Revaluation reserve for land
Unrealized gains on securities
Foreign currency translation
adjustments
Treasury stock

Total stockholders’ equity
Liabilities, minority interestand stockholders’ equity

Consolidated Results
6

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

Net Assets
Common stock

30,872------

Capital surplus

20,512------Retained earnings

92,169

--

--

--

(873)

--

--

--

Treasury stock
Stockholders’ equity

142,681

Unrealized gains on securities

9,410

--

--

--

Profit/loss on deferred hedge(2,636)

--

--

--

Revaluation reserve for land
Foreign currency translation
adjustments
Appraisal and Translation
Differences
Minority interests

40,415

--

--

--

(61)

--

--

--

1,175

--

--

--

Total net assets

190,984

--

--

--

Liabilities and net assets

582,243

--

--

--

47,128

Consolidated Results
7

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

III. Segment Information
1. Segment Information by BusinessCurrent Nine Months (April 1, 2006 to December 31, 2006)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

159,125

47,87541,39546,520115,734

410,649--

410,649

2,139

2,025

160

292

24

4,639

(4,639)--161,264

49,90041,55446,812

115,758

415,288(4,639)410,649

141,652

48,99838,956

40,735

105,302375,643(4,817)

370,825

19,612

902

2,598

6,077

10,456

39,645

178

39,823F

Item
Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operatingincome/loss

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, 2005 to December 31, 2005)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

153,016

48,23437,59039,91490,027368,782--368,782

1,444

1,920

328

244

44

3,981

(3,981)--

154,460

50,15437,91840,15890,071

372,762(3,981)

368,782

135,287

49,41039,19036,06584,022

343,974(3,961)

340,013

19,174743(1,272)

4,094

6,050

28,789(20)

28,769F

Item
Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operatingincome/loss

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 Results8Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

Previous Full Year (April 1, 2005 to March 31, 2006)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

218,798

82,74067,372

56,054

126,375

551,339--551,339

2,059

2,902

421

335

56

5,774

(5,774)--

220,857

85,642

67,79456,389126,431557,113(5,774)551,339

191,519

81,36568,27350,542

117,898

509,598(5,763)503,834

29,338

4,277

(479)

5,847

8,533

47,515(10)

47,505F

Item
Net sales(1) Sales toexternalcustomers(2) Internal sales
betweensegments or
exchanges
Total
Operatingexpenses
Operatingincome/loss
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 XYStages, Ion Accelerators, Plasma Coating System for FPDs,
Precision Forgings, Control Components, Defense Equipment
Power Generation Systems, Industrial Waste Treatment Facilities,
Water and Sewage Treatment Systems, Real Estate, Software
Ships, Pressure Vessels, Bridge

Industrial Machinery

Forging Machines, Material Handling Systems, Logistics System,
Automated Parking System, Turbines, Pumps

Construction Machinery

Hydraulic Excavators, Mobile Cranes, Road Machinery

Consolidated Results
9Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

IV. Orders, Sales and Balance of Orders by Segment
Orders received
Businesses

Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total(Units: millions of yen)

April 1, 2006 to
December 31, 2006

April 1, 2005 to
December 31, 2005

Amount%Amount%175,08034.4

160,869

37.3

72,03514.2

62,87469,561

13.7

68,974
122,626
508,275

Y/Y
Change%Amount%8.8

219,141

36.3

14.6

14.6

83,605

13.9

56,68513.2

22.7

95,171

15.8

13.6
24.1

53,58097,077

12.4
22.5

28.7
26.3

68,693
136,385

11.4
22.6

100.0

431,085

100.0

17.9

602,995

100.0

Sales
Businesses

Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total(Units: millions of yen)

April 1, 2006 to
December 31, 2006

April 1, 2005 to
December 31, 2005

Amount%Amount%159,125

38.8

154,535

41.9

47,875

11.6

47,731

41,395

10.1

46,520115,734
410,649

Y/Y
Change%Mass-Produced
Machinery
Environmental
Protection Facilities,
Plants & Others
Ship, Steel Structure &Other Specialized
Equipment
Industrial Machinery
Construction Machinery
Total

April 1, 2005 to
March 31, 2006
Amount%3.0

220,989

40.1

13.0

0.3

82,062

14.9

36,5749.9

13.2

65,859

11.9

11.3
28.2

39,91490,027

10.8
24.4

16.6
28.6

56,054
126,375

10.2
22.9

100.0

368,782

100.0

11.4

551,339

100.0

Balance of Orders received
Businesses

April 1, 2005 to
March 31, 2006

(Units: millions of yen)

April 1, 2006 to
December 31, 2006

April 1, 2005 to
March 31, 2006

Amount%Amount%82,41817.7

66,36018.0

97,563

20.9

73,536

180,04238.6

78,15728,409466,589

Y/Y
ChangeAmount%24.2

74,444

19.6

19.9

32.7

87,13623.0

151,907

41.2

18.5

142,706

37.6

16.7
6.1

55,704
21,518

15.1
5.8

40.3
32.0

56,73018,557

14.9
4.9

100.0

369,025

100.0

26.4

379,573

100.0

Consolidated Results
10%

April 1, 2005 to
December 31, 2005

Consolidated Results for the Third Quarter
Fiscal Year ending March 2007

Changes in Segment Affiliation
SHI Examination and Inspection Ltd. and Japan Electron Beam Irradiation Service Co., Ltd. have beentransferred to the Mass-Produced Machinery segment from the first quarter of the current consolidated
fiscal year. These companies have been transferred from the Ship, Steel Structures and Other
Specialized Equipment segment and the Environmental Protection Facilities, Plants and Other segment,
respectively, with which they were formerly affiliated.
We have therefore shown segmentation following these changes for the previous fiscal year and for thethird quarter of the previous fiscal year as well.

Consolidated Results
11