Sumitomo Heavy Industries, Ltd.
1Q CONSOLIDATED FINANCIAL REPORTFor the First Quarter ended June 30, 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 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 First Quarter
Fiscal Year ending March 2008

SUMMARY OF CONSOLIDATED FINANCIAL STATEMENTS
For the First Quarter ended June 30, 2007
Presented July 28, 2007

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 5488 8219

1. FY 2007 - 1Q Consolidated Results (April 1, 2007 to June 30, 2007)(1) Business Results(Units: millions of yen)First Quarter

Previous First Quarter

Previous Full Term

April 1 to June 30, 2007

April 1 to June 30, 2006

April 1, 2006
to March 31, 2007

% change% change

Net Sales

134,223

6.7

125,82721.1

600,256

Operating Income

14,744

53.9

9,583

54.5

64,224

Ordinary Income

15,405

56.7

9,831

53.0

65,341Net Income

8,847

34.1

6,597

48.6

37,352Net Income per Share (yen)Fully Diluted Net Income per Share

14.65

10.97

--

--

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

61.99--

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

(2) Financial Position(Units: millions of yen)
End of First QuarterEnd of Previous
First QuarterEnd of Previous
Full YearAs of June 30, 2007

As of June 30, 2006

As of March 31, 2007

Total Assets

605,886

561,526

600,890

Net Assets

212,111

174,406

206,010

34.8

30.5

34.1

348.86290.14338.95Equity Ratio (%)
Net Assets per Share (yen)2. FY 2007 Consolidated Forecasts (April 1, 2007 to March 31, 2008)(Units: millions of yen)
Full Year

Half Year
April 1, 2007 to Sept. 30, 2007

April 1, 2007 to March 31, 2008

% change% change

Net Sales

300,000

9.7

650,000

8.3

Operating Income

30,00012.1

74,00015.2

Ordinary Income

29,0004.7

73,00011.7

Net Income

17,0001.8

43,00015.1

Net Income per Share (yen)

28.16

71.22

*Note: (1) Projected net income per share for FY2007 (ending March 31, 2008): .................................... 51.57 yen

Consolidated Forecasts for the Full Year
The interim and full-term forecasts of business results released on May 8, 2007 are unchanged.
*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.

3. Other(1)

Changes involving important subsidiaries during the quarter (changes involving specific subsidiaries as thescope of consolidation changed):No(2)

Adoption of Concise Method on Accounting Procedure:

Yes

(3)

Changes of Accounting Procedure from the Latest Consolidated Fiscal Year:

Yes

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

Consolidated Business Results
The Japanese economy continued to expand steadily during the first quarter, despite concerns over the sustained
high level of crude oil and raw material prices. Economic expansion overseas also remained firm without any
significant change, particularly in the U.S. and China.

Under such economic conditions, the Sumitomo Heavy Industries Group continued to operate its business steadily,achieving higher operating results for the quarter than drafted in its “Leap to Excellence ’07” medium-term plan.

Orders received rose in all segments, notably in the industrial machinery and construction machinery segment,reaching 189 billion yen, an increase of 11% from the same quarter in the previous year (the “previous term.”) Sales
also rose, particularly in the construction machinery segment, and ship, steel structure and other specialized
equipment segment, reaching 134.2 billion yen, an increase of 7% from the previous term.

In terms of income, in line with increasing sales, operating income rose to 14.7 billion yen (up 54% on the previousterm) due to fall in the ratio of sales cost to net sales, ordinary income rose to 15.4 billion yen (up 57% on theprevious term), and net income rose 8.8 billion yen (up 34% on the previous term).

Results for each segment are as follows.
Mass - Produced Machinery
The laser system and mechatronics businesses remained sluggish, but due to the steady performance in the
reduction gear and gearbox business, especially in overseas markets, overall orders received in this segment saw aslight increase, while sales fell slightly. The division recorded orders received of 59.5 billion yen (up 1% on the samequarter in the previous year), sales of 49. billion yen (down 2%) and an operating income of 5.2 billion yen.
Environmental Protection Facilities, Plants, and Others
Power generation boilers and environmental equipment for the energy plant business enjoyed steady sales. The
division recorded orders received of 30.7 billion yen (up 2% on the previous term), sales of 15.2 billion yen (up 8%)
and an operating income of 0.6 billion yen.
Ship, Steel Structure and Other Specialized Equipment
Orders received and sales in the shipbuilding business were the same as in the previous term, with orders for 2
Aframax tankers and sales of 1 Aframax tanker. However, owing to a rise in ship prices, the value of both orders
received and sales increased. The sales cost ratio also improved thanks to cost reductions achieved by means ofcontinuous shipbuilding. Among other models, orders for reactor vessels for petroleum product and chemical plantcontinued to rise. The division recorded orders received of 26.2 billion yen (up 16% on the previous term), sales of
12.5 billion yen (up 14%) and an operating income of 2.9 billion yen.

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

Industrial MachineryTransportation machinery for the shipbuilding and steel industries along with turbines and pumps, especially inoverseas markets, continued to perform well. The division recorded orders received of 26.4 billion yen (up 27% on
the previous term), sales of 16.0 billion yen (up 6%) and an operating income of 1.7 billion yen.
Construction Machinery
The hydraulic excavator business performed well, recording an increase in both orders received and sales. The
mobile crane business sector also saw orders received and sales growth thanks to the continued buoyancy of theNorth American markets. The division recorded orders received of 46.2 billion yen (up 25% on the previous term),
sales of 41.4 billion yen (up 17%) and an operating income of 3.7 billion yen.

Consolidated Financial Position
Total assets rose to 605.9 billion yen, up 5.0 billion yen on the level recorded at the end of the previous term. This
increase is due to falls in bills & accounts receivable and cash & deposits, respectively of 17.8 billion yen and 6.7
billion yen, and to rises in inventory assets and tangible fixed assets, respectively of 19.9 billion yen and 1.9 billion
yen. The balance of interest-bearing debt rose by 3.0 billion yen on the level recorded at the end of the previous term
to 91 billion yen, and the ratio to total assets rose by 0.4 points on the level recorded at the end of the previous term,
to 15.0%. Shareholders’ equity ratio to total assets was 34.8%.

Other(1) Changes in Scope of Consolidation and Application of Equity Method:None(2) Simplification of accounting methods:- Treatment of corporation tax, etc.: a simplified method based on the statutory effective tax rate is used.
- Simplified methods are used in some areas, where the financial impact is negligible.
(3) Changes in consolidated accounting methods from the most recent fiscal year:- In conjunction with revisions to the Corporation Tax Law ("Law revising portions of the income tax law, etc." March 30, 2007, Law No. 6 - and "Government order revising portions of the Corporation Tax Law enforcement
regulations" - March 30, 2007, Government order No. 83), depreciation costs relating to tangible fixed assets
acquired on or after April 1, 2007 have been treated according to the revised Corporation Tax Law.
- These changes will have little impact on operating income, ordinary income and quarterly net income before tax
and other adjustments.

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

I.

Quarterly Consolidated Income Statements (Summary)(Units: Millions of Yen)
PreviousFirst Quarter

First Quarter

Previous
Fiscal Year
April 1, 2006 to
March 31, 2007

ChangeApril 1, 2007 toJune 30, 2007
AmountApril 1, 2006 toJune 30, 2006%

Amount%AmountAmount%Net sales

134,223100.0

125,827

100.0

8,396

600,256

100.0

Cost of Sales

101,033

75.3

98,514

78.3

2,519

464,071

77.3

Gross profit

33,19024.7

27,313

21.7

5,877

136,186

22.7

716

71,961

5,161

64,224

Selling, general &administrative
expenses
Operating income

18,446

14,744

17,730

11.0

9,583

7.6

10.7

Non-operating
Income:Interest income anddividend income

394

299

95

866

Other

1,398

1,353

45

7,357

Total non-operating
Income

1,791

1,652

140

8,223

Non-operating
expenses:
Interest expenses

325

438

(113)

1,666

Other

805

967

(162)

5,441

1,130

1,404

(275)

7,107

Non-operating
income/loss

662

247

414

1,116

Ordinary income

15,405

5,575

65,341

Extraordinary gains

--

294

(294)

1,693

Extraordinary
losses

1,038

--

1,038

4,093

Income before tax
and adjustments

14,3684,243

62,940Total Non-operating
expenses

Corporate income
taxes
Loss (Gain) of
minority shareholders
Net income

11.5

10.7

9,831

10,125

7.8

8.0

5,344

3,368

1,975

24,971

(178)

(160)

(18)

(618)

2,250

37,352

8,847

6.6

6,597

5.2

10.9

10.5

6.2

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

II. Quarterly Consolidated Balance Sheets (Summary)
End of First Quarterc

As ofJune 30, 2007

End of Previous
Fiscal Year
As of
March 31, 2007

(Units: Millions of Yen)
End of Previous
First Quarter
As ofJune 30, 2006

ChangeAssetsCash and deposits

41,41948,155(6,737)39,309Notes and accountreceivable

140,543

158,376(17,833)

133,383

Inventories

120,466

100,519

19,948105,564

Other

32,436

26,236

6,201

22,531

(753)

(776)

23

(820)

Current assets

334,111

332,509

1,602

299,968

Tangible assets

187,074

185,145

1,929

184,065

Intangible assets

6,246

6,276

(30)

5,042

Investments and otherassets78,45576,9601,495

72,451

Fixed assets

271,775

268,380

3,394

261,558

Total assets

605,886

600,890

4,996

561,526

Notes and accounts payable

146,453

150,874(4,421)

140,155

Short-term debt payable

28,77021,711

7,059

22,100Commercial paper

15,00015,000--8,000

Long-term debt within one
year

11,213

14,285(3,072)

28,784

Other

96,82995,343

1,487

80,669Current liabilities

298,265

297,213

1,053

279,708

Corporate bond

10,00010,000--10,000Long-term debt due after one
year

26,04527,049(1,004)35,917

Other

59,46460,618(1,154)

61,495Long-term liabilities

95,50997,667(2,158)

107,412

Total liabilities

393,775

394,880(1,105)387,120

Allowance for doubtful
accounts

Liabilities

End of First Quarterc

As ofJune 30, 2007

End of Previous
Fiscal Year
As of
March 31, 2007

End of Previous
First Quarter
As ofJune 30, 2006

ChangeNet Assets
Common stock

30,87230,872--30,872

Capital surplus

20,51920,5181

16,817Retained earnings

111,657

104,950

6,706

74,815

Treasury stock(1,104)

(996)

(108)

(625)

161,943

155,344

6,599

121,879

Unrealized gains on securities

12,718

11,195

1,523

8,461

Profit/loss on deferred hedge

Shareholders’ equity(3,948)(1,652)(2,296)(650)

Adjustment regarding pension
obligations of consolidated
overseas subsidiaries

(765)

(772)

7

--

Revaluation reserve for land

40,46540,411

55

41,898

216

166

50

(499)

48,68749,348(661)

49,211

Minority interests

1,482

1,319

163

3,316

Total net assets

212,111

206,010

6,101

174,406

Liabilities and net assets

605,886

600,890

4,996

561,526

Foreign currency translation
adjustments
Appraisal and Translation
Differences

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

II.

Segment Information

1. Segment Information by BusinessCurrent First Quarter (April 1, 2007 to June 30, 2007)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

49,091

15,223

12,512

16,011

41,386134,223--

134,223

511

640

45

96

2

1,295

(1,295)--49,601

15,863

12,557

16,10841,388135,518(1,295)

134,223

44,387

15,280

9,692

13,83237,651

120,841(1,362)

119,479

5,214

584

2,865

2,276

3,738

14,67766

14,744F

Item
Net sales(1) Sales toexternal customers(2) Internal sales
between segments
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 First Quarter (April 1, 2006 to June 30, 2006)(Units: millions of yen)Segment

Consolidation

A

B

C

D

E

Total

50,13814,127

10,963

15,12735,472

125,827--

125,827

529

643

55

68

7

1,303

(1,303)--50,667

14,77011,01815,19535,480127,130(1,303)125,827

45,171

15,177

10,933

13,491

32,861

117,633(1,389)116,244

5,496

(407)

85

1,704

2,618

9,497

86

9,583

F

Item
Net sales(1) Sales toexternal customers(2) Internal sales
between segments
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 Results for the First Quarter
Fiscal Year ending March 2008

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

Consolidation

A

B

C

D

E

Total

222,906

79,397

69,491

68,286160,177

600,256--

600,256

2,160

2,490

511

423

31

5,615

(5,615)--225,066

81,88770,002

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

196,222

77,39363,28759,182

145,812541,897(5,865)536,032

28,844

4,494

6,714

9,527

14,396

63,975250

64,224F

Item
Net sales(1) Sales toexternal customers(2) Internal sales
between segments
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

Main Products

Mass-Produced Machinery

Power Transmission Equipment, Plastic Injection Molding Machines,
Laser Processing Systems, Defense Equipment, Cryogenic Equipment,
Precision XY Stages, Cyclotrons for Medical Use

Environmental Protection Facilities,
Plants & Others

Water and Sewage Treatment Systems, Industrial Waste Treatment
Facilities, Chemical Process Equipment & Plants, Software, Real Estate

Ship, Steel Structure &Other Specialized Equipment

Ships, Bridge & Steel Structures

Industrial Machinery

Forging Machines, Material Handling Systems, Turbines, Pumps

Construction Machinery

Hydraulic Excavators, Mobile Cranes

3. Change in the segment during the first quarter:
Expenses associated with the Company’s administrative divisions had been distributed to only the segments that had
the relevant business divisions at the Company, but since the first quarter the expense distribution was changed insuch a way that the overall consolidated performance of the segments was reflected.

Consolidated Results for the First Quarter
Fiscal Year ending March 2008

III. 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(Units: millions of yen)First Quarter
April 1, 2007 toJune 30, 2007
Amount%Previous First Quarter
April 1, 2007 toJune 30, 2006
Amount%%Previous Fiscal Year
April 1, 2006 to
March 31, 2007
Amount%Y/Y
Change59,49831.5

58,81434.7

1.2

234,735

33.2

30,74716.3

30,23917.8

1.7

89,963

12.7

26,175

13.8

22,622

13.3

15.7

120,97117.1

Industrial Machinery

26,42914.0

20,877

12.3

26.6

93,615

13.2

Construction Machinery

46,18924.4

37,08321.9

24.6

168,089

23.8

Total

189,039

100.0

169,634

100.0

11.4

707,374

100.0

Sales
Businesses
Mass-Produced
Machinery
Environmental Protection
Facilities, Plants & Others
Ship, Steel Structure &Other Specialized
Equipment(Units: millions of yen)First Quarter
April 1, 2007 toJune 30, 2007
Amount%Previous First Quarter
April 1, 2007 toJune 30, 2006
Amount%Y/Y
Change%Previous Fiscal Year
April 1, 2006 to
March 31, 2007
Amount%49,091

36.6

50,138

39.9

(2.1)

222,906

37.1

15,223

11.4

14,12711.2

7.8

79,39713.2

12,512

9.3

10,963

8.7

14.1

69,491

11.6

Industrial Machinery

16,011

11.9

15,12712.0

5.8

68,286

11.4

Construction Machinery

41,38630.8

35,472

28.2

16.7

160,177

26.7

Total

134,223100.0

125,827

100.0

6.7

600,256

100.0

Balance of Orders received
Businesses(Units: millions of yen)

As ofJune 30, 2007

As ofMarch 31, 2007

Amount%Amount%87,997

16.5

76,93716.2

99,221

18.6

84,103217,051

40.7

Industrial Machinery

91,451

Construction Machinery
Total

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

Change%

As ofJune 30, 2007
Amount%14.4

75,143

18.2

17.7

18.0

89,64921.7

203,387

42.8

6.7

163,566

39.6

17.1

81,03317.1

12.9

61,45314.9

37,762

7.1

29,430

6.2

28.3

23,1295.6

533,482100.0

474,890

100.0

12.3

412,939100.0