Review of Operations

Steel Products
Steel Castings and Forgings Sector/Steel Plates and Structures Sector

Shell Flange Used for Pressure Chamber for
Nuclear Power Plant

Performance in fiscal 2009

94,342120,011

102,700

70,000118,007

105,000

105,299

Orders Received¥ million
140,000

35,00002006 2007 2008 2009 2010

Sales

¥ million
120,000

101,736

64,36676,30592,613

107,883

90,00060,00030,0000

2006 2007 2008 2009 201010

Clad Steel Plate

Orders decreased ¥25,668 million, or 21%, to ¥94,342 million (US$1,013million). Despite large projects for clad pipes for natural gas pipelines andincreased orders for components used in nuclear power plants, total orders
declined on the back of intensifying price competition for pressure vessels foroil refineries and clad steel plates due to the yen’s appreciation, and the effects
of fewer projects and project postponements.
Sales were down ¥6,147 million, or 6%, to ¥101,736 million (US$1,093million). This was attributable to a sharp decline in orders from projects forclad steel plates, despite growing sales of components for thermal and nuclear
power plants and brisk sales of pressure vessels for oil refineries.
Operating income edged up ¥167 million, or 1%, to ¥31,640 million(US$340 million). Despite lower earnings from decreased sales, the increase
was mainly due to higher production efficiency that supported a strong orderbacklog from the previous term forward.

Forecast for fiscal 2010
We expect sales to reach ¥109.0 billion in fiscal 2010, given the order backlogs
for thermal and nuclear power plant products and pressure vessels for oil refineries, and the recovery in demand for clad steel plates and pipes.
Operating income is projected to decrease by ¥3.6 billion from the previous year to total ¥28.0 billion. Economic benefits of greater operating efficiency
from higher levels of production are likely to be outweighed by the increase indepreciation expenses related to large-scale capital investments.

Machinery Products
Plastics Machinery Sector/Other Machinery Sector

Polyolefin Extruder/Pelletizer

Performance in fiscal 2009

113,711

118,643

124,11880,000144,461

120,000

119,347

Orders Received¥ million
160,000

40,00002006 2007 2008 2009 2010

98,164

117,462

126,155

106,906

127,866

Sales¥ million
120,000

90,000Die-casting Machine

60,00030,00002006 2007 2008 2009 2010

Orders slipped ¥4,931 million, or 4%, to ¥113,711 million (US$1,222 million). A contributing factor was a drop in orders for plastic injection molding machines, especially for automotive and consumer electronics industries,
despite large project orders for wind turbine system equipment and solid
demand for plastics manufacturing processing machinery.
Sales fell ¥19,297 million, or 16%, to ¥98,164 million (US$1,055 million). Despite a sizable increase from project orders for wind turbine systemequipment made in the previous fiscal year, the decrease was mainly due toplastics manufacturing and processing machinery and plastic injection molding machines being affected by waning capital investments. Operating income
tumbled ¥4,900 million, or 43%, to ¥6,535 million (US$70 million).

Forecast for fiscal 2010
Sales of machinery products are expected to total ¥97.2 billion, down ¥0.9 billion year-on-year, due to a falloff in shipments of wind turbine system equipment pending launch of new products. This is likely to outweigh the sales
increase from recovering demand for plastics manufacturing and processingmachinery and molding machines.
We forecast operating income of ¥4.3 billion, a ¥2.2 billion decline yearon-year due to increased competition in our mainstay products in the wake ofthe financial crisis triggered by the Lehman Brothers collapse.

11Review of Operations

Regional Development
Regional Development

Business Office Development(Fuchu Intelligent Park)

Sales

3,000

Performance in fiscal 2009

¥ million
4,000

2,965

2,000

2,000

1,779

1,767

1,000

2,082

0

2,081

1,789

1,766

2,082

1,985

1,000

Orders totaled ¥1,789 million (US$19 million), sales came to ¥1,779 million (US$19million) and operating income amounted to¥733 million (US$7 million).

3,000

3,010

Orders Received¥ million
4,000

JSW Apartment Building Development(Fuchu, Tokyo)

02006 2007 2008 2009 20102006 2007 2008 2009 2010

Capital Expenditures
Capital expenditures for the reporting period totaled ¥31,864 million (US$342 million), with the majority spent on installation,improvement and maintenance work on a variety of production facilities.
Details of capital expenditure by individual business segment are as follows.
In the steel products business, capital expenditures totaled ¥30,251 million (US$325 million). This expenditure consisted
largely of investments to construct new buildings and equipment for the forging and heat treatment facilities at Muroran Plant, toinstall new equipment and upgrade existing equipment at the same Plant, as well as upgrade equipment at steel-making plants.
In the machinery products business, capital expenditures came to ¥1,178 million (US$12 million) as a result of investments toraise machine processing efficiency at our Hiroshima Plant.
In the regional development business, capital expenditure consisted primarily of the upgrading of facilities on real estate forrental purposes, totaling ¥42 million (US$0.4 million).
Capital expenditures unallocable to individual segments came to ¥391 million (US$4 million).

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