(%)

In the electric furnace industry, crude steel production moved higher from the previous fiscal year, after demand for steel materials for construction and others were on the upward trend from the second half of the fiscal year under review. However, amid the stagnation of the steel materials market, prices of iron scraps as main raw materials started to rise sharply in the middle of the fiscal year. The industry thus continued to face adverse circumstances.

Under these conditions, the Group worked to cultivate demand for special profile sections to achieve a growth in sales quantity. Net sales stood at JPY 63,803 million, a 0.1% increase year-on-year. However, despite efforts on selling prices  in response to sharply soaring iron scrap prices, the price gap with iron scraps narrowed. Consequently, operating profit was JPY 2,882 million, a 40.1% decrease year-on-year.

(%)

We are involved in the enhancement of quality level of hot rolled products, reduction of industrial wastes and improvement in environmental issues such as recycling while implementing development of new shapes and new grade of steels.

On going achievements include orders received for new shapes, reduction in power intensity rate on conventional products, development of technology on industrial wastes and recycling of resources.

We spent JPY 2 million on these R&D activities.

We will seek to maximize the effect of the new steelmaking facilities and to cultivate new demand with a lineup of products based on special profile section manufacturing and processing technologies, in which the Group has strength.

In the automobile industry, light vehicle sales were sluggish and truck exports tumbled while domestic and overseas sales of ordinary passenger cars were bullish. Domestic production quantity consequently stayed flat. U.S. demand was at a high level. In the construction machinery industry, domestic demand contracted whereas the Chinese market rallied after growth in public investment. There were signs of a recovery in demand for mining machinery as well.

In this environment, the Group achieved growth in sales volume of undercarriage components for construction machinery mainly for China. However, affected by the strong yen and by a drop in sales volume of wheels for trucks, net sales were JPY 129,681 million, down 3.3% year-on-year. On the other hand, operating profit stood at JPY 6,524 million, rising 22.6% year-on-year, following an expansion of sales quantity of undercarriage parts for construction machinery, integration of production facilities in China and cost cutting effect.

(%)

We are involved in weight saving, quality improvements, cost reduction, speed up of development time and development of new products.

Ongoing achievements related to steel and aluminum wheels for passenger cars include improvement in the accuracy of analysis and evaluation technology, development and commercial production of new products, cost reduction, and quality improvement of conventional products.

Achievements associated with construction and mining equipment components include cost reduction in forging process of ultra-large diameter wheels, quality improvements and cost reduction in heat treatment processes of rollers and shoes for hydraulic excavators.

We spent JPY 555 million on these R&D activities.

Chiefly led by emerging markets, global automobile demand is growing and worldwide competition is intensifying. Automobile manufacturers are introducing common platforms to reduce costs. In response, the Group will expand and upgrade its global system for supplying commonly designed wheels to anywhere in the world in a bid to increase its presence.

With respect to undercarriage components for construction machinery, we will bolster overseas production and logistical facilities and enhance the functions of the domestic mother factory to rebuild our global supply chain and thereby cultivate new customers. For industrial fasteners, we will boost production capacity through mutual support among global production facilities, aiming to unfailingly capture growing demand.

In accordance with its business plan, the Group maintained its constant supply of electric power generated from coal-fired thermal power generation. After a major fall in electric power sales prices following a sharp decline in crude oil and LNG prices, net sales were JPY 8,425 million , down 20.7% in a year-on-year comparison. Meanwhile, the slide in prices of coal as fuel for power generation was limited. Operating profit was JPY 494 million, an 80.0% decrease year-on-year.

(%)

We continue to maintain solid production system and stable supply of electricity by operating power generation plant while paying the maximum consideration to keep harmonious relationship with surrounding environment..

The Topy Industries Group also engages in manufacture and sales of synthetic mica used in cosmetics and other products, the manufacture and sales of crawler robots, indoor and outdoor sign systems, civil engineering and construction, leasing of real estate such as Topy-Rec Plaza (Minami-Suna, Koto-ku, Tokyo), and the operation of the sports club OSSO. Net sales were JPY 6,326 million, and operating profit was JPY 1,557 million.

*Sales and operating profit attributable to Power Generation shown above are included the above fugures until FY2015.

(%)

The R&D Center undertakes research and development of basic elemental technologies associated with the steel business and with the automotive and industrial machinery components business. We work on positive promotion of university-industry cooperation in new areas. The Science Division is involved in the development of new products using high gloss synthetic mica as well as crawler robots.

We spent JPY 579 million on these activities.

The Group has long cultivated technologies for manufacturing undercarriage components for construction machinery. We will promote crawler robots incorporating these technologies for disaster response, seabed studies and other applications. We will also commercialize revolutionary moving systems capable of automatic and autonomous travel and expand sales to service and agricultural sectors where demand growth is anticipated.

Synthetic mica has been developed by applying technologies for melting in electric furnaces. The Group will strive to expand its sales for cosmetic applications as well as for industrial applications such as food wrapping film.