Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	214,282	216,539	(1.0)	-
Operating Income	712	5,377	(86.8)	-
Ordinary Income	300	6,380	(95.3)	-
Net Income	1,204	6,087	(80.2)	-
Automotive systems business
Sales	140,901	145,674	(3.3)	-The Company recorded lower performance year-on-year. Some of the reasons included the flooding in Thailand, which damaged the Company's local production facilities, and the Great East Japan Earthquake that forced OEMs to reduce their production volumes. In addition, performance was impacted by a rapid drop in demand in Europe because of the economic deterioration there caused the financial crisis, and by the continued high evaluation of the yen.
Operating Income	1,687	5,808	(71.0)	-

Mid-term Plan

- The Company forged a new, mid-term plan that covers up through FY2013, which ends in March 2014. One a consolidated basis, it targets making 300 billion yen in sales, a recurring profit margin of 10%, and a ROA of 15%.
- In the automotive sector, the Company realizes that in closely examining the trend in electrifying vehicles, the pace to market smaller, lighter, more efficient, and more fuel-efficient products will increasingly quicken in the future. As an independent automotive supplier, it will need to meet the needs squarely on the head and continue providing value in a timely manner through its global network. By doing so, it will speed up the growth of its business worldwide.

- The Company is set to embark on a global scale flexible sourcing practice of air-conditioner components. Its global production locations of air-conditioner systems in Japan, the U.S., Europe and Asia will introduce a new production system for a flexible exchange of product items aiming at mutual complementation of production capacity among them depending on fluctuations of demand for each product. In fiscal 2011, Sanden is planning to make a capital investment more than 20 percent larger than that in the previous fiscal year, prioritizing on China where demand is growing rapidly, as part of this flexible scheme. (From an article in the Nikkan Jidosha Shimbun on August 3, 2011)

- The Company is poised to boost production of compressors for car air-conditioners at a pace of 2 million  units every year. It plans to produce in fiscal 2011 15.5 million compressors, or an increase of 2.5 million over the previous fiscal year, representing an increase larger than that of the total air conditioner market. Kazunori Kiuchi, president of the company, is expecting to gain market share as well. Growing demand from European automakers, especially Volkswagen in Germany, is calling for the company to expand its supply capacity rapidly. Accumulated production volume of Sanden's flagship product, compressor, reached 200 million last year, after nine years from a 100 million mark. Production in fiscal 2009 amounted to 11 million, already at a pace of a 2 million increase per year. Besides sales to European makers, Sanden is increasing sales in China, India and Southeast Asian countries. Also, it is trying to explore business opportunities with automakers with which it has so far had little or no business transactions, taking advantage of business alliances among automakers. Mr. Kiuchi is expecting an even higher growth in orders after fiscal 2013 until which firm orders have already been received. The company will make capital investments in expansion of production capacity and launching of new models in the U.S. and emerging countries like China and India. It plans to make a capital investment of 12 billion yen for fiscal 2010, an increase of 2.2 billion from the previous year. It intends to continue investment at this level. (From an article in the Nikkan Jidosha Shimbun on July 14, 2011)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Group	7,431	6,138	5,440
Automotive systems business	4,816	3,936	3,676

R&D Activities

Automotive systems business
-The Company strengthened its cooperation with Sanden's technical centers in Japan and Germany in terms of developing compressors and car air-conditioners compatible with new types of vehicles such as plug-in hybrid, and electric vehicles. The Company also cooperated with the R&D Department in France.

-The company developed electric compressors, hybrid compressors, compressors with integrated inverter and small form factor heat exchanger.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Group	13,900	9,800	5,900
Automotive systems business	10,900	7,800	4,900
-Japan	4,700	3,900	1,900
-Europe	2,500	1,300	900
-North America	1,200	700	600
-Asia	2,300	1,700	1,400

-In the 2011 fiscal year, the Company made capital investments to further develop in-house production operations and maintain and upgrade facilities and equipment.

New Capital Investments

-During fiscal year 2012, the Company plans to spend a total of 15 billion yen to further strengthen its business by more selectively consolidating its facilities and equipment, especially increasing its production capacity at its plants overseas, conducting more in-house production, and maintaining and upgrading facilities and equipment. Among the amount to be invested, 12 billion will be spent in its Automotive Systems Division, as the Company plans to invest 410 million yen in Europe, 250 million yen in North American, 180 million yen in Asia, and 330 million yen in Japan.