Financial Overview

(in million euros)

	FY2008	FY2007	Rate of Change (%)	Factors
Overall
Sales	395.4	488.9	(19.1)	1)

Factors
Overall
-Although sales increased by 3.8 percent in the first half of the year, those in the second half were severely hit by the global financial crisis. The company posted poor results, especially in the fourth quarter during which it recorded a 30 percent decrease on a year-on-year basis.

-Performance at the wheel division further deteriorated due to decreased volumes of shipments and a low capacity utilization rate, which took a long time to recover. The company has postponed its plan to spin off its wheel business in December to form a new subsidiary because of prolonged negotiations with the labor union.

By country
-In France, shipment of products other than wheels and Audi's suspension parts produced at the Chateauroux Plant sharply decreased after the summer of 2008. The company started producing cylinder heads in small lots for the new V6 diesel engines that will be installed in Renault-Nissan vehicles. Production of products supplied to Jaguar vehicles was completed at the end of 2008, earlier than had been expected.

-In the U.K. the volume of products shipped from the Belfast Plant decreased at the end of the year, which negatively affected the Company's yearly performance.

-The Company closed down its Calcast Plant in Northern Ireland, following the cancellation of the cylinder head program for the Ford Explorer.

-Launch of commercial production at the Bulgarian Plant was postponed until April 2009 due to the delay in both Audi and Renault projects.

-The Alumalsa Plant in Spain returned to profitability, with its volume of shipments having increased from the previous year's level and both its development and production operations having gone smoothly.

-The volume of products the Company shipped from the Torreon Plant in Mexico declined in the second half of 2008. Its program business with General Motors was canceled.

-In Canada, although the amount of business the Company did with Chrysler gradually decreased, the Company achieved profitability, thanks to rising prices of related products. However, following Chrysler's canceling its contract at the end of the year due to changes in the economic environment, the Company was forced to shut down its operations and slash its workforce there.


Restructuring Initiatives
-Following cancellations of both the Ford SOHC project in Calcast, Northern Ireland and the Chrysler Bedplate project in Canada, the Company streamlined its production operations by integrating its production functions. As a result, its production operations in North America were consolidated into its existing plant in Mexico and those in the U.K. were consolidated into the operations being carried out in Belfast. The move is also in line with the Company's reorganization initiatives at its wheel and machine tool divisions since 2007.


Outlook for FY2009
-The Company decided to suspend its China Plant project.

-As program business with General Motors has been canceled, the Company intends to use the plant and equipment originally prepared for this project for producing products for vehicles made by both Audi and Ford, from which it won business in 2008 and early 2009, respectively. This move will allow the company to reduce the amount of investments it will make during a five year period. As a result, the 200 million yen euros it had originally planned to invest were trimmed to 85 million euros. This includes 15 million euros allocated for 2009 and 25 million euros for 2010. The Company intends to leverage its existing plant space by 2010 and to make its facilities fully operational by the end of 2011.

R&D Expenditure

(in thousand euros)

	FY2008
Overall	7,852

-The Company plans to spend 9,785,000 euros in R&D in 2009.


R&D Focus
-Processes control
-Tooling accuracy (in view of reducing parts dimensional gaps)
-New centers
In Chateauroux, for the wheels and suspension parts
In Saragossa for braking parts
In Laigneville for cylinder-heads. In this unit, an industrial pilot develops every new cylinder-head.


R&D Structure
<China>
-The Company signed an agreement with administrative committee of Changzhou National High-tech District, under which, the Company will invest USD 29.98 million in the district to develop engine cylinder heads and other automobile parts. Through careful inspection and investigation, the Company finally chose Changzhou National High-tech District in Jiangsu as the initial production base in China. The project will be carried out in two phases. Phase 1 is involved in the registered capital of USD15 million, mainly to produce and develop precision castings and raw castings. To date, the Company has started to deal with registration procedures. Construction can be expected in the near future. (From a press release on Feb. 29, 2008)

Major Investment Projects for FY2008
Bulgarian facility: 17 million euros
*Chinese facility: 4 million euros
Mexican facility: 4 million euros

*The new plant project in China will be frozen after the plant building is completed. In the meantime, the Company will maintain the new building without setting up any of the necessary infrastructure or installing any production equipment. The Company will decide later whether it will resume the project or sell the vacant facility.