Financial Overview

(in millions of JPY)

	FY2010	FY2009	Rate of Change (%)	Factors
Overall
Sales	216,539	194,696	11.2	-
Operating Income	5,377	5,203	3.4	-
Ordinary Income	6,380	6,630	(3.8)	-
Net Income	6,087	4,410	38.0	-
Automotive systems business
Sales	145,674	129,986	12.1	Overall sales increased year-on-year due to several reasons, which are: the growing markets in developing countries such as China and India; a slight market recovery in Europe and North America, the Company’s major markets; the Company’s more aggressive promotions to sell smaller and more energy-saving products; and the acquiring of new commercial rights in Europe.
Operating Income	5,808	6,824	8.3	-

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.

Critical initiatives for FY2011in the automotive sector:
(1) Growth based on products with competitive advantages rooted in the latest technology.
- The Company plans to take an active role in developing competitive products that make use of the latest technology in terms of “compact”, “lightweight”, and “high performance”, working to acquire commercial rights and raise its market share in Europe, North America, China and elsewhere.
(2) Growth based on launching new, compact scrolls in the market.
- The Company will endeavor to launch new, compact scrolls, which boast competitive advantages, in the growing markets of developing countries, working to significantly increase sales.
(3) Growth through providing value-added products based on environmental technology
- The Company will work on allocating recourses to develop environmental technology and supply value-added products that achieve energy savings, power savings, and fuel efficiency, aiming to acquire commercial rights that will lead to new growth after FY2013.

Awards

 Honda Supplier Award
Paccar Quality Award
Volvo Truck Supplier Award
Perodua Supplier Award
Toyota Supplier Improvement Conference Award
Beifang-Benz Development Contribution Award
PSA Supplier Award

R&D Expenditure

(in millions of JPY)

	FY2010	FY2009	FY2008
Group	6,138	5,440	7,019
Automotive systems business	3,936	3,676	3,974

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 inverters and compact/light automotive heat exchangers in its efforts at developing eco-friendly, next-generation products and energy-saving technology, which are the two most significant targets in the automotive business.

- The Company announced that it will start developing a new energy-saving technology to reduce power needed to drive the automotive air conditioner systems, by making effective use of absorption agents. Sanden will receive a subsidy from the New Energy and Industrial Technology Development Organization (NEDO), which has chosen the development program as one of the strategic, next generation technologies for practical applications. The technology is designed to utilize the heat energy which is normally wasted in the radiator. This will cut down power to operate the air conditioning compressor, and thereby minimize deterioration of vehicle fuel efficiency when using the climate control device. (From an article in the Nikkan Jidosha Shimbun on February 7, 2011)

Capital Expenditure

(in millions of JPY)

	FY2010	FY2009	FY2008
Group	9,800	5,900	12,900
Automotive systems business	7,800	4,900	10,300
-Japan	3,900	1,900	6,800
-Europe	1,300	900	1,800
-North America	700	600	300
-Asia	1,700	1,400	1,400

-In FY2011, which ends in March 2012, the Company will invest to mainly set up in-house manufacturing and strengthen, increase, rationalize, and maintain its facilities and equipment. 
-Capital investments in the Asian region were allocated to improve the Company’s competitive strengths in China. Included was 800 million yen invested to enhance casting and processing facilities and equipment at Sanden Al Salam LLC for the purpose of increasing its business there.

New Capital Investments

-For FY2011, which ends in March 2012, the Company is more selectively choosing and consolidating where it will invest. Planning to spend 11,900 million yen, the Company intends to mainly set up in-house manufacturing and strengthen, increase, maintain, and renew its production capacity. Among this amount, it will allocate 1,700 million yen in Europe, 1,300 million yen in North America, 1,600 million yen in Asia, and 4,800 in Japan in its automotive equipment business.