Aichi Steel Corporation Business Report FY2009

(in millions of JPY)

	FY2009	FY2008	Rate of Change(%)	Factors
Overall
Sales	174,278	222,060	(21.5)	-Totalsales declined year-on-year,although theproduction and sales volumesof steel and forged products for automakers steadilyimproved quarter by quarter.
Operating income	4,313	(482)	-	-Operating andordinary income increased, supported bythe Company's full-year cost reduction efforts,even thoughthe yearly sales volume decreased.
Ordinary income	3,906	(1,804)	-
Net income	6,625	(14,105)	-	-Net income increased becausethe Company's deferred incometaxeswere adjusted.
By Segment
Steel	115,798	157,486	(26.5)	-The salesvolumesof steel and forged products decreased becauseof lower selling prices and sales volumes.
Forged products	75,754	85,895	(11.8)
Electromagnetic products	5,622	3,380	66.3	-Sales ofelectromagnetic products increased, thanks to anincrease in the sales volume of MI sensors, Magfine magnets,and electric parts.

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	2,531	2,828	2,001

-The Company has about 180 employees engaged in R&D as of March 31, 2010.

Business	Budjet (in million JPY)	R&D activities
Steel	1,724	-Development of new special steel for automotive parts and a new manufacturing technique for producing stainless steel FY2009 : The Company's R&D activities in this sector included work on the following items: -Steel materials that can be used to make high-strength connecting rods, which are useful for improving the fuel economy of vehicles -Developingsteel for lowpressure carburizing that can help reduce CO2emissions -Developing low-alloy case hardening steel -Developing stainlesssteel reinforcing bars andshaped,duplex stainless steels for theenergy and environment sectors
Forged products	117	-Under theslogan of “manufacturing innovations", developmentofa processto manufacture forgedautomotive parts FY2009 : The Company's R&D activities in this sector included work on technology to improve the surfaces and lubricity of dies ; and technology to conduct automatic testing of forged and other parts. -Initiatives to make practical approaches in searching for new processes andequipmentto manufacture automotiveparts
Electro magnetic parts	690	-Development of Magneto-Impedance (MI) sensors, magnets for motors, dental magnetic attachments, heat releasers for automotive electronic equipment, and other products FY2009 : -Development ofultra-compact, electronic compasses -Improvement oftheneodymium-containing anisotropic bond magnets,Magfine, so that theybetter resist oxidizationand heat

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	8,163	14,467	13,165

Busienss	Capital investment (in million JPY)	Objective
Steel	4,391	Rationalizationand renewal of manufacturing facilities,environmental measures, etc.
Forged products	2,315	Renewal of manufacturing facilities, etc.
Electro magnetic parts	1,416	Enhancement ofproduction capacity, etc.

Name (Location)	Type of business	Type of facility	Planned investment (million JPY )	Start	Completion	Production capacity upon completion
Chita Plant (Tokai City, Aichi)	Steel etc.	Facilities for producingsteel;rolling equipment, etc.	31,226	Dec. 2006	Aug. 2011	*
Kariya Plant (Kariya City, Aichi)	Steel	Rolling equipment, etc.	523	Sep. 2009	Mar. 2012	*
Forging Plant (Tokai City, Aichi)	Forged products	Facilities for producing forged products	1,622	Jan. 2008	May 2011	*
Higashiura Plant (Chita Gun, Aichi)	Electro magnetic parts	Facilities for producing products using magnets, etc.	117	Mar. 2006	Dec. 2012	*
Gifu Plant (Kakamigahara City, Gifu)	Electro magnetic parts	Facilities for producing electronic functional materials and components	29	Mar. 2009	Mar. 2012	*
Seki Plant (Seki City, Gifu)	Electro magnetic parts	Facilities for producing products using magnets, etc.	441	Jun. 2008	Sep. 2010	New facilities

*The production capacity upon completion is expected to be around the same level as what it was at the end of March 2010.