Financial Overview

(in million JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	2,059,344	2,033,827	1.3	-
Operating income	86,946	103,810	(16.2)	-
Ordinary income	106,696	129,099	(17.4)	-
Net income	58,861	70,614	(16.6)	-
Automotive Business
Sales	991,246	959,341	3.3	-In spite of a disappointing first half-year, with lower demand because of the Great East Japan Earthquake, the Company’s performance improved in the second half of the year as a result of a recovery in production, greater demand in the automotive markets worldwide, and the Company’s growing market share of wire harnesses. -The worldwide production volume of the Company’s wire harnesses broke all previous sales records.
Operating income	54,331	64,118	(15.3)

-The Company announced that the Japan Fair Trade Commission (JFTC) ordered the Company to pay a fine of 2,102.2 million yen for a bid-rigging cartel concerning transactions of automotive wire harnesses and related products. The company has been investigated by the JFTC since February 2010. In accordance with the decision, the Company will book a special loss of 2,142.0 million yen in the financial report for the first quarter of fiscal year 2012. (From a press release on January 19, 2012)

New Company

<Thailand>
-The Company announced that it will establish a subsidiary in Rayong Province, Thailand, tentatively named as SEI Thai Electric Conductor Co., Ltd. (STEC), to produce and sell copper wire rods and wire drawings, used as generating lines for electric wires and cables of automotive wiring harnesses. It will also manufacture and sell aluminum rod materials to be machined into valves for automatic transmissions. Scheduled to start operations in April 2014, the subsidiary is expected to sell approx. one ton of copper products and approx. 110 tons of aluminum products per month in FY 2015 in an aim to achieve annual sales of approx. 47 billion yen. This will be the Company's third manufacturing facility after Japan and Indonesia to output copper wire rods and wire drawings, with the largest copper wire rods and wire drawings output capacity in Southeast Asia. While Sumitomo Electric Toyama Co., Ltd., its Group company, has produced aluminum rod materials, it will hereafter perform the upper processes such as casting and rolling and the new plant will output the final products. (From an article in the Nikkan Jidosha Shimbun on January 27, 2012)

<India>
-The Company announced that it has established a new sales company SEI Trading India Private Limited in Gurgaon, Haryana, India, and began its operations on November 1. It is capitalized at 5 million rupees (approximately 7.7 million yen). The new company is engaged in sales of products by Sumitomo Electric and its subsidiaries. (From a press release on November 8, 2011)

Restructuring

-The Company announced that it will merge Sumitomo Electronic Wire, Inc. and Sumitomo Electric Flat Components, Inc., its wholly owned subsidiaries, effective April 1, 2012. When the integration is completed, Sumitomo Electronic Wire will be the surviving company, employing a total of about 770 people. The new company will develop, manufacture, and sell electric wiring products including harnesses and flat cables, taking over the business operations of the two companies. (From an article in the Nikkan Jidosha Shimbun on December 9, 2011)

-Sumitomo Wiring Systems, Ltd. announced on August 8 that it will consolidate its four manufacturing companies in eastern Japan effective October 1. As production of wiring harnesses has been increasingly shifted overseas, the company aims to strengthen its competitiveness by increasing its efficiency in product manufacturing, making better use of human resources, and developing more agile production structure through introduction of a flexible worker exchange system beyond regional boundaries. The integration will help the Group clarify what it needs to do as a Japan-based "global mother plant". The four companies are Tohoku Sumidenso, Ltd. (Nanyo, Yamagata Prefecture); Kyohritsu Hiparts Co., Ltd. (Ichinoseki, Iwate Prefecture); Kyohritsu Harness, Ltd. (Ichinoseki, Iwate Prefecture), and Kanto Sumidenso, Ltd. (Oyama, Tochigi Prefecture). Tohoku Sumidenso will be the surviving company. The new company to be formed through the consolidation will be called SWS East Japan, Ltd. It will be headquartered in Ichinoseki, Iwate Prefecture. Sales are expected to reach 15.6 billion yen in the year ending March 2013. (From an article in the Nikkan Jidosha Shimbun on August 9, 2011)

Recent Development in Japan

-The Company announced its cables with connectors for rapid charging devices for electric vehicles, which are compliant with the CHAdeMO specifications, were installed at the charging device located in the Tokyo Electric Power Co. office. CHAdeMO is a system meant to be standardized by the CHAdeMO organization participated by automakers, charging manufacturers, government organizations and so forth. A cable with connectors has an excellent performance in handling because it uses light weight aluminum alloy for the base cable and a rubber-coated table. (From a press release on September 29, 2011)

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

Outlook for FY ended Mar. 31, 2013

(in billions of JPY)

	FY ended Mar. 31, 2013 (Estimated)	FY ended Mar. 31, 2012 (Result)	Rate of Change (%)
Sales	2,200	2,059.3	6.8
-Automotive Business	1,080	991.2	9.0
Operating income	110	86.9	26.6
Ordinary income	130	106.7	21.8
Net income	70	58.9	18.8
R&D Expenditure	93	86.6	7.4
-Automotive Business	55	49.0	12.2
Investment Expenditure	160	135.0	18.5
-Automotive Business	-	60.5	-

Business Plan for FY ended Mar. 31, 2013

-The Company plans to increase business activities with automakers based outside Japan, strengthening its sales structure to boost its business with Ford, Chrysler, PSA, and others.
-Initiate thoroughly effective cost-reduction activities

• Improve productivity through automation
• Rebuild the best global production framework possible by revamping and expanding operations in Mexico and Southeast Asia (Cambodia, Vietnam, Indonesia, etc.)  
• Speed up local procurement of parts and materials

-Development of high-voltage harnesses designed for hybrid and electric vehicles, aluminum harnesses that contribute to vehicle weight reduction, anti-vibration rubber that satisfies the need for more compact and lighter weight products, reactors, and battery products.

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	86,582	79,026	72,259
Automotive Business	49,017	45,107	37,512

-The Company's planned R&D expenses for the FY ended Mar. 31, 2013 are 93 billion yen, among which 55 billion yen will be spent in the automotive division.

R&D Activities

Wire harnesses / In-vehicle electronic equipments
-R&D activities are mainly conducted at AutoNetworks Technologies, Ltd., which is jointly owned by the Company and Sumitomo Wiring Systems, Ltd. R&D activities are mainly focused on developing new products meeting safety, comfort and environmental needs.

-Wire harnesses: The Company is building harness architectures that can be mounted in next-generation vehicles' onboard systems, conducting R&D activities on elemental technologies needed to meet this need.  Also, in order to reduce vehicle weight and be environmental friendly, the Company is developing lighter weight harnesses. It has succeeded in this area, developing and starting mass-production of harnesses using aluminum, which is lighter in weight than copper. Moreover, the Company is continuing its R&D activities on high-voltage harnesses and connectors for the growing EV/HEV sector.

-In-vehicle electronics devices: The Company is now developing electronics devices such as PDs (power distributors) and next-generation in-vehicle LAN (Local Area Network) units in order to respond to the rapid advances taking place in IT. The Company is also launching systems with advanced features and/or networking capabilities.

Technological Alliance

-The Company and Meidensha Corporation released a joint statement on March 29 that the two companies will develop in partnership a new electric double-layer capacitor (EDLC) that uses Sumitomo Electric's porous metal "Aluminum-Celmet" for electrodes. They will work on commercializing this product in 2015 primarily for automobile applications to electric and hybrid vehicles. (From an article in the Nikkan Jidosha Shimbun on March 30, 2012)

Product Development

High-performance fluororesin coating
-The Company and Sumitomo Electric Fine Polymer, Inc. announced on January 30 that it has developed a high-performance fluororesin coating that offers higher wear resistance and lubricity than most other plastics. Sheets applied with the high-performance fluororesin coating can be pressed into split bushings used in automobiles. Its high sliding characteristics contribute to reduced torque. As a next step, the Company will study its applications to parts formed into any desired shape, including automotive shafts. (From an article in the Nikkan Jidosha Shimbun on January 31, 2012)

New coating materials to enhance the cast iron machining performances in high-speed, continuous turning processes
-The Company has developed and released two new coating materials, Ace Coat AC405K and AC415K, to enhance the cast iron machining performances in high-speed, continuous turning processes, while extending the service life of the cutting tools by 50 percent. The new coating films are made of finer and harder ceramic particles to form a titanium carbon nitride (TiCN) layer, which provides a 50 percent improvement in wear resistance as compared with conventional products. Lower wear resistance has dramatically increased cast iron turning speeds. Cast iron, a composite of iron and graphite, is hard, tough, vibration/sound insulating and heat resistant. The material is used in a number of automotive components such as engines, crankshafts, camshafts and brake discs. In the automotive industry, requirements for thin and lightweight parts are further increasing, as automakers are competing to raise their vehicle fuel economy. Under this move, introduction of stronger, but harder-to-machine nodular graphite ductile cast iron is growing, which calls for highly durable machining tools to withstand extremely demanding conditions. The company is aiming to generate 400 million yen in the year ending March 2012 and 1.7 billion yen in the year ending March 2015 through sales of the new coating technology. (From an article in the Nikkan Jidosha Shimbun on January 26, 2012)

Four- and six-inch engineered gallium nitride (GaN) substrate
-The Company and S.O.I. TEC Silicon On Insulator Technologies S.A. (Soitec), a French manufacturer of semiconductor materials, have succeeded in manufacturing four- and six-inch engineered gallium nitride (GaN) substrates and launching pilot production lines in their strategic joint development program started in December 2010. With the demonstration of GaN wafers' scalability, the companies are now proceeding with the next step to establish pilot production lines in Itami, Japan, and Bernin, France. The pilot lines will fabricate four- and six-inch wafers. These substrates are suited for manufacturing high-brightness light-emitting diodes (LEDs) for the lighting market and power controllers for the electric vehicles and energy markets. (From a press release on January 24, 2012)

Porous aluminum
-The Company, having newly developed its porous aluminum "Aluminum-Celmet," has set up a small-scale production line at Osaka Works to accelerate development efforts toward mass production of the new material. Celmet's features include high porosity (up to 98%), considerably higher than other porous metals, such as nonwoven metal fabric and foam metal. Celmet has recently been adopted as a positive electrode current collector in hybrid vehicle nickel-hydrogen batteries. Aluminum-Celmet offers lightness (the specific gravity of aluminum is about one-third that of nickel) and greater electrical conductivity (or low electrical resistivity, less than half that of nickel). Aluminum-Celmet can be used to improve the capacity of lithium-ion secondary batteries and capacitors. The Company's trial calculations indicate that in the case of automotive onboard battery packs, such replacement will increase battery capacity 1.5 to 3 times. (From a press release on June 24, 2011)

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	135,039	98,424	73,306
Automotive Business	60,498	45,666	29,609

-The Company invested in the automotive business to increase production and improve the efficiency of wire harnesses and vibration isolating rubber.

Investment Outside Japan

<Europe/Other>
-The Company enhanced its wire-harness production capabilities in Morocco, Tunisia, and Eastern Europe, producing wire-harnesses for Renault, PSA, the Volkswagen Group, the Fiat Group, and Japanese automakers.

<Americas>
-The Company upgraded and expanded its wire-harness and parts production facilities in Mexico, Brazil, and the U.S.A.

-The Company increased its production capacity of anti-vibration rubber.

<China/Asia>
-The Company expanded and upgrading its wire-harness and parts productions facilities in Asia such as in China (Huizhou, Tianjin, Shanghai, Changshu), Thailand, Vietnam, the Philippines, and Indonesia.

-In addition, the Company's facilities producing anti-vibration rubber were upgraded and increased.

Investment Plan (FY ended Mar. 31, 2013)

-The Company plans to invest 160,000 million yen in FY ended Mar. 31, 2013.

-Its Automotive Business Division plans to invest 77,000 million yen mainly in its facility that produces wire harnesses and vibration-isolating rubber.

Investment Outside Japan
<Europe/Other>
-The Company will invest to expand and upgrade its wire-harness production facilities in North Africa (Morocco) and elsewhere that produce wire-harnesses for Renault, PSA, the Volkswagen Group, the Fiat Group, and Japanese automakers.

<Americas>
-The Company will upgrade and expand its wire-harness and parts production facilities in Mexico and Brazil.

-The Company is planning to increase its production capacity of anti-vibration rubber.

<China/Asia>
-The Company will expand and upgrade its wire-harness and parts productions facilities in Asia such as in China, Cambodia, Indonesia and Vietnam.

-In addition, the Company's facilities producing anti-vibration rubber will be upgraded and increased.

-The Company will construct new plants for each wire harness products, sintered parts and cutting tools for automobiles in Indonesia with an investment of about 5 billion yen. The Company and Sumitomo Wiring Systems will add a second factory to their joint venture for production of wire harnesses to treble production capacity by the fiscal year ending March 2016. Sumitomo Electric will form a joint venture with a local supplier group to manufacture and sell sintered parts with production scheduled to start in February 2013. For cutting tools, Sumitomo Electric Hardmetal Corporation, a group company, will set up a joint venture for manufacture and sales so that it will start production in April 2013 for the first time in areas of sintered parts and cutting tools. With an investment of 1.4 billion yen in the existing PT. Sumi Indo Wiring Systems located in Purwakarta, West Java, a new building will be added. A plant for production of sintered parts will be established in Bekasi, West Java at an estimated cost of 2.5 billion yen. A facility to produce cutting tools will be established in Karawang, West Java with an investment of 1.2 billion yen. (From an article in the Nikkan Jidosha Shimbun on March 24, 2012)