Financial Overview

(in millions of JPY)

	FY2008	FY2007	Rate of Change (%)
Sales	101,942	113,001	(9.8)
Operating income	3,277	5,497	(40.4)
Ordinary income	3,290	5,527	(40.5)
Net income	1,534	1,039	(47.6)

Sales by product
Engines
-Sales of engines for the Nissan Almera sold in the Middle Eastern markets increased. But sales of the Nissan Tida, Note and March sold in Japan, as well as the Qashqai and Note sold in Europe, decreased. Overall sales of engines decreased 9.0% year-on-year to 47.6 billion yen.

Manual transmissions
-Sales of manual transmissions for the Nissan Frontier sold in North America and the Frontier and Navara sold in Southeast Asia decreased. The volume of engines delivered to Renault Samsung Motors in Korea also decreased. On the other hand, sales of the new GR6 transmissions for the Nissan GT-R and transmissions sold to Proton Holding Bhd in Malaysia increased. Overall, sales of manual transmissions increased 6.6% year-on-year to 24.8 billion yen.

Automobile parts
-Sales decreased 21.1% year-on-year to 29.3 billion yen.


Business Plan
-The Company, which is supporting Nissan Motor Co., Ltd.'s global expansion plans, is revising its business agreement with the automaker in the area of engines and powertrain units. Up until now, the Company used to develop and supply engines for Nissan on the condition that it would be able to be involved in all of the operations involving engines, from product development, mass-production, up to assembly. Starting in fiscal year 2009, however, Nissan intends to manufacture what are called A-segment, low-priced small vehicles in emerging-market countries. As a result, Nissan will start building engines for these models at its own facilities outside Japan. This means that only development of these engines and production of major components will be handled by the Company, but not the full mass-production of them. In addition, the Company is to provide only engineering services such as developing and designing products for Nissan. Although the Company can not expect to generate a high level of profit from these projects, which do not include parts assembly operations, the Company nevertheless decided that it was necessary to change its policy with Nissan in order to make the Nissan Group more competitive in the global market. (From an article in the Nikkan Jidosha Shimbun on Jan. 8, 2009)

-The Company, an affiliate of Nissan Motor Co., Ltd., is working to sell a higher percentage of products to customers other than the Nissan Group. During the three-year period of the next medium-term business plan, which started in FY2009, the Company intends to double the percentage it sells to other companies,  to 20 percent from the current 10%. In order to boost sales amid the worldwide downturn in the automotive industry, the Company decided it was necessary to expand its customer base, which will reinforce its business structure. Basically, the Company will supply new customers with the most sophisticated transmission units that the company originally developed for Nissan's latest models. (From an article in the Nikkan Jidosha Shimbun on Jan. 21, 2009)

R&D Expenditure

(in millions of JPY)

	FY2008	FY2007	FY2006
Automotive Business	66	67	96

Product Development Structure
-The Company set up an integrated R&D structure that enables the Company to conduct planning, designing, and test production experiments needed for commercializing products. Also, the Company developed innovative products including clean, economical, and high performance engines and compact and light manual transmissions by utilizing the latest computer systems on digital mockups, simulation and data analysis. 


R&D Achievements
Engines
-The Company developed an upgraded version of its HR15DE inline four-cylinder engine. This more fuel-efficient engine is now on the new Nissan Cube, which was released in November 2008.

Manual transmissions
-The Company upgraded its R31A manual transmission designed for RWD vehicles so as to include a synchro-rev control system. This transmission has been installed on the Nissan Fairlady Z since December 2008.

Capital Investment

(in millions of JPY)

	FY2008	FY2007	FY2006
Automotive Business	10,200	5,300	7,400

-The Company invested 9,900 million yen mainly on streamlining and renewing manufacturing facilities to produce automotive units and parts for both redesigned engines and manual transmissions made by its customers. The Company spent 9,400 million yen on the Engine Segment and 400 million yen on the Manual Transmission Segment.


Capital investment
-For the 2009 fiscal year ending in March 2010, the Company plans to invest 6,500 million yen mainly on manufacturing facilities for producing automotive units and parts, in order to deal with planned model changes of engines and manual transmissions made by its customers.