Financial Overview

(in millions of JPY)

	FY2009	FY2008	Rate of Change(%)	Factors
Overall
Sales	455,287	488,638	(6.8)	-
Operating profit	38,341	19,938	92.3	-
Ordinary income	36,506	16,524	120.9	-
Current net income	23,509	2,740	758.0	-
Electronics Related Products
Sales	244,788	251,937	(2.8)	1)
Operating profit	30,490	17,212	77.1	-
Advanced Performance Products
Sales	212,174	239,264	(11.3)	2)
Operating profit	7,746	2,916	165.6	-

 

Factors
1)
Wiring boards and materials for wiring boards
- Sales of multi-layer printed wiring boards for automobiles and information communication devices decreased.
- Sales of copper-clad laminated sheets for use in automotive printed wiring boards failed to make a full-scale recovery.

2)
Industrial materials
- Sales of insulating varnishes increased year-on-year, because of their greater use in hybrid vehicles.
- Sales of epoxy resin curing agents decreased year-on-year due to falling demand for the types used in automobiles.

Carbon/ceramics
- Requirements for electric brushes used in automobiles and railway cars decreased.
- Sales of ceramics products for automotive water pumps decreased.

Automotive parts
- Sales of automotive interior and exterior products fell year-on-year due to a decrease in vehicle production.
- Sales of automotive friction materials increased, thanks to their greater use in vehicles sold in North America.

Recent Developments in Japan

-The Company, Shin-Kobe Electric Machinery, Co., Ltd., and Hitachi AIC Inc. (Moka City, Tochigi Prefecture) announced that Hitachi AIC, which is a wholly owned subsidiary of Hitachi Chemical, will transfer its condenser business to Shin-Kobe Electric Machinery as early as October 1. Shin-Kobe Electric, also a subsidiary of Hitachi Chemical, manufactures lead and lithium-ion batteries, while further expanding the scope of its new energy business. The integration is thereby expected to create huge synergies within the Hitachi Group. The areas to be transferred from Hitachi AIC are aluminum electrolysis condensers, film condensers, as well as vapor deposition apparatuses related to these technologies. Sales and assets of the businesses totaled 11.5 billion yen and 7.6 billion yen, respectively in 2008. Automotive applications of Hitachi AIC's condensers include headlamp igniters. (From an article in the Nikkan Jidosha Shimbun on July 29, 2009)

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

R&D Expenditure

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	25,400	27,600	28,200
Electronics Related Products	13,800	15,800	15,700
Advanced Performance Products	11,600	11,800	12,000

R&D Facilities

Tsukuba Research Laboratory	Ibaraki Pref., Japan
Tsukuba Research Laboratory (Yamazaki)	Ibaraki Pref., Japan
Tsukuba Research Laboratory (Shimodate)	Ibaraki Pref., Japan
Hitachi Chemical Research Center, Inc.	California, USA
Hitachi Chemical - SJTU Research & Development Center	Shanghai, China

R&D Activities

Heat radiation material
-The Company announced that it has developed a new heat radiation material, which offers both superior insulation and high-heat conductivity properties. The Company plans to turn the technology into a practical business solution as adhesive sheets. Samples made of a resin composition comprising the new radiator material, epoxy resin, and inorganic fillers will be available soon. The Company says these sheets can efficiently dissipate heat generated from products including inverters for hybrid electric vehicles and LED lighting products, which are being made even smaller while supporting higher current. The new technology is expected to generate 5 billion yen in sales in 2013. (From an article in the Nikkan Jidosha Shimbun on July 16, 2009)

Light shielding film
-The Company announced that it has started to mass produce a new light shielding film, which offers an unlimited variety of shading levels. The color density can be freely adjusted by controlling the level of voltage applied to the light distribution element in the film. The broad and long film is suited for automotive window glass and plastic (transparent sheet) application as a laminate material. When no voltage is given, the film is dark with a high light blocking effect, which contributes to reducing energy consumption by cutting down the use of air conditioner in an efficient manner. When a high voltage is supplied, the film becomes transparent, making the car cabin look more spacious. The technology, which provides both energy saving feature and superior riding comfort, is expected to be employed in a variety of products such as aircraft, consumer electronics, and buildings as well. The Company aims to generate 5 billion yen in sales from the new film in 2012.(From an article in the Nikkan Jidosha Shimbun on July 23, 2009)

Automotive lithium-ion batteries
-The Company announced that it will start commercial production of carbon materials for use in negative electrodes of automotive lithium-ion batteries in Nov. 2009. The Company invested approx. 1 billion yen to complete a new production line at its Yamazaki Plant in Hitachinaka City, Ibaraki Pref. to manufacture two types of negative electrodes: a graphite-based electrode; and an amorphous carbon-based electrode. Through this expansion, the company is set to respond to the increasing requirements for lithium-ion battery products used in environmentally friendly technologies such as hybrid and electric vehicles. The Company is aiming to generate 30 billion yen in yearly sales solely from its negative electrode business by 2015. (From an article in the Nikkan Jidosha Shimbun on Oct. 21, 2009)

Technical Assistance Contracts

(As of Mar. 31, 2010)

Company	Other company	Contract Details	Period
The Company Japan Brake Industrial Co., Ltd.	Federal Mogul Corp. (USA)	Granting the working rights to the patent for disc pads. Providing technical information on disc pads	2007.3.31- Until the time production of vehicle models that use the subject products is stopped
The Company	Brembo S.p.A. (Italy)	Granting the working rights to the patent for disc brake pads. Providing technical information on disc brake pads	2009.8.31- 2014.8.31 (The contract is scheduled to automatically renew every five years after the initial period ends.)

Technological Licensing Agreements

(As of Mar. 31, 2010)

Group company name	Other Party to the Agreement	Contract details	Period
The Company	Hitachi, Ltd.	Acquisition of patent rights and license to use technical expertise on μ-Chip tags.	Apr. 20, 2007 to Apr. 19 2019
Shin-Kobe Electric Machinery Co., Ltd.	Panasonic Storage Battery Co., Ltd. (Japan)	Acquisition of patent rights and license to use technical expertise on lead storage batteries	July 1, 2004 to June 30, 2014

Capital Investment

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	21,000	36,000	37,400
Electronics Products	10,100	17,600	19,100
Advanced Performance Products	10,900	18,400	17,600

Electronics Products
- Major investments in the electronics products division included funds to increase the Company's capacity to produce carbon materials for negative electrodes of lithium-ion batteries for consumer use, and install new equipment for producing parts used in environmentally friendly vehicles .

Advanced Performance Products
- The advanced performance products division invested mainly in building a new plant to produce brake pads at Hitachi Chemical Mexico, S.A. de C.V.

Planned Capital Investments

(As of Mar. 31, 2010)

Company Office	Location	Equipment to be installed	Estimated amount of investment (million JPY)	From	To
The Company Yamazaki Works	Ibaraki Pref., Japan	Equipment for producing carbon materials for negative electrodes of automotive lithium-ion batteries	2,000	Jan. 2010	Nov. 2010