During the first half year, the East Japan Great Earthquake occurred on March 11, 2011 disrupted supply chain of the Japanese automobile industry, the NICHIDAI Group’s primary customer, resulting in a plunge in automobile production. This led the Company to forecast moderate business results at the beginning of the year, but the speed of reconstruction was faster than we expected, and the industry has now recovered to the pre-earthquake level.

The Net-Shape Business recorded sales of 2,640 million yen (up 5.4% year-on-year). A steep decline in the domestic sales of the Forging Die Division, which was posted in the first quarter due to the Earthquake, recovered in the second quarter responding to the pickup in the automobile industry. Meanwhile, in the Precision-forged Goods Division, sales of forged scrolls increased substantially.

Sales of the Assembly Business jumped to 2,455 million yen (up 62.6% year-on-year). This is primarily attributable to robust sales of VG turbocharger parts destined for the European automobile market continued from the previous term. In response to the booming demand, sales grew at our production bases both in Japan and Thailand (NICHIDAI (THAILAND) LTD.).

Continuing from the previous term, the Filter Business also increased sales to 630 million yen (up 23.6% year-on-year), thanks to strong sales for the healthcare and other domestic markets along with a recovery in demand for oil drilling filters produced at THAI SINTERED MESH CO., LTD.

As a result of the above, consolidated sales for the first half year totaled 5,726 million yen (up 26.5% year-on-year). Consolidated operating income was 277 million yen (up 75.4% year-on-year), consolidated ordinary income was 247 million yen (up 61.1% year-on-year) and net income was 149 million yen (up 11.1% year-on-year).

With regard to income, while reduced sales of the Forging Die Division caused sales of the Net-Shape Business to decline, overall consolidated income increased thanks to the higher sales of the Assembly Business and the Filter Business. On a non-consolidated basis, 16 million yen of operating loss was recorded in contrast to the originally forecasted 45 million yen of operating income. This is because the Net-Shape Business posted experimental and research expenses associated with the Supported Project for Strategic Basic Technology Advancement (commonly known as “Supporting Industry Project”) certified by the Ministry of Economy, Trade and Industry. These experimental and research expenses are, however, fully subsidized and the subsidy has been recorded as non-operating income, thus there is no impact on ordinary income.

At the beginning of the fiscal year we announced that we were unable to reasonably calculate the full-year business forecasts until June this year, due to the significant impact of the Great East Japan Earthquake on industries of the Group’s major customers. Following the recovery in the automobile industry came in sight, at the release of the first quarter FY2012 financial results, we announced our full-year business forecasts as described below.

We project full-year consolidated sales of 12,500 million yen (up 21.3% year-on-year), consolidated operating income of 880 million yen (up 25.1% year-on-year), consolidated ordinary income of 800 million yen (up 17.4% year-on-year) and net income of 500 million yen (up 0.8% year-on-year).

The above forecasts have not factored in the influences of the Thai flooding. We will inform you promptly if it becomes clear that the flooding will have a serious impact on the business results of the Group.

Starting from this fiscal year, the Group has been working companywide on the three strategies – “Bolstering overseas operations,” “Creating new markets by technological development” and “Strengthening competitiveness through improved customer satisfaction” based on the Medium-Term Management Plan.

As for bolstering overseas operations, the Net-Shape Business will start mass production of forged scrolls in Thailand. Future growth in demand for forged scrolls is expected in emerging nations as car A/C compressor manufacturers expand their business overseas. To meet the demand, we will enhance our overseas production system and start mass producing forged scrolls in the next fiscal year at NICHIDAI (THAILAND) LTD., where turbocharger parts are manufactured. With the mass production of forged scrolls as a start, we will further advance overseas operations of the Net-Shape Business. Also in the Assembly Business, we are promoting localization of material procurement and parts processing.

As an example of new market creation by technological development, our development activity of small-sized electricity-generating rotor components, which have been promoted by the Net-Shape Business, was certified as a Supporting Industry Project by the Ministry of Economy, Trade and Industry. Supporting Industry Project is designed to encourage technologies excelled in energy saving or environmental responsiveness. Our cost-cutting ability by precision forging received recognition. The small-sized electricity-generating rotor components, which are currently being prototyped, are assumed to be adopted in eco-cars, such as hybrid cars, small generators and others.

As an example of new market creation by technological development, our development activity of small-sized electricity-generating rotor components, which have been promoted by the Net-Shape Business, was certified as a Supporting Industry Project by the Ministry of Economy, Trade and Industry. Supporting Industry Project is designed to encourage technologies excelled in energy saving or environmental responsiveness. Our cost-cutting ability by precision forging received recognition. The small-sized electricity-generating rotor components, which are currently being prototyped, are assumed to be adopted in eco-cars, such as hybrid cars, small generators and others.

We will continue to report on the Medium-Term Management Plan as needed.

Despite the influences of the East Japan Great Earthquake in the first half year, we were able to start this fiscal year almost as planned in pursuit of the next stage of growth. For this reason, we will pay a dividend of 6 yen for the second quarter and a year-end dividend of 6 yen, a full-year dividend of 12 yen per share.

However, amid the influences of the large-scale flooding in Thailand, our future business environment is uncertain. The Group has been earnestly collecting information and analyzing the situation. We will inform you promptly if it becomes clear that the flooding will have a serious impact on our business results.

Despite such circumstances, the Group will seek to steadily implement the Medium-Term Management Plan and pursue a one step higher. I would like to ask our shareholders for their understanding about the current situation of the NICHIDAI Group, as well as their expectations as we continue to expand our business in the future.