masayoshi matsumotomasayoshi matsumoto …global-sei.com/ir/library/pdf/20100525ceo_e.pdfforex sales...

May 2010

GETTING BACK ON THE GROWTH TRACK & REALIZING VISION 2012GETTING BACK ON THE GROWTH TRACK & REALIZING VISION 2012

Masayoshi MatsumotoMasayoshi MatsumotoMasayoshi MatsumotoMasayoshi MatsumotoPresident and CEOPresident and CEO

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F t

FY2009 Consolidated ResultsFY2009 Consolidated ResultsFY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

FY 2009 sales declined from the previous year, due to shrinkage of the automotive and electronics markets, mainly during the first half-year, and a drop in copper prices. On the other hand, operating income increased, thanks to the effects of structural reforms.

FY2008 FY2009 FY2009 FY2009 FY2009 Y o Y

,Compared to the figures announced mid-year, demand recovery and cost reduction made progress, mainly in the automotive segment, resulting in increased sales and income.

FY2008 FY2009 FY2009 FY2009 FY2009 Y-o-Y

（¥bn） Result ① Forecast in InterimAnnouncement

Revised Forecast(March 26)

Revised Forecast(April 30) Result ② (②－①)／①

Net Sales 2,122.0 1,800.0 1,820.0 1,830.0 1,836.4 (13%) 2,122.0 1,800.0 1,820.0 1,830.0 , ( )

Operating Income 23.5 33.0 45.0 51.0 51.7 ＋120%

Ordinary Income 37.8 40.0 55.0 68.0 68.2 ＋81%

Net Income 17.2 13.0 20.0 28.0 28.7 ＋67%

Capital Expenditures 131.6 82.0 －－ 73.3 (44%)

Depreciation Expenses 108 2 100 0 103 8 (4%)Depreciation Expenses 108.2 100.0 －－ 103.8 (4%)

R&D Expenses 73.0 75.0 －－ 72.3 (1%)

ROA 1 6% 2 3% －－ 3.6% ＋2.0% ※ROA 1.6% 2.3% 3.6% ＋

ROE 1.9% 1.5% －－ 3.3% ＋1.4%

　※ ROA = Operating income/Average capital employed during FY

※

1

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tOperating Income AnalysisOperating Income Analysis for for FY2008 FY2008 & & FY2009FY2009

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsOn a yearly basis, sales quantity plunged into the negative, due to a sharp drop during the first half-year. On the other hand, cost-related structural reforms and cost reduction proved effective, resulting in an increase in income. The breakeven point also improved.

Price decline( 2.8 %)

¥ 51.7 billion(%) ⋅⋅⋅⋅ Operating income ratio

Lower of cost methodor market method ・Loss onvaluation at market value

Material price(including portion

passed on toproduct prices)+7 4( 1 1 %)

¥23.5 billion

+15.1(30.5)

+49.6Special

expenses

+7.4( 1.1 %)

+8.0

(60.7)[FY2008 Results] Effects of

structural reforms [FY2009 Results]

+48.5FOREX

Sales quantity (7.7)

(Average rate¥101/$ → 93)

Actuarial differences

2

(1.5) Cost reductions, etc.


Operating Income AnalysisOperating Income Analysisfor FY2009 Forecasts in Interim Announcement & FY2009 Resultsfor FY2009 Forecasts in Interim Announcement & FY2009 Results

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

The automotive market recovery was much better than expected, resulting in increased sales quantity and accelerated cost reduction and structural reforms. As a result, operating income came to 51 7 billion yen 18 7 billion yen above the figure announced mid-year

+1.1( 2.8 %)

to 51.7 billion yen, 18.7 billion yen above the figure announced mid-year. (%) ⋅⋅⋅⋅ Operating income ratio ¥51.7 billion

+6.9

(1.6) (0.7)

FOREX(Average rate¥101/$ → 93) Actuarial

differences

Effects of structural reforms

+12.4

( ) (0.7)

Cost reductions, etc.

12.4

¥33.0 billion Price decline

Material price(including portion

passed on toproduct prices)

+0.5

( 1.8 %)

+0.1Sales quantity

[FY2009 Results][FY 2009 Forecast

3

[ ][(Interim Announcement)]

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tEffects of Structural Improvement Measures for FY2009Effects of Structural Improvement Measures for FY2009

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsThe effects of structural improvement measures amounted to 49.6 billion yen, well above the estimated figures announced at the beginning of the year and at mid-term, thanks largely to reduced expenses and production base reorganization. (Figures announced at the beginning of the year: 47.4 p p g ( g g g ybillion yen, at mid-year: 48.5 billion yen)

1st Half 2nd Half Year Total

(¥bn)Result

Forecast in Interim

AnnouncementResult

Forecast in Interim

AnnouncementResult

Announcement Announcement

Workforce Reduction 13 4 14 2 13 2 27 6 26 6Personnel cost reduction 13.4 14.2 13.2 27.6 26.6

Reduced expensesReduced expensesProduction base reorganizationImpairment, etc.

9.8 11.1 13.2 20.9 23.0

Total 23.2 25.3 26.4 48.5 49.6

4


FY2009 Consolidated Results OverviewFY2009 Consolidated Results OverviewFY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

Compared to FY2008, progress in structural improvement and cost reduction increased FY2009 operating income, mainly in the Automotive and Electronics segments. In comparison with the figures announced at mid-year, income increased in the Automotive segment thanks to demand recovery and cost reduction, while the target was not achieved in the Information and Communications segment.

2,122.02,200 110

120Net Sales

(¥bn) Net Sales Information & Communications

Electric Wire & Cable,Energy

Automotive Electronics

Industrial Materials, etc. Eliminations

y , g gOperating

Income

(¥bn)

917.1

1,800.01,836.4

1 600

1,900

80

90

100

275 0

775.0 816.6

51.71,300

1,600

60

70

80

・・・・・・・・・

・・・・・・・・・182.9

165 0 165.1

275.0

285.0 271.2

33.0

34 5700

1,000

40

50

Operating income

536.1

405.0 412.5

165.0

23.5

1 15.0

6.1

3.66 5

34.5

17.0400

700

20

30

Industrial

income

1 2008年度に償還予定の第6回無担保転換社債が2007年3月31日時点で473億円あり、当該転換社債の普通株式への転換による影響を加味している

282.1 225.0 228.22.4

8.9 7.9

1.1

0.5

0.94.5

4.94.5

6.5

-200

100

-10

0

10

(71.2) (55.0)0

Eliminations(57.2) (0.1)

Materials

FY 2009 Forecast FY2009 ResultsFY2008 Results

5

200 10

Operating income ratio 1.1% 1.8% 2.8%

FY 2009 Forecast(Interim Announcement)

FY2009 ResultsFY2008 Results

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tFY2010 Consolidated ForecastFY2010 Consolidated Forecast

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsIn FY 2010, mild demand recovery is expected to continue, resulting in net sales of 2 trillion yen and an operating income of 100 billion yen.

P diti f f t FOREX ¥90/$US ¥125/€

FY2009 FY2010 % growth

Preconditions for forecast: FOREX : ¥90/$US, ¥125/€Copper : ¥0.65 million/t （LME 6,500 $US/t）

(¥bn) Result ① Forecast ② （②－①）／①

Net Sales 1,836.4 2,000.0 ＋9%

Operating Income 51.7 100.0 ＋93%

Ordinary Income 68.2 120.0 ＋76%

60 0 109%Net Income 28.7 60.0 ＋109%

Capital Expenditures 73.3 110.0 ＋50%

Depreciation Expenses 103.8 100.0 (4%)

R&D Expenses 72.3 75.0 ＋4%

ROA 3.6% 7.1% ＋3.5%

ROE 3.3% 6.5% ＋3.2%

※

6

※ ROA = Operating income/Average capital employed during FY


Operating Income Analysis for FY2009 & FY2010 Operating Income Analysis for FY2009 & FY2010 FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

An operating income of 100 billion yen and an operating income ratio of 5% are expected as a result of demand recovery, mainly in the Automotive and Electronics segments, and further cost reduction.

¥100.0 billion( 5.0 %)

(%) ⋅⋅⋅⋅ Operating income ratio

+36 3

( 5.0 %)

(3 8)

+36.3

¥51.7 billion

+2.5

Price decline

FOREX（Average rate¥93/$ → 90）

(3.8)( 2.8 %)

+53.9(38 1)

Price declineActuarial differences

Cost reductions, etc.

(38.1)Material price

(including portion passed on to

product prices)

(2.5)

[FY2009 Results] [FY2010 Forecast]

Sales quantity

7

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tFY2010 Financial Forecast OverviewFY2010 Financial Forecast Overview

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsMild demand recovery is expected to continue, mainly in the automotive and electronics markets. In the Information and Communication segment, on the other hand, decrease in sales and income is anticipated, since Commuture Corp. will become an equity method affiliate as of the second half-year.

210.02,122.0

2,000.0

3,000.02,500 150

Information & Communications

Electric Wire & Cable,Energy

Automotive Electronics

Industrial Materials, etc. EliminationsNet Sales Net Sales(¥bn)

Operating

Income

917.1915.0

100.0

1,836.4

,

2,000 120(¥bn)

275.0220.0

816.6

60.0

1 000

1,500

60

90

536.1412 5

455.0

182.9

165.1200.0

271.2

23.5

51.7

12.02.0

34.5500

1,000

30

60

Operating income

282.1 228.2 280.0

412.5

8.9

3.66.1

2 4

0.915.07.9

11.01.1 4.9

5.0

0 0(71 2) (57 2) ( )

ElectronicsIndustrial Materials

2.4

-500 -30

2012 Targets(VISION 2012)

(71.2) (57.2) (70.0)

FY2008 Results FY2010 ForecastFY2009 Results

Eliminations(0.1)

Industrial Materials

8

Operating income ratio 1.1% 2.8% 5.0% 7.0%

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tCapital Expenditures and Depreciation ExpensesCapital Expenditures and Depreciation Expenses

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsIn FY 2009, a year-on-year decrease was seen in both capital expenditure - minus 58.3 billion yen (minus 44%) - and in depreciation expenses - minus 4.4 billion yen (minus 4%). In FY 2010, capital expenditures will increase to 110 billion yen, to accommodate increased production, while depreciation expenses will drop to 100 billion yen

140.0

depreciation expenses will drop to 100 billion yen.

119 9 121.9131.6 (58.3)Capital Expenditures Depreciation Expenses(¥bn)

69 6100.0

120.0

99.8106.9 108.2

100.0

119.9 121.9

103.8110.0

69.1 72.9

69.6

48.080.0 73.3

Automotive

10 9

12.09.8 7.5

9.1

12 9

21.029.6

40.0

60.0Information & Communications

19.3 21.1 22.6 17 0

7.8 9.518.3

15.510.0

13.9 10.96.7

14.012.9

20.0Electric Wire & Cable, Energy

Industrial M t i l t

Electronics

19.38.6 17.0

0.0

FY2006 FY2007 FY2008 FY2009 FY2010 Forecast

Materials, etc.

9

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tCash Flow and Financial Constitution Reinforcement Cash Flow and Financial Constitution Reinforcement


In FY 2009, free cash flow was 98.7 billion yen, balance of interest-bearing debt was 355.6 billion yen, and shareholders ’ equity ratio was 46.6% at the end of March 2010. In FY 2010, FCF is expected to remain positive. The financial constitution will be further reinforced

200

220Cash flows from operating

Cash flows from investing activities

p pso as to achieve the target shareholders’ equity ratio of 50% in Vision 2012.

(¥bn)

204 6160

180p g

activitiesinvesting activities

(126.4)204.6

171.6 100

120

140

Free Cash Flow (161.0)

(72.9) (115.0)

131.0 168.5

98 7

170.0

60

80

100(131.2)

78.2

7 5

98.7

55.0 20

40

(0.2)7.5 0

FY2006 FY2007 FY2008 FY2009 FY2010 ForecastInterest-bearing debt (¥bn) 456.4 415.5 405.5 355.6 295.0

10

Interest bearing debt (¥bn) 456.4 415.5 405.5 355.6 295.0

Shareholders’ equity ratio 41.8% 44.1% 46.1% 46.6% 49.5%


Realizing Vision 2012 (1)Realizing Vision 2012 (1) –– Group performance evolution Group performance evolution ––FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

O ti

After the bursting of the IT bubble and the Lehman Shock, the levels of operating income quickly recovered. To realize Vision 2012, business foundation reinforcement, efficiency improvement and new business development will be accelerated.

3003,000

Y2001 Y2008

Net Sales(¥bn)

Operating Income(¥bn)Net Sales and Operating Income

new business development will be accelerated.

2502,500

Bursting of the IT bubble Lehman Shock

2002,000Net Sales

1501,500

50

100

500

1,000 Operating Income Vision 2012

0

50

0

500

11

FY1999 FY2000 FY2001 FY2004 FY2008 FY2009 FY2010FY2002 FY2003 FY2005 FY2006 FY2007 FY2012 Forecast


Realizing Vision 2012 (2) Realizing Vision 2012 (2) –– Getting back on the growth track Getting back on the growth track ––FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

GloriousNew Markets

GloriousExcellentCompany

2 Developing in new markets (global markets)2. Developing in new markets (global markets)⋅ Actions for newly emerging economies ⋅ Capturing demand related to infrastructural development FY 2012 targets

Vision 2012

Sales: 3 trillion yenOperating income:

210 billion yenROA: 10 0%

3 Entering new domains

ROA: 10.0%Raising Our

Global Presence3. Entering new domains

1. Pursuing further internal solidification Strengthening Our

Leading T h l i

⋅ Plan actions in environment and other new technological domains E t b i t

New

Technologies⋅ Reinforce manufacturing capabilities ⋅ Review and reform cost structure

⋅ Enter new business segments

12

domains


Realizing Vision 2012 (3)Realizing Vision 2012 (3) –– Actions for achieving Vision 2012 goals Actions for achieving Vision 2012 goals --FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

1. Lowering breakeven point by strengthening corporate constitutionReinforce manufacturing capabilitiesReinforce manufacturing capabilitiesTake action to improve working efficiency and productivity

2. Organizational reforms in preparation for new product development and new business creation

NEXT Center: plans future R&D strategies Power System R&D Labs.: integrates environment and energy-related

h ( t id t )research (smart grid etc.) Automotive Technology Planning Division:

promotes new product/technological developmentpromotes new product/technological development in response to changes in the automotive market, such as expansion of newly emerging markets and popularization of eco vehicles

Planning and executing new strategies on a global scale, including alliances+13

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tGrowth Strategies: AutomotiveGrowth Strategies: Automotive


1,199.41,200 100

Sales/Operating income (billion yen) Major goals and current achievements

Major goals(1) Capture 25% share of global wiring harness market

Operating incomeWiring harnesses Tokai Rubber & others (brake business transferred in FY07 H2))(¥bn)

917.1

816.6

868.0

915.074.5

60.0800

1,000

60

70

80

90

( ) p g gJapanese car makers: Steadily win orders for major car lines and global strategic models.Non-Japanese car makers: Capture 15% share by 2012.Strengthen sales structure and overseas bases; improvetransactions with local business groups

683.6

597.7

655.2

34.5400

600

30

40

50

60 transactions with local business groups.Capture the demand for emerging countries,：cost-efficient wire harnessesStrengthen orders ; respond to order shifts from other makers to us.

(2) Construct and optimize global production bases in response to demand.

231.4331.4

218.9

261.96.1

0

200

0

10

20

2007 2008 2009

(3) Develop new products and technologies.(small and lightweight, environment-conscious, networking, etc.)Weight reduction (Cu-SUS compound conductors, aluminum wiring, smaller connectors)Develop new products for HEVs ・EVs ： under-floor cables, high-voltage 2010 forecast

Wiring harness order quantity and global market share

p p g gcables, plug-in, reactors, battery-related parts, etc.Power & LANs: Optical wire harnesses

Current achievementsExpanded activities for acquiring orders from non-Japanese car makers

2,000

25Global Market

25%

22%23%

・Captured diverted orders from Europe and the United States・Started sales of connectors and a part of wire harnesses to

Chinese local carmakersAdjusting production systems and capacities according to demand, improving productivity per person.

1 000

1,500

nits/

year

15

20Others

Europe

21%22%

p g p y p pProduction bases for European market： Eastern Europe →North Africa Production bases for North America ： Mexico→ASEAN countriespromote the production shift to lower-cost areasReinforced development of and order acquisition for high-voltage wiring harnesses for HEVs and related products especially to Japanese

500

1,000

10,000 u

n

5

10

NorthAmerica

Asia

J

14

wiring harnesses for HEVs and related products, especially to Japanesecar makersDeveloped aluminum wiring harnesses0

2008 2009 2010 2012

0

Japan


Global Automobile Output Forecast Global Automobile Output Forecast FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

Worldwide passenger car output in2010 (calendar year basis) is estimated to be 64.4 million units, up 13% from 57 million units in 2009 (up 6% on FY basis).

As compared to the second half of 2009 (July – December), a similar yet mild recovery is expected.I t f hi l i i t d t b b i k i N th A i t d i A i i l di J b t l

Global Automobile Output ForecastGlobal Automobile Output Forecast CSMCSM Worldwide April 8, 2010Worldwide April 8, 2010

In terms of geographical regions, recovery is expected to be brisk in North America, steady in Asia - including Japan - but slowin Europe.

10 000 units

3,470 3,392 3,573

3,471 3,452 3,692 3,740

3 500

4,000

pp p ,p ,

Increase gradually

10,000 units

343 350

397

681 728 747

688 763 760 807

821 877 902 952

,

2,973

2,526

3,176 3,230 3,205

2 500

3,000

3,500 Asia and other areasChina

530 547

560

506 432 436 417

433 452 443 462

350

335

476

609 583 634 670 679

734 770 618

00

2,000

2,500

Japan

1,126 1,046 1,172

877

767 863 871 774

894 831 940 906

317

432 417

1,000

1,500

Europe

789 721 698 566 348 510 580 574 653 613 672 651

0

500

2007/1‐6 2007/7‐12 2008/1‐62 2008/7‐12 2009/1‐6 2009/7/12 2010/1‐6 2010/7‐12 2011/1‐6 2011/7‐12 2012/1‐6 2012/7‐12

North America

15

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tWiring Harness Order Forecast Wiring Harness Order Forecast


Following recovery in automobile demand, taking the orders received during the first half of FY 2008 (April-September 2008) as 100

Wiring Harness Order Forecast

2008) as 100, the FY 2010 annual average is estimated to be 107, up 15% from FY 2009's annual average of 93 (FY year basis).

As compared to the second half-year of FY 2009 (October 2009 – March 2010), an increase of some 6% is forecast, above the market-wide growth level, thanks to orders shifted from other companies and sales expanded to

J t knon-Japanese automakers.

101105 109Man-hour (KMH)

basis100

7384

101basis

Overseas

FY 2009 average 93

FY 2010average 107

orders

Domestic

2005 2006 2007 2008 1st H 2008 2nd H 2009 1st H 2009 2nd H 2010 1st H 2010 2nd H

Domestic orders

16NB: Basis not including correction of three months' displacement due to account settlement

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tActions for Newly Emerging Markets: ChinaActions for Newly Emerging Markets: China


In FY 2009, China saw a marked increase in the number of new automobiles sold (13.64 million vehicles, up 45.4%),despite the orld ide a to market shrinkage

Number of new automobiles sold in China

1 600 1 50010,000 units/year

despite the worldwide auto market shrinkage. China has become the world's largest auto market. In FY 2010, sales volume is expected to pass the 15 million mark (+10%; China Association of Automobile 1,200

1,400

1,6001,364

1,500

+10.0%+45.4%

Manufacturers estimate).

600

800

1,000

Reinforce production capabilities in China

938879

722

0

200

400 Volkswagen, Hyundai and Japanese-affiliated automakers, our main customers, have announced their plan to reinforce their production capabilities in China.

0

Y2006 Y2007 Y2008 Y2009. Y2010 Forecast

We also promote production capability reinforcement in China, including new plant construction, to expand orders.

Sales expansion activities in China China, including new plant construction, to expand orders.

Expand sales to American, European and Japanese-affiliated automakers for their strategic models

Further reinforce customer responsiveness (open new sales ffi t )

Develop low-price harnesses

office etc.). Expand sales to Chinese automakers

Supply certain types of harnesses, mainly those that local suppliers cannot handle; full-range supply will require

Review overly sophisticated portions of products, focus on satisfying basic performance and functions. Achieve major cost cuts for dies and component

17

pp ; g pp y qfurther cost reduction. materials.

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tActions for Cost Reduction Actions for Cost Reduction


Further accelerate assembly process simplification and efficiency improvement; VA and other cost-cutting activities.Also focus on mid- and long-term production optimization, and next-generation assembly line modification (automation).

Accelerate production optimization

Accelerate production relocation to low-cost regions in the global manufacturing network (66 overseas manufacturing bases) and in consideration of market, production scale, labor cost standards, exchange rates, etc.A ti f f t i b i Chi d S th t A i (f J d N th A i k t ) d i Af iActive use of manufacturing bases in China and Southeast Asia (for Japanese and North American markets) and in Africa (for European market), leaving development and mother plants in Japan

AfricaRegional output (Unit basis)Japan

8%Europe

17%

Africa5%

Japan4%

Europe9%

Africa11%

g p ( )

Asia56%

Asia65%

The Americas14%

The Americas14%

Promote automation for next generation manufacturing

2008 Result 2012 Target

Trial automation

Promote automation for next-generation manufacturing

Focus on full-capacity use of existing automation equipment and next-generation assembly line

18

100% automatic insertion In-line inspection

development, so as to ensure cost competitiveness and realize efficient factory space.


Priority Themes in New Technological Development Priority Themes in New Technological Development in Response to Automobile Market Changes in Response to Automobile Market Changes


Telematix Smart grid Promote product development and sales expansion in markets where integration of SEI Group

Roadsidecommunication device

Traffic control ITS system

where integration of SEI Group technologies proves most effective, such as information& communication, electric

Traffic information

Safety, traffic information

Vehicle information

HEVs key componentsCharging

wire, equipment and materialsand energy.

Power supplyGateway

SoftwareGateway

LAN (optical etc.) HEVs key components (including those for EVs) and related components using specific materials

C a g gconnector(PLC, etc.)

Power supplyequipment

Wireless

Body ECU

Software

Automobile interior infrastructure and related components using specific

Gasoline engine

Power supply system

Invertor Booster convertorMotor Battery

W/H (use of aluminum etc.)components using specific W/H and software

Automobile exterior

Radiation shield

M i Battery infrastructure and related components making use of ITS, communication and wireless devices

High-voltage W/H

Reactor Power module Magnet wire

Celmet

19Items circled by dotted line are under development.

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tGrowth Strategies: Information & CommunicationsGrowth Strategies: Information & Communications


400 30

Sales/Operating income (billion yen) Major goals and current achievementsMajor goals(1) Enhance price competitiveness and reduce costs.(2) Capture overseas demand for broadband- and FTTH-related products and expand NB: From FY 2010 2nd half-year,

Fiber ・Cable/Accessories

CommutureAccess network equipment

Sales(¥bn)

Others

Operating incomeOptical & Electronic devices (including Sumitomo Electric Device Innovation from 2009) (¥bn)

275.6 271.2

220 0

275.0300

20

25

( ) p p pbusiness globally.

(3) Expand share of optical communication components; improve and expand 10G product range; develop 40G/100G products.

(4) Increase sales of wireless communication electronic devices; improve and expand GaN-based product range.

(5) Develop and expand sales of next-generation network (NGN) equipment and wireless

y ,Commuture Corp. will be removed from consolidated accounting and treated as an equity method affiliate.

35.7 52.143 0

30.947.9

87.1 79.0 77.8

80.133.7

220.0

200

10

15

communication-related products.Current achievements

Optical fiberCapturing demand in newly emerging economies (China, India, Southeast Asian countries etc.) to compensate for declining demand in JapanPromoting optical fiber joint venture with the local Chinese Futong

32.5 31.6

86.6 81.4 77.2

37.0

43.0

29.4

51.2

25.3 22.3

5.0 3.62.0

8.1

0

100

0

5

Smooth startup of an optical fiber preform manufacturing company in Hangzhou in September 2010Promoting expansion of optical cable sales with Opticable, (Nexans’ subsidiary in Belgium, investment made in Dec. 2008)

Optical equipment Reorganizing manufacturing bases in Japan, reinforcing sales capabilities (merger of T k i d S id Hi h P i i i J l 2010)

2008 20092007

NGN-related product sales forecast

Toyokuni and Sumiden High Precision in July 2010)Optical & Electronic devices

Promoting integrated operation, including technical fusion and manufacturing base reorganization, while Sumitomo Electric Device Innovations Inc. (SEDI; a wholly owned subsidiary established in August 2009 following the 100% acquisition of Eudyna Devices as a subsidiary in April 2009) serves as a development and manufacturing centerOptical devices: accelerating competitiveness reinforcement and product lineup

2010 Forecast

146 NGN-related FY2007 = 100Changes

Optical devices: accelerating competitiveness reinforcement and product lineup expansion of 10G products, drawing on high-end Eudyna Devices products; intensifying efforts for 40G/100G productsElectronic devices: Launching high value-added products such as GaN and inter-node communication MMIC devices, with focus on their productivity improvement

Access network equipmentWith NGN related investment decreased efforts are focusing on sales expansion of80

120

160

7340

NGN-service

100

146

120

82

investment is expected to decrease

H t k With NGN-related investment decreased, efforts are focusing on sales expansion of NGN-based terminals, wireless communication-related products and other new products, and on the development of next-generation high-speed communication devices for NGN.Focus on development in overseas growth markets; sales expansion of GE-PON etc. mainly in Asia

Commuture0

40

80

222 32 24

5148

2898

30

NGN‐related products

service launched in March 2008

Home network appliances

Broadband access equipment

20

CommutureOctober 2010: Integrate management through a holding company to be established with Daimei Telecom Engineering Corp. and Todentsu Corp.

2007 2008 2009 2010 Forecast


Establishing an Optical Fiber Cable Manufacturing Establishing an Optical Fiber Cable Manufacturing System in China System in China

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecastsyy

Improve manufacturing bases across China to better respond to growing demand by further pursuing alliance with Futong Group

P f f t i i Chi ( ti h d l d t i S t b 2010

Chengdu Area

Preform manufacturing in China (operation scheduled to commence in September 2010by Hangzhou SEI-Futong Optical Fiber Co., Ltd.) JV with Futong

JV with Putian

Chengdu SEI-FutongOptical Cable Co., Ltd.

SEI: 49%・Fiber drawing

Worldwide demand in 2009: 170 million kmf

Beijing・Cable manufacturing

・Began operation in Jan. 2009 China 45%

Europe 10%

Japan 5%India 6%

Others 21%

North

ShanghaiE t Chi AE t Chi AChengdu

America 13%Chengdu ZhongzhuOptical Fiber Co., Ltd

SEI : Putian = 40 : 60・Fiber drawing

Our estimate

East China AreaEast China AreaSouth China Area

g

Hangzhou SEI-FutongOptical Fiber Co., Ltd.SEI ： 51%

Hong Kong SEI-Futong Holdings Ltd

・Begin operation in Sep. 2010

SEI ： 51%・Preform manufacturing・Fiber drawing

Shenzhen

Hong KongTranstech OpticalSEI Optical Fiber andC bl (Sh h )

Holdings Ltd.SEI： 49%

21

Begin operation in Sep. 2010as planned.

Transtech Optical Communications

・Fiber drawing

Cable (Shenzhen)・Fiber drawing・Cable manufacturing


Optical & Electronic Device Business Optical & Electronic Device Business FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

(2) Electronic device (wireless communication) market trends

(1) Optical component market trends (3) Company's optical & electronic device sales forecast

M$ Increase due to Eudyna Devices' becoming a consolidated subsidiary in April 2009¥bn

120

140 OtherSatellite etc.

¥bn

Shrunk due to worldwide recession

Increasing Demand

33.730 9

47.951.2

40

50

60

80

100

120 MMIC for automobilesInter-node communicationCell phone stations 3G/LTE

30.9

10

20

30

20

40

60

Source: Ovum-RHK (February & March, 2010)Source: Company's estimate based on ABI Research and EJL Wireless Research

<Actions for Optical Components>

0

2007 2008 2009 2010 Forecast

0 2006 2007 2008 2009 2010 2011 2012 2013

Gradual market recovery → Market-level sales increase anticipated

for FY 2010

<Actions for Optical Components>Relocation of manufacturing base from Japan to China(a subsidiary in Suzhou, China)Promotion of local component purchase.

→ Counter stronger yen and achieve greater cost reduction<Company’s strategies>

Reinforce high value-added products

Achieve greater cost reductionO l ti f d ti t

→ Counter stronger yen and achieve greater cost reduction Synergy-based product development

→ Achieve higher speed (40G/100G); add higher functions (variable wavelengths etc.) etc.

<Actions for Electronic Devices>・ Overseas relocation of production to

counter stronger yen

・ Take advantage of synergy generated by former Eudyna Devices’ (present SEDI)

Focus on wireless communication market where high-performance devices can be put to maximum advantage

→ MMIC (monolithic microwave IC) etc. for cell phone markets in newly emerging economies

Ad d d t d l t i G N ( d hi h f t llit

22

y (p )becoming a wholly owned subsidiary Advanced product development using GaN (radar, high-frequency satellite

communication equipment etc.)

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tGrowth Strategies: ElectronicsGrowth Strategies: Electronics

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsSales/Operating income (billion yen) Major goals and current achievements

300 30

Major goals(1) Focus on products in growth business areas (cell phones, liquid crystal

Electronic wires FPCs Semiconductors Others Operating incomeSales(¥bn) (¥bn)

182 9

220.0

200.0200

250

300

20

25

30 ( ) p g ( p q ydisplays, storage devices and game consoles, etc.) and expand sales.

(2) Strengthen global sales and production structure, especially in emerging countries.

(3) Increase sales of high value-added products and reduce costs for mainstay products.

(4) Launch new products and develop new technologies

73.5

71.9

57.6

56.6

58.5

47.7

165.1

182.917.2

12.0

100

150

200

10

15

20 (4) Launch new products and develop new technologies.Current achievementsElectronic wiresSales expansion of products related to digital appliances such as flat-screen TVs.

69.854.9 46.7 53.7

16.212.5

19.813.9

58.256.5

1.1

4.950

100

5

10 Smooth startup and sales expansion of tab leads mounted for lithium-ion batteries in automobiles (FC)Captured demand for products for electronics in China (halogen-free electronic wires, Sumicard, etc.)Sales expansion in automobile and medical fields

0 0

2008 2009 2010 Forecast

Sales of ultra-fine coaxial cables, FPCs and semiconductors

2007FPCsStrengthened overseas sales structure and expanded sales to non-Japanese customers.Expanded sales of high value-added products for smartphones and HDD,game consoles, etc.

138

172 167 174207

150

200

250 Expanded sales of surface–mounted and modularized products.Cost reductions through shifting upstream processing overseas (ex. China)SemiconductorsGaN substrates: expanded sales for Blu-ray applications; expanded application of high-power LEDs to more appliances and expanded sales.

(FY2005 figures = 100(FY2005 figures = 100))

31 43 3919 20

48

74112

130 134163100

50

100

150 application of high power LEDs to more appliances and expanded sales.Accelerated development and early commercialization of GaN substrates for Green LDs.Sales expansion and market share increase of GaAs for cell phones

OthersPromoted microfiltration water treatment membrane module business.

FPCs

Ultra-fine

23

21 21 21 15 21 24

3122 19 20

020052005 20062006 20072007 20082008 20092009 2010 Estimate2010 Estimate

Developed the Chinese market. Expanded metallic nanosphere business.

Ultra fine coaxial cablesSemiconductors

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tFPC : Initiatives and AchievementsFPC : Initiatives and Achievements


1 2601,3701400

1600 Million units/year 73.5 80

Sales forecast for FPCsWorldwide output forecast for cell phones

( ): increase/decrease % from previous year (+26%)

¥Bn/year

1 047 980 1,030 1,090

1,180 1,1601,260

,3 0

600

800

1000

1200

1400

Cell phones 40 949.6

58.5 56.5 58.2

0

60

70 ( ): increase/decrease % from previous year ( )

(+3%)

133 180 230 280

1,047 980

0

200

400

600

'08 '09 '10 '11

Smartphones 26.4 31.9 25.0 29.2

40.9

30

40

50 2H

'08 '09 '10 '11

<Cell phone market environment>The number of cell phones sold worldwide in FY 2009 dropped from the previous year for the first time since FY 2001. I FY 2010 9% i i t d (N ki ’ f t l d

23.2 26.6 31.5 29.0 32.6 10

20

30

1H

In FY 2010, a 9% increase is expected (Nokia’s forecast on a calendar year basis: +10%) Nearly 30% increase in high-performance cell phone (smart phone) market

0

FY06 FY07 FY08 FY09 FY10FY 2009 worldwide smart phone What to do:

Oth

FY 2009 worldwide smart phone market shares Focus on high value-added products

The smart phone market is dominated by the top three manufacturers (see table left; over

What to do: <New company established in China (April 2010)>Name : Sumitomo Electric Interconnect Products

(Shenzhen), Ltd. Location : Bao An, Shenzhen Scale : Approximately 5 000 persons as FPC staff

Nokia 39%

RIM Apple 14%

Others 27%

manufacturers (see table left; over 70%) ⇒ Increase sales to these three

companies Cut costs by integrated

d ti i Chi

Scale : Approximately 5,000 persons as FPC staff Objectives: Sales expansion to local customers in China,

cost reduction Integrated production scheduled for commencement in summer 2010 (to be realized b i f i i d i

24

20%14% production in China

Promote high-density mounting modularization

Source: Nikkei Inc.

by conversion from commissioned processing system)

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tElectronic Wire Business Electronic Wire Business


57.6 56.6 70 80

Electronic wire sales forecastFY 2009 → 2010: sales +19%Automotive use :expected to increase as worldwide automobile production

volume picks up Consumer appliance use:demand increase expected, mainly for flat-screen TV sets

¥bn

25.7

27.7 28.0

47.7

2030 40 50 60 2nd

Half

1st Half

and related equipment Cell phone/medical use :[cell phone] year-on-year increase expected, although

demand dropped from peak level due to decreased number of overseas models requiring fine coaxial cables and shifting to FPC ; [medical use] steady growth

31.9 20.0

28.6

0 10 20

FY2008 FY2009 FY2010 Forecast FY 2010 electronic wire sales breakdown by use

to FPC ; [medical use] steady growth

Heat-resistant irradiation wireWire with excellent heat resistance;

used in a wide variety of areas

Fine coaxial cable (cell phone, medical use)Used for cell phone and PC hinges; in medical equipment

such as automobileengines, EV motors

and sensors Heat-resistant irradiation wire AutomobileUse

Cell phone

hinges; in medical equipment, ultrasonic diagnostic unitsensor cable etc.

Fine coaxial cables

Medicine

Use

Consumer appliance

Flat-screen TV Tab leadEco Wire, Sumicard etc. Used in a range of

products such as flat-screen TV sets, game terminals, DVD (Blu-ray) players and video cameras

Tab leadFor lithium ion

batteries; futureappliance, ( y) p y batteries; future

demand increase is

expected following emergence

of the electric car market

25

Tab lead

Sumicard Eco Wire

of the electric car market.

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tGrowth Strategies: Electric Wire, Cables and EnergyGrowth Strategies: Electric Wire, Cables and Energy


Sales/Operating income (billion yen) Major goals and current achievements

Major goalsCopper wire rods Operating incomeSumitomo Densetsu Co., Ltd.

700

45

50

(1) Continue structural reforms in mature business areas and accelerate cost reductions.

(2) Capture active energy-related demand in overseas markets suchas China, India and the Middle East.

( ) f

Magnet wires

Electric power cables Nissin Electric Co., Ltd.Sales(¥bn) Others (¥bn)

147.5102 3

594.8

536.1

500

600

40

45 (3) Develop more products for automobile and electric industries.(4) Explore new business opportunities in the fields of energy/resource

conservation and environmental protection.

Current achievements

62.258.4

43 458.5

68.0

102.3455.0

412.5

400

500

30

35 Captured Asian and Middle Eastern demand for electrical infrastructure and expand production bases globally・Joint venture established by J-Power Systems Corporation (50%-

owned equity method affiliate) and local capital in India (start ti i 2011)

147.891.3

42.6

43.4

110.1

71.418.730020

25 operation in 2011); ・another JV established in Saudi Arabia (start operation in 2011)Development and sales expansion of products for recyclable energy (solar, wind, etc.) and electric-efficient infrastructure Development and commercialization of new magnet wires for high

97 0

110.0137.3

131.5119.9

7.9

11.0

8.9

100

200

10

15Development and commercialization of new magnet wires for high-strength and high-voltage applications (for HEVs, etc.)Reduced the cost of magnet wire and moved into the blackIncreased production capacity for Celmet porous metal used in batteries for hybrid cars

37.9 32.9 45.3

62.1 109.7 87.297.0

24.10

100

0

5

2008 2009 2010 Forecast

batteries for hybrid carsExpanded sales of air cushions and trolley wire in response to increasing demand for railway infrastructureCommercialization of thermal-control devices for electronics sectorR&D and practical application of superconducting cables and 2007

26

& p pp p gapparatuses

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tGrowth Strategies: Industrial MaterialsGrowth Strategies: Industrial Materials

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsSales/Operating income (billion yen) Major goals and current achievements

Major goals(1) Accelerate global business growth (Global Top 3 products)

Special steel wires

H d t i l

A.L.M.T.

Oth

Operating income

301.9

350 50

(1) Accelerate global business growth (Global Top 3 products).(2) Strengthen core technologies (new materials and product development,

processing technologies, etc.) and pursue further differentiation.(3) Develop more products for industries other than automotive,

such as aviation and energy.

Hard materials OthersSales(¥bn) Sintered parts (¥bn)

83.0

76 0

282.1

228 2

280.0

250

300

40

(4) Secure stable supply of tungsten and other raw materials.Current achievements

Special steel wiresAcquired prestressing wire demand for infrastructure (bridges, airports, etc.) Integrated production and cost reduction of spring OT wires and saw wires

73 7 58 5 58 3

76.0

66.6

74.2228.2

30.3

200

250

30

Integrated production and cost reduction of spring OT wires and saw wiresExpanded sales of saw wires for solar cellsExpanded overseas sales and cost reduction of steel cordsGlobal business development in partnership with Sumitomo Rubber IndustriesHard materials

45.235.1 39.2

73.7 58.5

41.9

58.3

15 0

15020

Hard materialsStrengthened emerging countries’ sales; established branches in China (Dalian, etc)Integration of production centers for TA and CBN and consideration ofestablishing new overseas manufacturing bases Sales expansion into new areas outside the auto industry

59.8

45.6

29.0

37.932.3

15.0

50

100

10

Sales expansion into new areas outside the auto industry (aviation, energy, railways, etc.)Continued joint research with Nagoya University concerning recyclingtechnologies for cemented carbide tools

A.L.M.T.Sales expansion and cost reductions for liquid crystal target materials

40.266.9 58.4

70.42.4

0.9

0 02010 Forecast2008

Sales expansion and cost reductions for liquid crystal target materials, heat sinks and precision wire saw (bonded abrasive)Sintered partsGlobal production optimization （integration of domestic production bases,cost reduction, and beef-up of Chinese manufacturing bases, etc.)20092007

27

Developed environment-conscious products (VVT, CVTs, etc.)


Construction of Global Sales and Production Bases Construction of Global Sales and Production Bases for Hard materials for Hard materials

FY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 ForecastsEstablish a global sales and production bases in view of overseas sales expansion

(Overseas sales ratio ; FY 2009: 49% → FY 2012 target: 55%) Progress: Established new sales bases in China (Dalian, Chongqing)

C id tti d ti b t t t d l d t l b ll: Consider setting up mass-production bases to cut cost and supply products globally : Established Tungsten recycling center in Toyama (Japan) for resource conservation, environmental protection

and cost reduction: Commenced production of multi-drill in India

H d i l l b l d i b

SHF (Germany, Czech Republic)

SCM (USA)

Design Engineering Center established to lead design development

EuropeEurope

North AmericaNorth AmericaHard materials global production bases (as of April 2010)

Master Tool (USA) Design Engineering Center established to lead design development

JapanJapan

SEI (Itami)

Mother plants in Japan

Manufacturing bases for local

NSS (Hokkaido)TSK (Mie)QS (Saga)

AML (Hyogo)

SCT (China)

Tianjin areaTianjin area

Manufacturing bases for local markets

New sales base (opened ithi 1 )

Manufacturing base

AML (Hyogo)

India India Southeast Asia Southeast Asia Shanghai area Shanghai area

Existing sales base

within 1 year)

28

SPT (China)MTLL (India) SHT (Thailand)

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tSaw Wire BusinessSaw Wire Business


7370

801,000 t / year

Worldwide saw wire demand forecast Semiconductor and solar cell

Saw wire products

5267

38

46

57

30

40

50

60For Semiconductors

For Solar cellssilicon ingot cutting wire; saw wire for solar cell use is expected to

1334 41

5216

0

10

20

Y2005 Y2008 Y2009 Y2010 Y2012

use is expected to increase following growing renewable energy demand. * Loose abrasive type: Special Steel Wire Bonded abrasive type: A.L.M.T.

Mainly used for semiconductors

Expand sales for solar cell silicon ingot cutting.･Expand sales of loose abrasive type.Secure demand overseas (especially in Asia)

Y2005 Y2008 Y2009 Y2010 Y2012Saw wire use (example)

viou

sly

utur

e

in Japan ･Secure demand overseas (especially in Asia).・Capture new demand with bonded abrasive type.

Saw wire sales forecast ¥bn / year

Prev Fu

Silicon

6.4

4

5

6

7For Semiconductors

For Solar cells

¥bn / year

Siliconingot

Cut section(rough rendition)

Wafer

1.1 1.4 1.6 1.8

4.72.02.5

2.7 2.7

0

1

2

3

(*Notes) Loose abrasive type: item to be processed is polished when abrasive particles roll over item surface; at

29

0FY2006 FY2007 FY2008 FY2009 FY2010 Forecast

( ) yp p p p ;present, most solar cell silicon ingot cutting employs this type.Bonded abrasive type: item is polished with abrasive particles fixed onto wire; this environmentally friendly type is highly durable; future demand increase is expected for solar cell-related use.

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tResearch & Development Research & Development -- Developing new businesses by utilizing core technologies Developing new businesses by utilizing core technologies --


Thin film-type wires

New composite material of CBN and ceramics

Nano-polycrystalline diamonds Challenge to innovate materials and systems technologies that impose a lower

environmental burden

Shipboard superconducting motors

Automotive components for eco cars

Superconducting coils

Tungsten recycling technologies

Electric Wire & Cable, Energy Industrial Materials

High-performance thin motors

p

High-density battery materials Thin film batteries

Bismuth-based superconducting wireEnvironment and

Resources

Raising Our Global

Material innovation for next-generation safe

and environment-friendly cars Water treatment systems (including ballast water)

Near-infrared broadband

Reactors for HEVs/EVsWiring harness lightweight technologies

Automotive optical LANsR t f HEV /EV

Electronics Automotive

Raising Our Global Presence,

Strengthening Our Leading

Technologies

Environment-friendly and resource-saving materials

innovation

Water treatment systems (including ballast water)HEV/EV-related technology

light source

Power devicesGreen laser

Magnesium alloys

Femtocell(ultra-small

wireless

Reactors for HEVs/EVs


LifeSafety/Security/

Mobile communication network

Magnesium alloyswireless base station)

Life Sciences Ubiquitous

Networking

Creation of non-communication b i tili i ti l

Product development aimed at creating

Magnesium alloys

GaN substrates

Blue-violet laser diode

Fiber laser High-function glass

Next-generation transmission technologies (40G ･100G)

Efficient wirelessamplifier

businesses utilizing optical technology

next-generation optical communication businesses

Expanded repeaters, ubiquitous terminals and

Wireless amplifiers and devicesVisual communication software

30

GaN substratesg gPON

Composition imaging system using near-infrared (NIR) light

Near-infrared camera

Photonic crystal fiber

Optical USB

Expanded repeaters, ubiquitous terminals andITS devices to respond to integration of

communications and broadcasting as well asintegration of wire and wireless

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tResearch and DevelopmentResearch and Development


New R&D Center "WinD Lab" (including laboratory and auditorium buildings) completed in April 2010, providing improved R&D environment

Improved R&D environment: R&D divisions previously scattered over the site are integrated, facilitatingImproved R&D environment: R&D divisions previously scattered over the site are integrated, facilitating interaction among divisions and researchers Shared use of facilities Reinforced communication and collaboration with external partiesSuch improvements are expected to encourage creative and efficient R&D.

Environmental considerations: 2900 m2 green zones on rooftop and unoccupied ground-level area; energy-saving design (target: 10% improvement from current level)saving design (target: 10% improvement from current level)

Laboratory building g

Auditorium building

緑地

31WinD Lab exterior view

緑地↑ New R&D Center "WinD Lab" completion ceremony,

April 28, 2010


Return to Shareholders: Dividend Amount & Payout RatioReturn to Shareholders: Dividend Amount & Payout RatioFY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

FY 2009: 9 yen for year-end dividend, 16 yen/share annually (as compared to 14 yen/share announced at beginning of year)

FY 2010: 18 yen/share expected following improved performance

25Yen per share

Annual dividend payment

20Intermediate dividend payment

¥17/share

¥20/share

¥18/share

¥16/shareMemorial dividend

¥18/share

79

2 1015

¥13/share

¥16/share

98

7

5

10

¥8/share

¥10/share

¥8/share

5 67

1011

79

4 45

5

4 45

0FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009FY2002 FY2010 Forecast

Net income

32

34.29 48.01 76.43 100.22 112.74(26.89)23.3% 20.8% 17.0% 17.0% 17.7% 82.6% 44.2%- 23.8%

21.78 36.19 75.64Net income per share (yen)Dividend payout ratio


Sumitomo Electric Group Corporate Social Responsibility (CSR) ActivitiesSumitomo Electric Group Corporate Social Responsibility (CSR) ActivitiesFY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

1. Establishment of Sumitomo Electric Group Social Contribution Fund "Sumitomo Business Spirit" and "Sumitomo Electric

Sumitomo Electric Group Basic Policies on Social Contribution

Examples of Sumitomo Electric’s Social Contribution Activities

pIn April 2009 Sumitomo Electric established a fund whose objectives are to support human resources development and research and studies. In Feb. 2010 It was authorized as a nonprofit foundation.

<Activities>・・・New activities in FY2010(1) M t t ib ti t d i it

Contributing to

improvement f

Respecting human

Attaching importance to

Group Corporate Principles" focus on the following:

(1) Monetary contributions toward university courses in addition to Tokyo Univ. and Osaka Univ. Invite entries from other universities

(2) Granting of scholarships for local students studying at overseas universities Expand scholarship recipients in addition to scholarship scheme for Sooshow Univ. Nanchang Univ. and the Thai-Nichi Institute of Technology.

of environment and society

human resources

importance to technology

g gy(3) Granting of scholarships for international students to study in Japan(4) Subsidies for primary, secondary and tertiary education in Japan and

overseas(5) Support for academic and research activities

Off h b idi t h d h

1. Implementing global-scale efforts toward human resource development, advancement of research and academic studies, and environmental conservation Offer research subsidies to researchers and research groups.

(6) Fostering of personal development of young people through support for sports, cultural activities and the arts

2. Established a special subsidiary and promoted the employment of disabledpersons

conservation.

2. Promoting community-oriented social contribution activities at Sumitomo Electric business locations around the world. persons

3. Systems for supporting employee involvement in social contribution activities4. Contributions to local communities5. Support for post-disaster restoration

Group wide donation for earthquake victims in Sichuan China (2008)

3. Providing ongoing support for employees' social contribution activities.

Group-wide donation for earthquake victims in Sichuan, China (2008), in Padang in Sumatra, Indonesia (2009), in Haiti (2010)

On the occasion of the 110th anniversary of its foundation (2007), Sumitomo Electric Group established its Basic Policies on Social

33

On the occasion of the 110th anniversary of its foundation (2007), Sumitomo Electric Group established its Basic Policies on Social Contribution. The Group promotes social contribution activities with a view to becoming a “Glorious Excellent Company."

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tFY2009 Results & FY2010 ForecastsFY2009 Results & FY2010 Forecasts

Appendix

34


New MidNew Mid--term Management Plan “Vision 2012”term Management Plan “Vision 2012”–– Leaping forward to become a Glorious Excellent companyLeaping forward to become a Glorious Excellent company


Glorious Excellent Company

“VISION 2007” Sales &Marketing

Portfolio: 5 business segments

Electric Wire & Cable, Energy Electronics

“VISION 2012”（Second 5-year plan)

FY2012 targetsSales: ¥3,000 bn

（First 5-year plan）FY 2007 targets (initial)Sales: ¥2,000 bnOperating income: ¥120 bnROA 8 0%

Marketing

CorporateStaffR&D Manufacturing

Industrial Materials


Sales: ¥3,000 bnOperating income:¥210 bnROA: 10.0％

“Strengthening of strategies”

Developing a profit-oriented growth portfolioROA: 8.0%“Gearing up for growth” Automotive

e e op g a p o t o e ted g o t po t o o

Bolstering our business structure based on full implementation of capital and financial strategies

Optimizing Group management worldwide

Growth StrategiesExpand overseas operations(manufacturing, R&D, sales, logistics).Create corporate alliances and expandbusiness in a strategic manner.

Be a global top competitor in “QCDD”(quality, cost, delivery and development).Exploit intellectual properties (IP).

Withd f d f i

Global Top 3 Targets

Raising Our Global Presence Strengthening Our Leading Technologies

g

Human resources development (SEI University)

Withdraw from underperforming non-core businesses and focus on core businesses.Achieve global Top 3 status in sales, technology and profitability.

• Sumitomo Business Spirit ・ Sumitomo Electric Group Corporate Principles

Human resources development (SEI University)

35

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tPrioritized Investment in Growth Areas: Capital ExpendituresPrioritized Investment in Growth Areas: Capital Expenditures


Target segments Priority measures

Wiring Harnesses・Respond to new orders. 131 6 (¥bn)

• Capital expenditures plan

Automotive

p・Rationalize investments.・Strengthen production bases in ASEAN and China.

Tokai Rubber・Strengthen overseas production bases.・Respond to new orders.

131.6

110.0

(¥bn)

Information & C i ti

・Increase production capacity in response to expandingdemand for optical fiber in China. I d ti f ti l & l t i d i

69.6

48 0

100

Communications ・Increase production of optical & electric devices.・Rationalize investments.

48.0 73.3

Electronics ・Strengthen FPC overseas production bases.・Rationalize investments.

12.0

9.1

12 9

21.0 29.6

50

Electric Wire & Cable, Energy

・Develop business in China and respond promptly to increasing orders by Nissin Electric Co., Ltd.

・Rationalize investments.

18.3

15.5 10.0

6.7 14.0 12.9

IndustrialMaterials

・Increase production of special steel in China and Japan.・Increase production of hard materials and sintered parts.

22.6 8.6

17.0 0

2008 2009 2010 (est.)

36

Materials・Rationalize investments.

( )

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tPrioritized Investments in Growth Areas: R&D ExpensesPrioritized Investments in Growth Areas: R&D Expenses


75 0 80 (¥bn)

Target segments Priority measures

・Environmental protection(HEVs/EVs)

・High-voltage harnesses・Thin-diameter（Cu-SUS）harnesses

• R&D expenses planMarket trends

73.0 72.3 75.0 80

Automotive(HEVs/EVs)

・Light weight ・Safety (sensors, cameras)・Computerization

・Thin-diameter（Cu-SUS）harnesses・Reactors for HEVs/EVs・Electric control units・Power distributors

・High-speed optical links/modules.

38.9 37.5 40.0

60 Information

&

・Higher backbone network capacity

・Expanded FTTH/wirelessaccess

g p p・Specially functional optical fiber・Optical wiring for Information equipment・High power optical applications・Optical access equipment, Wireless access equipment, IP terminal equipment,

40

Communications ・Integration of communications and broadcasting

・Development of new productsfor NGN and Green IT

q p , q p ,Image distribution equipment Power-saving technologies.

・ITS wireless communication equipment・Increased investment in Eudyna Device as a consolidated subsidiary

13.4 17.5 17.5

y

Electronics

・More compactness, highdensity in devices

・ Increased demand for power devices

・High-performance FPCs※

・High-density mounted parts/materials,・Lithium batteries, GaN/SiC/AlNM i ll

7.1 5.6 5.5

17.5 17.5

20 ・Light-weight・ Sophisticated semiconductor

equipment

・Magnesium alloys

Electric Wire & C bl E

・Energy -savingsE i t t ti ・High-temp. superconducting wires, cables, coils

4.0 4.1 4.5

9.6 7.6 7.5

0

Cable, Energy ・Environment protection High temp. superconducting wires, cables, coils

IndustrialMaterials

・High-precision machining ・Scarcity of rare materials

・High-performance carbide・Soft magnetic materials components・Nano-polycrystalline diamond toolsR h f t t li

37※ Flexible Print Circuit

2008 2009 2010 (est.)・Research for tungsten recycling

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tFY2009 Financial ResultsFY2009 Financial Results


FY2008 Y-o-YY-o-YFY2009

Sales and Operating income (OI) by business segment

Sales OI Sales OI Sales OI Sales OI Sales OI(\bn)

FY2008 Y-o-YY-o-Y

Result ① Forecasts in InterimAnnouncement ②

FY2009Results ③ ③－②③－①

Automotive 917.1 6.1 775.0 17.0 816.6 34.5 (100.5) 28.4 41.6 17.5

Information &275 0 5 0 285 0 6 5 271 2 3 6 (3 8) (1 4) (13 8) (2 9)Communications 275.0 5.0 285.0 6.5 271.2 3.6 (3.8) (1.4) (13.8) (2.9)

Electronics 182.9 1.1 165.0 4.5 165.1 4.9 (17.8) 3.8 0.1 0.4

Electric Wire &Cable, Energy 536.1 8.9 405.0 4.5 412.5 7.9 (123.6) (1.0) 7.5 3.4

IndustrialMaterials &

Others282.1 2.4 225.0 0.5 228.2 0.9 (53.9) (1.5) 3.2 0.4

Eliminations (71.2) 0.0 (55.0) 0.0 (57.2) (0.1) 14.0 (0.1) (2.2) (0.1)

Total 2 122 0 23 5 1 800 0 33 0 1 836 4 51 7 (285 6) 28 2 36 4 18 7

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Total 2,122.0 23.5 1,800.0 33.0 1,836.4 51.7 (285.6) 28.2 36.4 18.7

FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tFY2010 Financial ForecastFY2010 Financial Forecast


Y-o-YFY2009 FY2010

Sales and Operating income (OI) by business segment

(\bn) Sales OI Sales OI Sales OI Sales OI Sales OI

Automotive 816 6 34 5 455 0 29 0 460 0 31 0 915 0 60 0 98 4 25 5

2nd H Forecast Forecast ②Result ① 1st H Forecast ②－①

Automotive 816.6 34.5 455.0 29.0 460.0 31.0 915.0 60.0 98.4 25.5

Information &Communications 271.2 3.6 115.0 (3.0) 105.0 5.0 220.0 2.0 (51.2) (1.6)Communications

Electronics 165.1 4.9 95.0 5.0 105.0 7.0 200.0 12.0 34.9 7.1

Electric Wire &Cable, Energy 412.5 7.9 210.0 3.0 245.0 8.0 455.0 11.0 42.5 3.1

Industrial MaterialsIndustrial Materials& Others 228.2 0.9 135.0 6.0 145.0 9.0 280.0 15.0 51.8 14.1

Eliminations (57 2) (0 1) (35 0) 0 0 (35 0) 0 0 (70 0) 0 0 (12 8) 0 1(57.2) (0.1) (35.0) 0.0 (35.0) 0.0 (70.0) 0.0 (12.8) 0.1

Total 1,836.4 51.7 975.0 40.0 1,025.0 60.0 2,000.0 100.0 163.6 48.3

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FY2009 R lt & FY2010 F tFY2009 R lt & FY2010 F tForwardForward--looking Statementlooking Statement


This presentation contains various forward-looking statements that are based on current expectationsand assumptions of future events. All figures and statements with respect to the future performance,projections, and business plans of Sumitomo Electric and its affiliated companies constitute forward-p j p plooking statements. Factors that could cause actual results to differ materially include, but are notlimited to:

1 Market and economic conditions in the United States Europe Japan and other Asian countries1. Market and economic conditions in the United States, Europe, Japan and other Asian countries, especially increases and decreases in personal consumption and capital expenditures.

2. Fluctuations of currency exchange rates, especially between the Japanese yen and the U.S. dollar, the euro and Asian currencies.

3 Th bilit f S it El t i d it ffili t d i t ith id t h l i l3. The ability of Sumitomo Electric and its affiliated companies to cope with rapid technologicaldevelopment.

4. Changes in financial, management, environmental and other assumptions.5. Current and future laws and regulations in foreign countries involving trade and other activities.6. Changes in the market value of securities owned by Sumitomo Electric and its affiliated companies.

Please be advised that there are possibilities that actual sales and profits could be different from thosedescribed in these materials Sumitomo Electric and its affiliated companies are not obliged to updatedescribed in these materials. Sumitomo Electric and its affiliated companies are not obliged to updateand make public any forward-looking statements after releasing these materials.

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