During the consolidated fiscal year under review, real economy had suddenly deteriorated in the latter half of the fiscal year due to the financial crisis in the U.S., and the global economy experienced a simultaneous stagnation.

In the automobile industry, impacted by the global market slump, car production sharply dropped in the third quarter of the fiscal year. Regarding the domestic construction and housing industry, the demand stays low.

In order to adjust ourselves to the severe economic situations, from December 2008 onward, the Riken Group has been working on improvement of cost structure under the Emergency Cost Structure Reformation Plan, through which we took several profit-improvement treatments such as operational rearrangement, various cost-cut measures, postponing and canceling unurgent and unnecessary investments.

In spite of these efforts, negatively influenced by lessened marginal profit due to decreased sales and high raw material costs through the fiscal year, consolidated sales was 80,909 million yen, a 15.5% decrease from the previous year, operating income was 245 million yen, down 96.7% from the previous year, ordinary income was 482 million yen, down 94.5% from the previous year and net loss was 1,118 million yen.

The business situations that surround us will stay severe considering the continued global automobile market slump due to stagnated economy.

To cope with the unfavorable situations, we will try to improve our profitability through the Emergency Cost Structure Reformation by implementing additional rationalization and operational rearrangement. To prepare for the future recovery of the market, we will strengthen our competitiveness through the five pillars of measures: 1) manufacturing innovation, 2) quality improvement and quality management reformation, 3) high technological competitiveness, 4) enhancement of global operations, and 5) nurturing human resources, sound and transparent corporate organization.

The Riken Group has been working on hammering out our new mid- and long-term management vision. The essence of our new vision is 1) to enhance our technological/developmental capability adjustable to automobile markets' evolving requirements such as natural resources, ecology, economical efficiency, and 2) to create long-term management strategies and operational foundations adjustable to the next generation of technologies. Through the new vision, we will keep enhancing our corporate structure and corporate value.

In order to be reliable corporate entities, the Riken Group has been refining its corporate governance. We have been strengthening our management structure by which we can assume corporate social responsibility (CSR) for all the stakeholders such as customers, business partners, employees, share holders and regional communities, while elevating managerial efficiency and maintaining legitimacy and transparency.

In order to keep refining our internal control system, high level of awareness in each member of our organization is important. We will continually nurture human resources based on Riken's Ethics Principles and maintain corporate soundness and transparency.
We, as a member of the society, aim to maintain sustainable corporate growth and to contribute to sustainable development of our society forming mutual understanding and building good relationship with all the stakeholders.

June 2009

Noritada Okano,
President