Hitachi Cable News vol.372
72nd annual business report
From April 1, 2008 to March 31, 2009

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Special Report

Summary of business performance for fiscal 2009 and policies for fiscal 2010

Overview of business performance for fiscal 2009

The Hitachi Cable Group’s business performance in this consolidated fiscal year fell substantially from the previous consolidated fiscal year due to the strong impact of the global financial crisis that began last fall and of the resulting economic slowdown.

Net sales in this consolidated fiscal year totaled 493,151 million yen, showing a 13% decrease from the previous consolidated fiscal year. This resulted from factors such as the effect of rapid drops in copper prices, sluggish demand and falling prices centered on products for the semiconductor and automotive markets.

In the area of income as well, the Group reported an operating loss of 14,740 million yen and an ordinary loss of 19,974 million yen due to factors such as revaluation losses on inventories and a worsening revenue structure centered on the sophisticated materials business due to sluggish demand for products for the semiconductor and automotive markets.

In addition, Hitachi Cable recorded extraordinary losses including impairment losses and losses on disposal of fixed assets in connection with implementing business restructuring measures in response to the rapid worsening of business performance. It also considered the recoverability of deferred income tax, following revision of future plans, and included this in the corporate tax adjustments. As a result, net income showed a loss of 53,775 million yen.

Note: The above amounts have been rounded to the nearest unit.

A look at conditions by business segment shows that, in the wires and cables business, industrial cables and electric power cables were impacted by the slowdown in construction demand beginning in the second half of the fiscal year. Magnet wires were impacted by sluggish demand for automotive electronic components, while electronic wires and wiring devices felt the effects of sluggish demand for industrial equipment and consumer devices. Net sales for this segment as a whole fell by 15% from the previous consolidated fiscal year, to 253,028 million yen. The operating loss in this segment totaled 2,058 million yen.

In the information and telecommunications networking business, sales of optical submarine cables were strong, boosted by booming demand. Sales of wireless systems were strong for both digital-broadcasting relay stations and mobile phone base stations. In information networks, while the integration business performed consistently, sales of information and telecommunications networking devices were somewhat sluggish beginning in the second half of the fiscal year as a result of the economic slowdown. Net sales for this segment as a whole fell by 7% from the previous consolidated fiscal year, to 82,831 million yen. Operating income in this segment fell by 44% from the previous consolidated fiscal year, to 3,886 million yen.

In the sophisticated materials business, performance was sluggish due to the impact of decreased sales quantities and falling prices, in tape automated bonding (TAB) products centering on chip on film (COF) products for use in LCD panels, in addition to a massive drop in sales of compound semiconductors due to the effects of drastic inventory adjustments. Sales of auto parts were sluggish as well, strongly impacted by cooling demand centered on North American markets. Copper products saw a drop in sale prices due to a rapid fall in copper prices as well as sluggish demand, particularly for copper strips. Net sales for this segment as a whole fell by 13% from the previous consolidated fiscal year, to 177,822 million yen. The operating loss in this segment totaled 17,284 million yen.

Note: Sales figures by business segment in the text include internal sales or transfers between business segments.

Note: Graphs of sales by business segment are based on figures after removing internal sales and transfers between business segments.