Message From the President

Mitsuo Imai President and CEO

Due to the various economic and financial measures enacted in each nation, the world economy showed signs of recovery during the cumulative second quarter of this consolidated fiscal year (April 1 - September 30, 2009). Nevertheless, generally speaking, severe conditions persist. Due to the impact of these continuing harsh economic conditions, the business performance for the Hitachi Cable Group during the cumulative second quarter of this consolidated fiscal year showed sales of 170,284 million yen, operating losses of 5,321 million yen, ordinary losses of 3,784 million yen, and net losses of 4,850 million yen.

A segment-by-segment look at business conditions follows.

In the wires and cables business, declining construction demand led to lower sales in industrial cables and electric power cables. Sales of magnet wires were slow, with the exception of products for hybrid vehicles. Despite signs of recovery in electronic wires and wiring devices for certain products used in consumer electronics, demand remained sluggish in the primary markets of products for industrial equipment and machine tools. Overall sales in this segment fell by 43% from the same period of the previous fiscal year to 81,601 million yen. Operating losses in this segment totaled 1,620 million yen.

In the information and telecommunications networking business, sales of optical submarine cables remained strong. While wireless sales for the construction sector fell, sales were strong for products for mobile-phone base stations. In the information networks business, performance was strong for systems integration services but sluggish for information network devices. Overall sales in this segment fell to 32,431 million yen, down 22% from the same period of the previous fiscal year, while operating income fell 79% to 576 million yen.

In the area of sophisticated materials business, sales recovered for the compound semiconductors used in electrical devices but fell significantly for optical devices. While the introduction of new TAB tape products for semiconductor memory use went as planned and the recovery in demand for chip-on-film (COF) products for use in liquid crystal display panels exceeded expectations at the start of the fiscal year, sales of TAB tape failed to reach levels achieved during the same period of the previous fiscal year. Auto-parts performance remained sluggish, chiefly at North American subsidiaries. In the area of copper products, while demand recovered for copper strips for use in semiconductors, sales of both copper tubes and copper products for electrical use fell, weighed down by factors including slowing capital-investment demand. In this segment, overall sales fell to 61,790 million yen, down 43% from the same period of the previous fiscal year. Operating losses in this segment totaled 4,546 million yen.

In response to rapid changes in the business environment since fall 2008 the Hitachi Cable Group is currently moving ahead with aggressive business-restructuring efforts, including efforts to reorganize and consolidate its production bases, particularly in businesses experiencing declining profitability, alongside comprehensive cost reductions targeting fixed costs. The Group is also energetically striving to improve business performance through steady efforts to capture the recovering demand emerging since spring in various markets, including the semiconductor and automotive markets.

Due to these efforts, in terms of ordinary losses by quarter, Group business performance since the final stage of the previous fiscal year has steadily recovered, with ordinary-loss figures falling from approximately 11 billion yen in the fourth quarter of the previous consolidated fiscal year (January 1 - March 31, 2009) to approximately 2.6 billion yen in the first quarter of this consolidated fiscal year (April 1 - June 30, 2009) and to approximately 1.2 billion yen in the second quarter of this consolidated fiscal year (July 1 - September 30, 2009).

In the second half of this consolidated fiscal year, in addition to sustaining various urgent measures, including cost reductions, to improve business performance, we will energetically strive to establish foundations for sustained recovery in business performance and for future growth, including efforts to promote structural reforms in unprofitable business areas and to enhance businesses in fields that promise future growth, such as the environment and infrastructures.

The interim dividend for this consolidated fiscal year is 2.50 yen per share.

The Hitachi Cable Group is grateful for the continuing support of its shareholders.

*	The sales figures by business segment in the text include internal sales or transfers between business segments.

Overview of business performance for cumulative second quarter of fiscal 2010

*	The above amounts have been rounded off to the nearest 100 million yen.
*	Graphs of sales by business segment are based on figures after removing internal sales and transfers between business segments.
*	Under the Financial Instruments and Exchange Law, Hitachi Cable has adopted a system of reporting results on a quarterly basis. As a result, the period traditionally known as the "interim fiscal period" is now known as the "cumulative second quarter."