May 12, 2008

Kobelco Cranes Annual Financial Results for Fiscal 2007
(April 1, 2007-March 31, 2008)

General Market Conditions

The international market for cranes continued to remain strong worldwide. In the Middle East, strong investments are being made in the energy field. Demand in North America continues to expand, despite the slowdown due to the subprime loan problem, while in South Korea, demand continues to be brisk as a result of an active shipbuilding industry. In Southeast Asia, demand for new cranes is growing due to the development of infrastructure and establishment of the industrial base. In Europe, the market continues to be bullish.

Demand in the domestic market is continuing a sharp expansionary trend. Private-sector demand is increasing the amount of work, and high exports have led to a decreased stock of domestic used machines. The replacement of aging machines is also supporting demand.

Under these conditions, Kobelco Cranes was able to increase the sales volume of its cranes in major overseas and domestic markets, as well as work on improving its business foundation for the future. Activities included:

• Promoting sales in business-focus areas such as the Middle East, North America, Southeast Asia.
• Promoting development of new models for a richer lineup.
• Increasing production capacity to meet expanding worldwide demand.
• Improving business foundation against recession in the future.

Through these activities, Kobelco Cranes sold about 850 units of new machines (total number over the entire product line) in the year which ended on March 31, 2008, nearly a 16% increase over the 730 units sold in the fiscal 2006.

In particular, a higher sales volume in the Middle East, North America, and Asia, including Japan, contributed to the result. Moreover, overseas sales of crawler cranes comprised nearly 80% of the number of units sold.

As a result, Kobelco Cranes’ consolidated net sales rose nearly 30% in fiscal 2007, over fiscal 2006. Consolidated ordinary income rose nearly 80% in the period under review, in comparison to the same period of the previous year.

Annual Financial Results for Fiscal Year 2007

(In Millions of Yen)	Consolidated		Nonconsolidated
	FY2007	FY2006	FY2007	FY2006
Net Sales	71,231 [+26.3%]	56,407	70,843 [+30.8%]	54,181
Operating Income	9,289 [+79.6%]	5,172	8,639 [+97.3%]	4,379
Ordinary Income	9,143 [+84.4%]	4,957	8,949 [+113.8%]	4,185
Net Income	5,282 [+77.8%]	2,971	5,242 [+113.6%]	2,454

Note: Figures in brackets [ ] show the percentage change over the previous period .

Consolidated domestic sales rose 20.8% over the last year to 25.6 billion yen and oversea sales increased 29.5% to 45.6 billion yen. Total sales went up 26.3% to 71.2 billion yen. Moreover, Kobelco Cranes worked on ensuring its healthy status financially by improving the cash flows of its group companies, etc.

Review by Geographical Area

Overseas

In the overseas markets, Kobelco Cranes undertook the following activities to further expand its global reach.

Mega projects, such as the construction of railways, airports and LNG refining facilities, are underway in the Middle East, supported by the abundant capital gained from high oil prices. In this region, Kobelco Cranes reinforced its marketing by increasing sales personnel and new dealers, which resulted in successfully increasing the number of machines sold. Customer service system was also improved by starting a project to keep a large stock of parts for customers in the Middle East.

In the U.S. market where investment in residential construction has slowed down, environmental and energy-related investments, such as wind-power generation and highway maintenance, continues to be strong, supporting the high demand for cranes. Owing to the strong market, Kobelco Cranes, by expanding the number of dealers and service distribution outlets, was able to increase the sales volume.

In Europe, active marketing and strengthening relations with major contractors, rental companies and energy-related industries also led to increasing demand for the Kobelco Cranes’ products both inside and outside the European market, resulting in continued strong performance in the region.

In Southeast Asia, where development of infrastructure and the establishment of an industrial base bolstered demand for new machines, Kobelco Cranes South East Asia Pte. Ltd., the sales subsidiary established in June 2007, showed a profit in its first fiscal year. The number of machines sold greatly increased by expanding the number of sales and service distribution outlets to meet the demand in this region.

Kobelco Cranes was also able to maintain strong sales of new machines in most of the major world markets including South Korea, India and Australia, except China.

Strong sales of the 550-metric-ton large sized crawler cranes, launched in March 2007, resulted in steadily increasing the sales volume and profitability.

In anticipation of recession, Kobelco Cranes Trading Co., Ltd. is established in April 2008, to deal with used machines which are expected to be available in quantity in the future market of Middle East, etc.

Japan

In the Japanese market, overall demand for new crawler cranes increased 25% over the previous year. In meeting this demand, Kobelco Cranes was able to increase the number of units sold, thus maintaining the top market share in Japan.

Domestic demand for rough terrain cranes was also strong, increasing 23% over the previous year. In order to reinforce the wheel crane business, Kobelco Cranes is promoting the development of a new, city-conscious model wheel crane to meet the current needs of customers. This new machine will be released on June 1st, 2008.

To meet growing orders in the Japanese and overseas markets, Kobelco Cranes strengthened its procurement capabilities with the cooperation of its suppliers. On the production side, Kobelco Cranes began implementing just-in-time manufacturing, shortening the lead time and improving overall production efficiency, resulting in boosting production capacity. These steps contributed greatly to the higher number of units sold.

In terms of service, Kobelco Cranes developed Kobelco Crane Remote Observation System. This system has been in service for domestic market since April 2008 and it has contributed to increased customer satisfaction. In addition, the service operations were reorganized with this system.
In order to increase product-customizing capabilities, specialized subsidiary KC Technoservice Co., Ltd. was established in April.

Alliance with Tadano

For rough terrain cranes, Tadano supplies complete small models and the carrier portion of large models on an OEM basis. With demand continuing to be robust in Japan and overseas, Kobelco Cranes has maintained a favorable relationship with Tadano.

Outlook for Fiscal 2008

In the fiscal 2008, the domestic market is anticipated to continue its expansionary trend. Construction investment in mega projects in the Middle East is expected to be firm. As a result, although there are some uncertainties, the world crane demand is forecast to continue being strong. However, factors which curtail profits—the rising cost of materials due to high steel and oil prices, the difficulty in procurement caused by booming worldwide economy and unstable currency market conditions—are areas of concern.

With these business conditions, large sales growth is expected by increasing the number of machine sold in the fiscal 2008.

With the major activities shown below, Kobelco Cranes will establish a strong business structure to accomplish the objectives of its Medium-Term Management Plan “rebuilding the crane business”.

Major Activities

• Maximize production and shipments, increase stable production, and reduce costs.
• Enhance network of domestic/overseas sales and service distribution. Complete sales systems in emerging markets.
• Strengthen the wheel crane business by carrying out the market penetration strategy for the new city conscious wheel crane line.
• Establish a used machine business system to strengthen the life cycle business.

Full-Year Forecast for Fiscal 2008

(in millions of yen)	Consolidated	Non consolidated
Net Sales	93,000 [+30.6%]	83,500 [+17.9%]
Operating Income	9,500 [+2.3%]	7,700 [-10.9%]
Ordinary Income	9,300 [+1.7%]	8,000 [-10.6%]
Net Income	5,500 [+4.1%]	4,700 [-10.3%]

Notes:
Figures in brackets [ ] show the percentage change over previous period.
Currency exchange rates forecast for Fiscal Year 2008: $1 = 105 yen, 1 euro = 155 yen.
The forecast above is based on information current at the time of this announcement.
The actual results may differ significantly due to various factors in the future.