May 12, 2010

Kobelco Cranes’ Financial Results
for Fiscal 2009 (April 1, 2009 – March 31, 2010)

General Market Conditions

Demand in overseas crane markets has been faltering since the global financial crisis in fall 2008, and the situation became even more severe in the second half of 2009. As a whole, demand for cranes has been poor worldwide. Although there are indications of recovery in India and some other areas, market decline has been severe especially in regions that used to be centers of demand. In North America, demand has drastically dropped because of decreased intention to invest in equipment and bankruptcies of local banks. In Europe, demand has been sluggish due to deterioration of operating rates. In the Middle East, big projects have been postponed or cancelled one after another.

Also, in the domestic crane market, demand for new crawler cranes and wheel cranes drastically declined, as users took a wait-and-see attitude and refrained from buying after reviewing their equipment investment plans and considering the downturn of residential investment.

Under these severe circumstances, Kobelco Cranes made every effort to maximize sales and profits by steadily shipping backlog orders and undertaking marketing activities to gain orders. In addition, company-wide cost reductions and expense-cutting were carried out in order to secure earnings.

Reflecting the worldwide drop in demand, Kobelco Cranes sold about 520 new machines (total number over the entire crane line-up) during fiscal 2009, ended March 2010, showing a marked decrease of 43% over the 920 units sold in fiscal 2008. However, in terms of profit, the company managed to minimize the decrease by implementing the above-mentioned measures.

Consequently, Kobelco Cranes’ consolidated net sales decreased 37.7% in fiscal 2009, and consolidated ordinary income decreased 81.3% in comparison to fiscal 2008. Nevertheless, the entire Kobelco Cranes Group, which consists of Kobelco Cranes, four overseas companies, and two domestic companies, managed to turn a profit.

Furthermore, Kobelco Cranes formulated its New Medium-Term Management Plan to be started in fiscal 2010. For that plan, it has initiated a system reform focusing on becoming a globally successful company by setting its technology and brand power as the operating base.

Financial Results for Fiscal 2009

In millions of yen		Net Sales	Operating Income	Ordinary Income	Net Income
Consolidated	FY2009	53,056 (37.7%)	1,581 (83.3%)	1,683 (81.3%)	916 (84.8%)
	FY2008	85,227	9,492	9,015	6,026
Non-consolidated	FY2009	49,320 (39.5%)	217 (97.0%)	2,038 (70.2%)	1,627 (58.6%)
	FY2008	81,473	7,270	6,836	3,930

Notes: Percentages show change as compared with the previous fiscal year.
Figures in parentheses show decreases.

Domestic consolidated sales dropped 37.5% over the previous fiscal year to 19.8 billion yen, and overseas sales decreased 37.9% to 33.3 billion yen. Total sales dropped 37.7% to 53.1 billion yen.

Fiscal 2009: Review by Geographical Area

Overseas

In overseas markets, under severe situations such as shrinking worldwide demand, customers’ difficulty in raising funds, and the strong yen, Kobelco Cranes put efforts not only into maximizing new machine sales but also into enhancing its business foundation for the future. The demand environment and approaches taken by Kobelco Cranes for each area are as follows:

• [United States]: Expectation for public investment diminished, and drive for equipment investment has declined further. In addition, demand for cranes has drastically decreased, influenced by bankruptcies of local banks and lack of financing. Under such conditions, Kobelco Cranes made efforts to further expand dealer and service distribution networks as well as strengthen sales and service capabilities of their existing distributors, aiming to enhance competitiveness at the retail level.

• [Europe/Africa]: In order to recover from downturn in Europe, especially in southern Europe where declining operating rates are evident due to an oversupply of equipment, Kobelco Cranes made efforts to cultivate new markets including Africa and strengthen business fields other than the new-crane business, including parts, services, and engineering.

• [Middle East]: Some projects have resumed in some areas. However, there is an oversupply of machines, and new demand has been stagnant. Under such conditions, Kobelco Cranes made efforts to strengthen its marketing by visiting customers along with distributors in priority areas and educating distributors. Kobelco also strengthened its parts and service distribution system including the local sale of parts.

• [Far East/Southeast Asia]: Although demand had been on a slight recovery trends, the drive to purchase new cranes began dropping as the yen sharply became stronger in the second half of the fiscal year. Kobelco Cranes, making it a priority to secure sales volumes, undertook sales activities. Additionally, it also made efforts to enhance its service capabilities, such as training distributors.

• [India]: In India, where expectations for economic recovery are rising, Kobelco Cranes has been making efforts to vitalize distributors to enhance their marketing and service capabilities, considering that some markets, particularly the power infrastructure market, are expected to expand.

• [China]: In China, which has become the biggest market as a single nation, Kobelco Cranes has been conducting more local operations. In order to meet demand, it incorporated the existing local representative office in February 2010, establishing the marketing company Kobelco Cranes (Shanghai) Co., Ltd., which offers new and used cranes, parts and maintenance services.

Japan

The Japanese market for new cranes has declined considerably, as the operating rates of users decreased, affected by fewer construction projects. Users took a wait-and-see attitude and refrained from buying, considering the uncertainty of future trends.

• [Crawler Crane Market]: Demand decreased around 40%, compared with fiscal 2008. However, Kobelco Cranes was able to minimize the drop by providing steady shipments of backlog orders and continuing steady marketing activities to gain orders.

• [Rough Terrain Crane Market]: Demand decreased around 50%, compared with fiscal 2008, resulting in a large decrease in the number of machines sold by Kobelco Cranes. Under these severe conditions, Kobelco has been strengthening the wheel crane business centered on the market penetration of a city-conscious crane, the PANTHER-X series.

Production

To provide solid shipments of backlog orders for the Japanese and overseas markets, Kobelco Cranes has been working on forming a system to respond flexibly to changes in production volume by shortening production lead-time and improving efficiency under the just-in-time production system through the cooperation of its suppliers, in addition to making efforts to strengthen its capacity to respond to custom products.

Customer Service

Kobelco Cranes continues improving customer satisfaction by utilizing the Kobelco Cranes Remote Observation System (KCROSS). Moreover, it has worked on the task of reorganizing the customer service system. The Customer Support Division was established on April 1st this year.

Alliance with Tadano

For rough terrain cranes, Tadano supplies complete machines of small models on an OEM basis. Kobelco Cranes has maintained a favorable relationship with Tadano and looks forward to continuing its close collaborative relationship with Tadano.

Outlook for Fiscal 2010

Although there are both strong and weak regions, worldwide demand for cranes in fiscal 2010 continues to be low in both domestic and overseas markets, showing some possibility of further decline. In addition, the business environment is still uncertain due to unstable currency market conditions and the financial crisis in Europe.

Under this harsh business environment, in fiscal 2010, we will continue more steady activities to gain orders and sales. We will also reduce costs in order to secure earnings. Also, as the first year of the New Medium-Term Management Plan, we will implement measurements to leap forward by addressing the following key issues:

Major Activities

• Secure maximum sales volume centered on regional strategies
• Expand the service business, taking crane life cycle into consideration
• Shorten production lead-time by cooperating with our suppliers on increasing the level of JIT production and improve cash flow
• Focus on emerging overseas customer markets
• Thoroughly streamline all business activities