Business development and results (January 1, 2002 - June 30, 2002)

The Japanese economy during the first half of the 51st fiscal year was still in a difficult situation. The personal consumption was flat reflecting that employment situation continued to be severe with the unemployment rate being at the unprecedented highest level. Corporate profits of manufacturing companies in the business year ending in March 2002 showed a decrease in sales and profit. Business investment also declined against a background of slack corporate activities. However, exports propped up the economy during the period since exports of electronic components like semiconductors to Asia increased and those of iron and steel and automobiles also remained firm.

The U.S. economy has been recovering moderately since private consumption is increasing at a slower pace. In the Asian countries, the economy is recovering due to firm private consumption and exports getting back on a recovery track. The pace of economic growth in China was rising since public sector expenditures were spent ahead of schedule and exports surged as other Asian economies were recovering.

In the automobile industry, which is the primary users of our products, domestic production trailed the previous year level due to increasing exports to the United States.

Under these conditions, we continued to devote significant efforts to the development of new applications, marketing activities in both domestic and overseas markets.In March, a new super heat resistant liquid crystal polymer (LCP) grade called the "VECTRA(R) S-Series Grade," was launched. In May, WinTech Polymer Ltd. started commercial operation of PBT continuous polymerization plant which completed in April.

As a result, consolidated net sales for the period were \33,469 million, \2,280 million above the same period last year. Consolidated operating profit increased by \385 million to \2,578 million. However, due to exchange loss generated in deposit, account receivable and bank loan debt by foreign currency at the reevaluation, consolidated ordinary profit and consolidated net income were \719 million, \1,685 million below the same period last year, and \176 million, \953 million below the same period last year, respectively.

Outlook for the 51st fiscal year

With regard to the Japanese economy for the second half of the 51st fiscal year, that growth is likely to remain low since uncertainties about the future are rising further in the U.S. economy and export is not able to drive the Japanese economy forward like as the first half. Corporate profits and business investment are expected to recover sluggishly during the second half. The personal consumption is also forecasted to recover at low levels due to slow improvement in employment and income conditions.

Under such conditions, sales are expected to increase at low levels during the second half. Consolidated sales for the 51st fiscal year are estimated to be \66,159 million which is \4,664 million above the last year level. Consolidated operating profit is estimated to increase \1,965 million to \5,483million. However, due to exchange loss, consolidated ordinary profit and consolidated net income are estimated to be \2,818 million and \1,337 million respectively, which are \501 million and \278 million below the last year level respectively.