Investor Relations

 Our International businesses have grown seven-fold over the nine years since we implemented aggressive growth measures in FY2002.
In FY2010, we set a new record high in international sales. To achieve further growth, we will evolve the MISUMI QCT Model and strengthen our competitiveness in the global markets.

 In FY2010 (the Fiscal Year Ended March 31, 2011), MISUMI Group Inc. sales were ¥121.2 billion (up 35.9% compared to the previous year). Operating income was ¥15.5 billion (up 85.1%) and net income was ¥9 billion (up 131.8%).

 Earnings have nearly approached levels reached before the financial crisis, marking a rapid recovery in just one year. However, domestic orders declined temporarily due to the Great East Japan Earthquake. As a result, our performance fell slightly short of our forecasts.

 Domestic sales increased 31% year-on-year on the back of a recovery in manufacturing. International sales grew substantially,up 51% year-on-year, or 59% on a local currency basis.

 Looking at results by region, North America sales were up 34% year-on-year, Europe up 34% and Asia up 56%. In Asia including China, a region enjoying remarkable economic growth, our sales surpassed ¥25 billion for the first time, driving rapid growth in sales overseas. International sales contributed 27.3% of total sales, a record high that enabled MISUMI to make solid progress toward our goal of 30%.

 Operating income grew by ¥7.1 billion year-on-year. Despite proactive investments aimed at driving growth, including personnel and organizational expansion and the launch of MISUMI VONA, a new business venture, profits increased as a result of efforts to improve profitability at Suruga Production Platform, logistics centers and marketing centers, coupled with higher sales volumes.

 We decided on year-end dividends of ¥10.50 per share. Including the interim dividend of ¥9.70 per share, the annual dividend totaled ¥20.20 per share.

■ Growth of The MISUMI Group

 A mere six years after new management took over in 2002, sales from international operations hit ¥25 billion, an approximately six-fold increase. After a temporary downturn in the wake of the financial crisis, international sales hit a new record in FY2010 and continue to grow rapidly.

International Roll-out of the MISUMI QCT Model

 Until now, precision mechanical industrial components such as die components and factory automation (FA) parts were manufactured according to individual orders, a business operation that was not only inefficient and costly, but also involved a lengthy wait for delivery. By changing to a business structure based on catalog sales of standardized products and piece-by-piece orders with short delivery times, where even an order for a single quantity ships in three days, MISUMI brought into fruition the MISUMI QCT Model rooted in high quality, low cost and short delivery times. To further advance the MISUMI QCT Model, we have implemented reforms including internalization of domestic logistics center operations and the consolidation of 13 call-center locations into 2 in-house call centers. Meanwhile, we achieved front-end (sales and distribution channels) innovations through the introduction of an e -cat alog and web ordering system. Back- end (manufacturing) innovation involved the integration of Suruga Seiki; the establishment of MISUMI Industrial Park, which attracted partner manufacturers; and the acquisition of SP Parts.

 Since new management took over in FY2002, the MISUMI Group has been building out front-end and back-end operations in each of the countries in which it operates, with the aim of achieving a complete QCT Model in each country. By FY2010, 23 sales of fices, 9 logistics centers and 7 manufacturing sites had been established in major markets overseas. Without missing a beat, we ramped up our international expansion in FY2010 with the establishment of a local subsidiary in Malaysia; sales offices in Milan (Italy), Chennai (India) and Ningbo (China); and an inventory center in Singapore.

 We also expanded our roll-out of local-language catalogs. Now, 29 versions of catalogs are available outside Japan. In FY2010, we published a new FA catalog in India.

 The amount of time required to progress from estimate to order placement has been reduced dramatically, enhancing customer convenience, by the introduction of e-catalogs and our web ordering system.

■ MISUMI QCT Model

Market-Penetration Challenges

 As international operations transition from the set-up phase to the penetration phase, measures to achieve cost reduction and short delivery times will be key to rapid advancement in the future.

 In Japan, the MISUMI QCT Model delivers strong cost competitiveness through the scale merits of mass production of half-finished products. Overseas, however, there is much work to be done in pursuit of the benefits of mass production.

 Further, while short delivery times have been accomplished overseas for some product s based on Japan's proven short-delivery-time system, still few products are available with three-day standard or one-day expedited shipping as in Japan. To bolster our competitiveness locally, we must increase the number of products that can be delivered quickly.

 We will work to overcome these challenges to bolster the competitiveness of the MISUMI QCT Model in international markets and to accelerate its penetration in markets throughout the world.

Back-End Innovations

 Back-end innovations include boosting the proportion of in-house manufacturing at Suruga Production Platform, a MISUMI Group company, and promoting local procurement overseas.

 Looked at by business segment, while FY2010 sales in the die components businesses did not reach the peak of FY2007, the proportion of in-house product manufacturing did rise. We will pursue further in-house manufacturing as we seek to reap the benefits of mass production and achieve factory work floor improvements. Suruga Production Platform has already instituted activities for improvement which are beginning to deliver steady results.

 FA businesses sales set a new record in FY2010, and while the proportion of in-house manufacturing is steadily increasing, it is still low in comparison with the die components businesses. Semi-finished goods in the production process play an important role in the MISUMI Group business model. In order to realize fully the benefits of mass production, the manufacturing facility in Vietnam will be expanded to allow concentration of production items.

 We are increasing the number of our overseas manufacturing par tners to advance local procurement and building a mechanism for global procurement of the lowest-cost and most quickly-delivered products.

Front-End Innovations

 Front-end innovations encompass the enlargement of logistics centers, enhancements to our e-catalog and web ordering system and strengthening of organizations' international functions.

 Increasing the number of products that can be delivered quickly overseas requires the advancement of local procurement overseas and an expansion of local inventories. A new inventory center was completed in Singapore in FY2010, and logistics centers in Asia and the United States are scheduled to be enlarged and expanded.

 Introduction of our e-catalog and web ordering system sparks a steep rise in the proportion of online orders overseas.

 MISUMI Group's uniquely robust web-system function will continue to be upgraded to fur ther enhance customer convenience.

 Though the disasters in Japan cast a pall of uncertainty on the prospects for FY2011, we forecast top- and bottom-line growth.

 This year we will continue proactive measures to drive growth in the future, such as upfront investments in Asia and the new MISUMI VONA business. Meanwhile, the benefits of increased sales and higher profits, and improved profitability of the manufacturing and infrastructure divisions, will ensure continued high profitability.

We thank our stakeholders for their continued support.