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INVESTOR RELATIONS

President's Message

PRESIDENT'S MESSAGE IKUO MORI PRESIDENT AND CEO

On May 8, 2009, we released our financial results for the fiscal year ended March 31, 2009.
As for the net sales, operating loss and ordinary loss, those figures slightly surpassed the previous plan announced at the end of third quarter of this fiscal year due to the depreciation of the yen, cost reduction, and all that. Additionally, targets of consolidated automobile sales units were achieved according to our projection.
However, net income was down to net loss of ¥69.9 billion, due to the provision of valuation allowance of deferred tax assets, the failure to collect receivables and others from business partner, Eclipse Aviation Corporation, and the rest. In addition, we suspended the payment of dividends for the end of the FYE 2009 in order to deal with sever environment such as decreasing retained earnings.
On the other hand, the fiscal year ending March 31, 2009, we have to endure the decreased sales and profit as the sluggish demand for automobiles is expected to continue and the future currency exchange movement is also uncertain. Therefore, we project to pass the interim dividend of the FYE 2010 at this point and deeply regret to suspend payment of dividends during a year in spite of the announcement of stable dividend policy in our mid-term management plan.
However the 5th generation of LEGACY is highly appreciated by media representative and automobile dealers when we held "LEGACY World Premium" at the New York Motor Show 2009. At first, new Legacy was launched in Japan on May 20th, and then introduced in the global market sequentially, which makes the leading force of the sales to recover business performance.
In 2008, we fortunately could be the only automobile manufacturer enjoyed increased units sales year on year basis owing to good sales of FORESTER and IMPREZA in the U.S. market. Additionally, from January to April in 2009, our sales volume remained unchanged compared to the same period of the previous year in the U.S.market, resulting in the increase of our market share. Though the new Legacy sales in overseas market will contribute to our business performance from 2nd half of the FYE 2010; we will strive to recover our financial performance by taking advantage of the new LEGACY introduction.

Consolidated financial results for the FYE 2009 and the plan of the FYE 2010

(Units; 100 million yen)

  Actual Results
FYE 2008
Actual Results
FYE 2009
Projection
FYE 2010
Net Sales 15,723 14,458 13,200
Operating Income/Loss 457 -58 -350
Ordinary Income/Loss 454 -46 -400
Net Income/Loss 185 -699 -550
Consolidated automobile sales (thousand units) 597 555 508
FHI Exchange Rate ¥116/US$ ¥102/US$ ¥95/US$

As you know well, the effect of the financial crisis triggered by the subprime loan problem has rapidly spread into the real economy. Accordingly, sluggish demand for automobiles and appreciation of the yen negated our improvement of business performance during the 1st half of FYE 2009 by the good sales of FORESTER.

We were in full production during 1st half of FYE 2009, however in order to respond to rapid changes in demand for automobiles, we have implemented prompt inventory corrections and production adjustments since 2nd half of FYE 2009. Additionally we are performing zero-based reviews of all expenses and striving to make reductions, such as giving up bonuses by directors of the board and reducing compensation for directors, SVP and VP by 10%, also conducting salary cuts for managers.
We will pursue the efforts continuing to adhere to the themes of our mid-term management plan, such as "To provide a distinctive Subaru experience for drivers and passengers", "To increase sales globally", "To strengthen competitiveness in quality and cost", and "To also grow through the business alliance with Toyota", to move forward with our plans with even greater speed. However target figures such as sales units, operating income, management ratio for the FYE 2011 and the stable dividend policy will be on hold due to the unpredictable volatility of conditions including foreign exchange rate and drastic change of business environment.

At first, we aim to achieve the target of FYE 2010, showing the recovery of the losses taking advantage of new LEGACY launch. Thereafter, we will certainly restore profitability in FYE 2011.
We will win the place in this tough business climate for the customers love SUBARU and establishing a valiant brand. I appreciate your support and expectation for our company.

Ikuo Mori
President and CEO

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