On November 2, we released our financial results for the first half of the fiscal year ending March 31, 2010, recorded net sales 635.6 billion yen, operating loss 11.4 billion yen, ordinary loss 11.8 billion yen and net loss 21.7 billion yen.

As for the financial results of the second quarter (from July to September) of this fiscal year − recorded operating income 8.2 billion yen and ordinary income 7.6 billion yen, we returned to the first profitability since the last second quarter. These figures exceeded our original plan released at the beginning of the year because of the good sales in U.S., Canada and China in addition to the group-wide cost reduction efforts by our employees and affiliate companies.

Consolidated financial results for the first half of the FYE 2010 (Units: 100 million yen)

As we promote each challenge in our mid-term business plan such as 'To provide a distinctive Subaru experience for drivers and passengers' and 'To increase sales globally' with the philosophy of customers come first, we can get the recognition of our customers that the Subaru cars are provided with the value of its environmental friendliness and safety. These trends bring in healthy sales of U.S. and other countries.
Good sales in U.S., China and other countries are still going on, therefore, we raise our operation in Yajima plant at Gunma Prefecture and SIA in U.S. at full capacity in this second half term.

Getting the big boost of these strong sales, we have revised performance outlook for the FYE 2010 to net sales 1,360 billion yen, operating income 1 billion yen, ordinary loss 5 billion yen and net loss 25 billion yen. The consolidated automobile sales plan of the FYE 2010 is expected to increase 37.6 thousand units from the previous plan at the beginning of the year, to 54.5 thousand units. We believe that our mid-term business plan is in the right direction, so will further pursue the efforts to move forward with each challenge and the cost reduction.

Consolidated operating plan for the FYE 2010 (Units: 100 million yen)

On the other hand, we will embark on capital expenditure as focusing on future business. For the new power-train to be launched next fiscal year, we build new plant in the vicinity of Oizumi plant at Gunma prefecture. This new power-train will be aimed to strike a balance between the environmental friendliness and the driving performance at a high level and improve the competitiveness in cost. Furthermore, we will introduce a car with hybrid system in 2012.

In our mid-term business plan, those target figures such as sales units, operating income and management ratio for the FYE 2011 and the stable dividend policy have been on hold due to drastic change of business environment. It is regrettable that we have suspended our dividends at the end of this first half following the last year end. However, we expedite our direction to be 'A compelling company with strong market presence' as we set up in our long-term management vision.

At first, I will lead to expand sales, reduce cost and work at structural reconstruction for achieving both the target of the FYE 2010 restoring profitability and the investment for our future.I appreciate your continuous support and expectation for our company.

November 2009
President and CEO
Ikuo Mori