On February 4, we released our financial results for the third quarter of fiscal year ending March 31, 2010, recorded net sales 1,012.1 billion yen, operating income 3.9 billion yen, ordinary income 1.8 billion yen and net loss 15.2 billion yen. We have returned to the profitability in terms of operating income and ordinary income.

Consolidated financial results for the third quarter of the FYE 2010 (100 million yen)

We plunged into the red for the first time in 15 years at FYE 2009 due to the negative impact on the sales by worsening real economy along with the global credit crunch. However we have been on a gradual recovery trend since the second quarter of FYE 2010 as the new Legacy was launched globally, good sales by support of cash for clunkers in U.S., healthy sales in China as well as the group-wide cost reduction effort by our employees and affiliate companies.
We implemented adjustment of production and shipment from January to June 2009 to reduce the automobile inventory because of sluggish demands all over the world.　However, our sales trends are steady and good performance of the new Legacy and other models since last summer, we are in the situation of inventory shortage. Therefore, we remain high operation in SIA (U.S. subsidiary) and Yajima plant which produce passenger cars with overtime work and holiday work.
Our global retail sale was 567 thousand units in CY 2009, which was almost the same level in CY2008. This was mainly from the expanded performance in U.S., Canada, and China where our sales exceeded the total demands trends. Especially in U.S., we marked sales record 217 thousand units and gained a 2.1 percent share.
In spite of deteriorated demands, our sales steadily increased compared to the same period of the previous year. The reason we enjoyed healthy sales is not only the government incentive but also our direction to increase sales globally as we set up in our mid-term business plan is correct.
Global retail sales target of CY 2010 is 600 thousand units. We plan to sell 230 thousand units in U.S., which will be the new sales record over last year as well as 50 thousand units in China. Our flagship car, Legacy, will be a leading force in the sales. In China, we launched Legacy in September, 2009 and Outback in January, 2010 following U.S. in great demands. We already have many back orders of Outback in China, which leading to further expectation of sales growth.

In the light of these strong sales trends, we have revised our performance outlook for the FYE 2010. The consolidated automobile sales plan of FYE 2010 is expected to increase 14.5 thousand units from the original plan at the beginning of the year, to 560 thousand units. Furthermore, we aim to return to profitability of operating income and ordinary income with the nearly 50 billion yen upwards revision compared to the original plan announced at the beginning of the fiscal year, respectively. However net income remains 25 billion yen same as the previous plan because we predict additional extraordinary loss. Consequently year-ends dividends will be suspended. It is very regrettable that we will suspend our dividends for a year and half, however, we would like to make a resumption of dividends for the next fiscal year by continuing our challenge following this fiscal year. Your understanding is highly appreciated.

Consolidated financial plan for FYE 2010 (100 million yen)

FY 2010 will be the final year of our mid-term business plan. We promote each challenge in that plan such as "To provide a distinctive Subaru experience for drivers and passengers", "To increase sales globally", "To strengthen competitiveness in quality and cost", "To also grow through the business alliance with Toyota" and "To grow the level of employees competence and so enhance the organization" with the philosophy of customers come first. In our mid-term business plan, those target such as sales units, operating income and management ratio for the FYE 2011 have been on hold due to drastic change of market environment and exchange rate. However we believe that our mid-term business plan is in the right direction, so we will further pursue the efforts to move forward with expanding sales and cost reduction in CY 2010 as the year of "Going Forward".

In the products side, we have aimed to integrate the pleasure of driving and environmental responsibility. We have developed optimal cars provided a distinctive Subaru experience for drivers and passengers for global market since the introduction of Impreza in 2007. We will remain that direction of product development after 2010. We will pursue more improvement of products and technology as focusing on both environmental friendliness and safety performance. As for safety performance, Subaru has been recognized as one of the top safety car manufacturer in Japan, U.S., EU, Australia and other countries. We will further improve of the passive safety as well as the active safety to enhance its renowned excellent safety performance. Meanwhile, regarding the alliance with Toyota group, our joint development of FR sporty car proceeds smoothly and minicars will be supplied by Daihatsu Motor Co., Ltd. on an OEM basis gradually afterwards.

For the rest of this fiscal year, we will speed up for achieving the target of FYE 2010 and aim to grow further with the word "Going Forward" for FY2010. I appreciate your continuous support and expectation for our company.

February 2010
President and CEO
Ikuo Mori