masayoshi matsumotomasayoshi matsumoto president and...

November 2009

GETTING BACK ON THE GROWTH TRACK & GETTING BACK ON THE GROWTH TRACK & REALIZING VISION 2012REALIZING VISION 2012

Masayoshi MatsumotoMasayoshi MatsumotoMasayoshi MatsumotoMasayoshi MatsumotoPresident and CEOPresident and CEO

FY2009FY2009 1 t H lf R lt1 t H lf R lt1H/FY2009 Consolidated Results1H/FY2009 Consolidated Results

FY2009FY2009 1st Half Result1st Half Result

Compared to the previous year, net sales have declined drastically by 35%, and operating income has recorded a deficit of 7 billion, due to such factors as appreciation

f th d d li i th i i dditi t h i ki d dof the yen and a decline in the copper price, in addition to shrinking demand. Against the original forecast, recovery of demand and cost reductions in Automotive and Electronics have helped to reduce the deficit amount.

1H/FY2008 1H/FY2009 1H/FY2009 1H/FY2009 Y-o-Y

（\bn） Results Original Forecast　① Rev ised Forecast (Sep. 25) Results ② ②／①

1,247.8 790.0 810.0 812.3 (35%)

49.2 (30.0) (10.0) (7.0) --

Net Sales

Operating Income ( ) ( ) ( )

15.8 (3.0) -- 3.1 --

65.0 (33.0) (13.0) (3.9) --

p g

Ordinary Income

Non-operating Income & Expenses

( ) ( ) ( )

(3.5) 0 -- (5.8) --

61 5 (33 0) -- (9 7) --

y

Income Before Income Taxes&Mi it I t t

Extraordinary Profit & Loss

61.5 (33.0) (9.7) --

39.7 (22.0) (14.0) (9.7) -- Net IncomeMinority Interests

1

FY2009FY2009 1 t H lf R lt1 t H lf R ltOperating Income AnalysisOperating Income Analysis for 1H/FY2008 & 1H/FY2009for 1H/FY2008 & 1H/FY2009

FY2009FY2009 1st Half Result1st Half ResultAs we forge ahead with structural reforms and cost reductions, operating income has plunged into the red due to shrinking demand.

(%)・・・・Operating income ratioPrice decline

Material prices

Lower of cost methodor market method

+4 6

+4.6+2.9 (%)・・・・Operating income ratio

(3.9%)¥49.2 billion

Material prices(including portion passed on to product prices)

Special expenses

(16.4) +4.6

【1H/FY2009】

¥(7.0 billion)

(0.9%)

【1H/FY2008】

FOREX（Average rate¥106/＄→96）

+23.2

Cost reductions, etc.

Effects of structural reforms¥106/＄→96）

(4.1)(89.0)

+19.7(1.7)Sales quantity

Actuarial differences

Effects of structural reforms

2

FY2009FY2009 1 t H lf R lt1 t H lf R lt1H/FY2009 Results Overview1H/FY2009 Results Overview

FY2009FY2009 1st Half Result1st Half ResultOperating income for 1H/FY2009 was -7 billion yen, exceeding the original forecast target of -30 billion yen, due to recovery of demand, mainly in the Automotive and Electronics segments.

Operating i

1,247.8Net Sales(¥bn)

Net sales

576.910,000

12,000

500

600income（¥bn）

49.2Automotive

(¥bn)

Operating income

1,200

1,000

60

50

134 0 330.0 349.4

24.48,000 400

790.0 812.3

Information & Automotive

800 40

299 8

105.7

70 0 72 7

134.0

130.0 129.0

330.0

6.5

5.20.2

4,000

6,000

200

300

Electronics

Communications

Electric Wire & Cable Energy Electronics

Automotive

Information &Communications

600

400

30

20

174.2 100.0 103.9

299.8

190.0 183.6

70.0 72.7

13.2

6.5

0

2,000

0

100Info. & Comm..・・・0.8Industrial

Materials, etc.

Cable, Energy

Industrial Materials, etc.

Electronics

Electric Wire & Cable, Energy200 Info. & Comm.

.・・・0

10

(6.5)(3.4)

(3.0)(3.5)

(3.1)-2,000

0

-100

0

(42.8) (0.3) (30.0) (26.3)

(7.0) Electronics・・・(0 2)

Electric Wire & etc ・・・(1.1)

Eliminations

1H/FY2008 Results(200) (10)

(17.0)

-6,000

-4,000

-300

-200

(30.0)

(0.2)1H/FY2009 Results

(400) (20)

(30)(600)

3

( )

1H/FY2009 Original Forecast

FY2009FY2009 1 t H lf R lt1 t H lf R ltFY2009 Consolidated ForecastFY2009 Consolidated Forecast

FY2009FY2009 1st Half Result1st Half ResultOperating income for 2H/FY2009 has been revised from 45 billion yen to 40 billion yen due to appreciation of the yen and drastic reduction of official revised budget relating to Information & Communications.Operating income for FY2009 has been revised from the original target of 15 billion yen to 33 billion yen, owing to a good performance in 1H/FY2009

FY2008 FY2009 FY2009 % growth % growth

good performance in 1H/FY2009 .Preconditions for 2H/FY2009 forecast: FOREX: ¥90/US, ¥130/EU€ Copper: ¥0.55 million（LME 5,500 US）

（\:bn） Results ① Original forecast　② Revised forecast　③ ③／① ③／②

Net Sales 2,122.0 1,780.0 1,800.0 (15%) ＋1%

Operating Income 23.5 15.0 33.0 ＋40% ＋120% ※※Ordinary Income 37.8 17.0 40.0 ＋6% ＋135%

Net Income 17.2 10.0 13.0 (24%) ＋30%

Capital Expenditure 131.6 80.0 82.0 (38%) ＋3%

Depreciation Expenses 108.2 100.0 100.0 (8%) -

R&D Expenses 73.0 73.0 75.0 ＋3% ＋3%

ＲＯＡ 1.6% 1.1% 2.3% ＋0.7% ＋1.2%

ＲＯＥ 1.9% 1.1% 1.5% (0.4%) ＋0.4% ※

　※ＲＯＡ = Operating income／Average capital employed during FY

1st Half (30.0) (7.0)

2nd Half 45 0 40 0

※

4

2nd Half 45.0 40.0

FY2009FY2009 1 t H lf R lt1 t H lf R ltOperating Income Analysis for FY2008 & FY2009 Operating Income Analysis for FY2008 & FY2009


Despite a drastic decrease in sales quantity, operating income is expected to be 33 billion yen due to the effects of structural reforms and cost reductions.

(%)・・・・Operating income ratio

+6.3

+8.8

Loss on valuationat market value

Lower of cost methodor market method

(1.8%)¥23.5 billion

¥33.0 billion

Sales Materials prices

(including portion Special


(30 6) ＋7 5

+7.4(1.1%) quantity( g p

passed on to product prices)

Special expenses

(30.6) ＋7.5

【FY2008】【FY2009 Revised Forecast】

Price decline

＋48.5


FOREX

(73.1)

Actuarial differences

FOREX（Average rate¥101/＄→93）

5

(0.8)(6.1)

( )

＋41.6

FY2009FY2009 1 t H lf R lt1 t H lf R ltOperating Income Analysis for Original & Revised ForecastOperating Income Analysis for Original & Revised Forecast

FY2009FY2009 1st Half Result1st Half ResultCompared to the original forecast, operating income is expected to be 33 billion yen, an increase of 18 billion yen, due to an increase in sales quantities and to cost reduction activities proceeding faster than expected. (%)・・・・Operating income ratiop g p

＋11.4(1.8%)＋1.1

¥33.0 billion


FOREX（A t

＋10.2

(1 5)Cost reductions, etc.

（Average rate¥95/＄→93）

¥15 0 billion (1.5)(0.8%) Price decline

¥15.0 billion

(3.0) (0.2) Sales quantity

Materials prices (including portion

passed on to product prices)

6

【FY2009 Revised Forecast】【FY2009 Original Forecast】

FY2009FY2009 1 t H lf R lt1 t H lf R ltOperating Income AnalysisOperating Income Analysis for 1H/FY2008 for 1H/FY2008 -- 2H/FY20092H/FY2009

FY2009FY2009 1st Half Result1st Half ResultOperating income for 2H/FY2009 is expected to recover to almost the same level as that for 1H/FY2008.

¥49.2 billion(%)・・・・Operating income ratio

(4.0%)

(3.9%)¥40.0billion

FOREX, Accounting changes

(2.0)Sales quantitySales quantity

(66.0)

+41.1+7.9


【1H/ FY2008 】

【2H/ FY2008 】【1H/ FY2009 】【2H/ FY2009

(7.0)(0.9%)

【Forecast】

(25.7)

+5.3(14.2)

15 9

+42.2(2.9%)

Cost reductions, etc

Effects of structural reforms,


Sales quantity

+15.9(39.4)

etc.Cost reductions, etc.

O

7


FY2009FY2009 1 t H lf R lt1 t H lf R ltFY2009 Financial Forecast OverviewFY2009 Financial Forecast Overview

FY2009FY2009 1st Half Result1st Half ResultCompared to the original forecast, operating income is expected to increase, mainly in theAutomotive and Electronics segments. Industrial Materials barely stay in the black.

3000.0

2122.0

20 000

25,000

800

1,000Automotive

Electric Wire & Cable,Energy

Information & CommunicationsIndustrial Materials,etc.

Electronics

EliminationsNet Sales

2,500

2 000

100

80

775.0740.0

917.1

210.01800.01780.0

15,000

20,000

600

8002,000

1 500

80

60

182.9 285.0290.0

275.0

775.0

33.010,000 400Operating

1,500

1,8001,000

60

40

・・・・・・・・・・・・・・・・・・

405.0430.0536.1

165.0160.0

182.9

23.5

15.0

6 511 55.0

17.06.1 05,000 200

Automotive

Industrial

p gincome

500 20

225.0220.0282.1

(3.0)

2.4

0.58.95.5 4.5

1.14.51.0

6.511.5

0 0

(71.2) (60.0) (55.0)

Materials

1 2008年度に償還予定の第6回無担保転換社債が2007年3月31日時点で473億円あり、当該転換社債の普通株式への転換による影響を加味している

-5,000 -200

( ) ( ) ( )

(500)(20)

2008 2009 (Original Forecast) 2009 (Revised Forecast)2012 Targets(VISION 2012)

Operating income ratio 1.1% 0.8% 1.8% 7.0%

8

2008年度に償還予定の第6回無担保転換社債が2007年3月31日時点で473億円あり、当該転換社債の普通株式への転換による影響を加味しているROE 1.9% 1.1% 1.5% 10.0%

FY2009FY2009 1 t H lf R lt1 t H lf R lt

Realizing Vision 2012 Realizing Vision 2012 ---- getting back on the growth track getting back on the growth track ----FY2009FY2009 1st Half Result1st Half Result

Ongoing Implementation of Structural Reforms and Improvement Measuresg g p pKeeping our organizations appropriate to declining demand and rebuilding our cost

structureImproving quality and efficiency of operationsp g q y y pReinforced human resources training

Priority themes for growth1. Actions in newly emerging economies

Capture abundant automotive-related demandCapture demand generated by infrastructural development for electricity communication networksCapture demand generated by infrastructural development for electricity, communication networks,

etc.2. Capturing demand generated by infrastructural development

Capture demand generated by infrastructural development for electric power-related facilities, i ti t i l i ti l fib d t k i t i Middl E t d A icommunication systems involving optical fibers and network equipment in Middle East and Asia

Capture demand generated by construction projects for bridges, motorways, etc.3. Environmental consideration

Promote product development and sales expansion in preparation for high fuel-efficiency automobiles (lightweight wiring harnesses, high-voltage wiring harnesses for HEV and EV)

Promote product development and sales expansion of renewable energy-related productsPromote development and commercialization of superconducting cables and apparatuses, power

devices, and other environmental technologies

9

FY2009FY2009 1 t H lf R lt1 t H lf R ltEffects of Structural Improvement Measures for FY2009Effects of Structural Improvement Measures for FY2009


Due to reduced expenses, effects of Structural Improvement Measures in 1st half have been ahead of the original forecast (+¥1.1 bn: forecast ¥22.1 bn→results ¥23.2 bn）.F ll ff t t d t b ¥48 5 bFull year effects are expected to be ¥48.5 bn.

1st Half 2nd Half Year Total

(¥bn) Forecast(original) Results

Forecast(original)

Forecast(revised)

Forecast(original)

Forecast(revised)

Workforce ReductionPersonnel cost reduction 13.3 13.4 14.2 14.2 27.5 27.6

Reduced expensesProduction bases reorganizationImpairment, etc.

8.8 9.8 11.1 11.1 19.9 20.9

Total 22.1 23.2 25.3 25.3 47.4 48.5

10


Capital Expenditure and Depreciation ExpensesCapital Expenditure and Depreciation ExpensesFY2009FY2009 1st Half Result1st Half Result

1 400 49 6Capital Expenditure

In FY2009, Capital expenditure will decrease by 49.6 billion yen (38%). Depreciation expenses will

decrease by 8.2 billion yen (8%).(¥bn)

1,200

1,400

106 9 108 2

121.8 119.9121.9

131.6 49.6Capital Expenditure

Depreciation Expenses

( )140

120

69.61,000

87.2

99.8106.9 108.2

100.0

82 0

100

72.7 69.1 72.9

33 0

800

82.0

Automotive

80

12.09.2 9.8 7.5

9.1

14.5

33.0

400

600

Information & Communications

60

40

7.2 7.8 9.518.3

15.0

10.0 13.9 10.99.5

200

400

Electric Wire & Cable, Energy

Industrial

Electronics

20

22.7 19.3 21.1 22.610.0

0

FY2005 FY2006 FY2007 FY2008 FY2009

Industrial Materials, etc.

0

11

FY2009FY2009 1 t H lf R lt1 t H lf R ltGrowth Strategies: AutomotiveGrowth Strategies: Automotive


1,199.4

Sales/operating income (billion yen)

Wiring harness

Tokai Rubber & others (brake business transferred in 2H FY 07)Operating

income(¥bn)

Sales

(¥bn)1,200 100

Major goals and current achievements

Major goals(1) Capture 25% share of global wiring harness market

868.0

775.0

917.1

1,095.9

74.5

58 0

1,000

80070

80

90

(1) Capture 25% share of global wiring harness marketJapanese car makers: Steadily win orders for major car lines and global strategic models; acquire orders inemerging markets (BRICs, etc.).Non-Japanese car makers: Strengthen sales structureand overseas bases; improve transactions with local

573.1

771.8

655.2

58.0

600

400

50

60

40

30

and overseas bases; improve transactions with localbusiness groups (capture 15% share by 2012).Capture diverted orders from other manufacturers

(2) Streamline operations and reduce overall costsPromote factory relocation and production shift to low-cost regions (Eastern Europe→North Africa; North America→ASEAN)

201.9331.4

261.9324.1

17.0

6.1

2007 2008 2009 forecast2006

200

0

30

20

10

0

regions (Eastern Europe→North Africa; North America→ASEAN)(3) Develop new products and technologies (small and

lightweight, environment-conscious, networking, etc.)Weight reduction (Cu-SUS compound conductors, aluminum wiring, smaller connectors)Underfloor cables for HEV and EV high-voltage cables plug-in2007 2008 2009 forecast2006

2,000

25世界シェア25%

Wiring harness order quantity and global market share

Gl b l k t h

Underfloor cables for HEV and EV, high voltage cables, plug in, battery-related parts, etc.

Power & LAN (Develop Sumitomo Green Harness)

Current achievementsExpanded activities for acquiring orders from non-Japanese

1,500

万台 15

20

25

その他

欧州

世界シェア

21%22%

23%Global market share

Others

Europe0 un

its/y

ear

car makers; favorable starting orders for new 2009 models of Renault, PSA (Peugeot, Citroen) and Ford.Adjusting production systems and capacities according to demand, improving productivity per person.Promoting production shift from North America to Asia

500

1,000台/年

5

10

北米

アジア

日本

North America

Asia

Japan

10,0

0 (aim at local procurement rate -- approximately 60%), diminishing production bases in Eastern Europe, promotingproduction shift to Africa.Reinforced development of and order acquisition for high-voltage wiring harnesses for HEV and related products.

120

08年 09年 10年 12年

0

日本Japan

2008 2009 20122010

Aluminum wiring mass production commenced.

FY2009FY2009 1 t H lf R lt1 t H lf R ltWorld Automobile Demand Forecast World Automobile Demand Forecast


20.0

World Automobile Output Forecast (CSM Worldwide, October 5, 2009)

1 million vehicles/quarter 1st 2nd

1 million vehiclesCalendar year basis (increase/decrease from previous year)

Automobile output compared

17.8 17.9

15 7

18.0

Dotted line: previous forecast (April 2009)

Continuous line: current forecast (October 2009)

Year half-year (Jan.–June)

half-year (July–Dec.)

Annual

2008 actual 35.7 29.7 65.4

Asia and other areasEurope

North America

Japan

5.6 5.8

15.7

14.0 13.1

13.6 13.6 14.2 14.4

15.0 14.5 14.3

14.0

16.0

2009 year-ahead forecast

(−32%)24.3

(−6%)28.0

(−20％)52.3

5.3

5.0

5.1 5.9 5.4

5.8 5.6 5.8

5.5 5.7

11.2 11.6

10.0

12.0

Demand is expected to exceed the year-ahead

2009 current forecast

(−29%)25.2

(−2%)29.2

(−17%)54.4

5.8 5.9

4.8

4.0 4 3

4.3 4.3 4 0

4.7 5.0

8.0

10.0 forecast, thanks to governmental purchase support and other measures: (-20%) → (-17%).

Demand is expected to increase for the second half-year from the year-ahead forecast, from 28.0

3.5 3.5 3.0

2.7 2 4

2.2 2.7 2.3 2 4

3.4 3.4

4.2 4.3

4.0 4.1 4.3 4.0

4.0

6.0

half year from the year ahead forecast, from 28.0 million (year-ahead) to 29.2 million vehicles (current), up 4%.

In terms of market share, orders shifted to us by k h i d i th k f

2.9 2.7 2.7 2.4 1.5 1.5 1.6 1.6 1.9 2.0

2.3 2.1 2.4 2.1

1.7 1.7 2.1 1.8

2.2 2.4 2.2 2.4

0 0

2.0

car makers have increased in the wake of business failures or the aggravated financial conditions of auto part manufacturers in Europe and North America (this change’s contribution to sales figures is expected to show in FY2010

13

0.0

08/1-3

08/7-9

08/10-12

08/4-6 09/1-3 09/4-6 09/7-9 09/10-12 10/1-3

g pand later).

FY2009FY2009 1 t H lf R lt1 t H lf R ltActions in Newly Emerging Countries Actions in Newly Emerging Countries ①① ChinaChina

FY2009FY2009 1st Half Result1st Half ResultAutomotive output in China for FY2009 will exceed 10 million units, highest in the world.・SEI is expected to secure approximately 19% share of China’s market, mainly for VW and Japanese auto makers in 2009

Shanghai VW

FAW‐VW

Shanghai

Tianjin Jin-Zhu Wiring Systems

mainly for VW and Japanese auto makers, in 2009.＜Future Actions＞

・Promote market research and local procurement of componentsby utilizing technical center in Shanghai.

・Start connector sales for local business groups.A i d f i i h

Shanghai GMBeijing HyundaiChongqing Chang'an

Others

Market shares for passenger cars sold in ChinaJan.-Sept. 2009

First Automotive

Work

Tianjin FAW ToyotaFAW-Volkswagen Automotive

g y・Acquire orders for wiring harnesses

in hybrid cars to be produced inChina from 2010.

Chang an Suzuki

Dongfeng NissanChery

Automotive

FAW‐BYD

Guangzhou Work Group

Beijing Hyundai

Motor

Changchun BN

Huizhou Zhucheng Wiring Systems Dongfeng Nissan

Toyotag

Honda

Source: NIKKEI NewspapersOrange segments in this pie chart: Japanese auto makers

Shanghai Dongfeng

Motor Company

Suzhou BN

Wiring Systems

Dongfeng HondaWuhan Sumiden Wiring SystemsChery

Automobile

Sumiden Mediatech Suzhou

Automotive Industry

Corporation

g gMotor Group

Chang'an Automobile

Chongqing Chang'an Suzuki

Shanghai VW

Guangzhou Automobile

GroupGuangzhou Honda

Guangzhou Toyota Motor

Huizhou Zhurun

Huizhou Sumiden Wiring Systems

Chongqing Jin-Zhu Wiring Systems

Consolidated Subsidiaries

Equity method affiliates

14

gAutomobile

Huizhou Zhurun Wiring Systems

affiliates

※SEI group has 23 affiliated companies in China.Only main affiliated companies are shown in this diagram.

FY2009FY2009 1 t H lf R lt1 t H lf R ltActions in Newly Emerging CountriesActions in Newly Emerging Countries ②② India and BrazilIndia and Brazil


Actions in Indian market Actions in Brazilian marketAutomakers' market shares FY2008Automakers' market shares FY2008

Number of

Suzuki (Maruti Suzuki) has an overwhelming 50% share of the Indian market.Our customers are Suzuki, Hyundai and Japanese carmakers with large market shares.

Japanese automakers, which were late to increase sales locally due to the predominance of biofuel, are now focusing their efforts on catching up.

Our customers are Fiat and Japanese two-wheel and four-wheel Number ofMahindra Number of

vehicles sold: 282 million

market shares.Our estimated market share is 59% (2008).

Maintaining Suzuki and Hyundai businessI i b i ith I di

manufacturers.Our estimated market share is 12% (2008).

- Increasing business with Japanese

automakers- Capturing business with VW and other

Number of vehicles sold:

155 millionSuzuki

Hyundai

Tata

Mahindra

Increasing business with Indian automakers

Manufacturing basesManufacturing and sales bases in India

Japanese

p gnew customers

- Increasing demand by responding to customers' expansion into nearby countries (Argentina etc.)

Japanese

Hyundai

Manufacturing bases

Sales basessales bases in India

Manaus area (Honda, Yamaha)

Mumbai area (FIAT, Mahindra, Tata)

Delhi area (Suzuki/Maruti, Honda)

Chennai area (Hyundai, Nissan) Sao Paulo area

(Honda, Toyota, FIAT)

Manufacturing bases

Sales bases

Manufacturing and sales

15

Bangalore area (Toyota) * Indian bases are mainly the

equity method affiliates, joint ventures with local capital.

Manufacturing and sales bases in Brazil

FY2009FY2009 1 t H lf R lt1 t H lf R ltTechnological Focal Themes of Wiring HarnessesTechnological Focal Themes of Wiring Harnesses


Underfloor cableUnderfloor cablePower cablePower cable Charger connectorCharger connectorBus ringBus ring

To be the top HEV/EV (high voltage) manufacturer, we are expanding our business sphere from cables to charger connectors and battery accessories.

gg

Battery packBattery pack--relatedrelated

HEV/EV(high voltage)

gg

AC100V

related related accessoriesaccessories

Weight-reducing technology, AC100V/200V

g g gy,low-cost components

Development of weight-reducing technology, which contributes to fuel efficiency, and highly cost-efficient components for low-priced automobiles

Power/signal distribution devices

Aluminum wireAluminum wire

Aluminum harness (30% of copper)

p p

(30% of copper)Highly reliable connecting technology

Low cost power wire

LowLow--cost cost componentscomponents HighHigh--speed LAN equipment and cablesspeed LAN equipment and cablesLow-cost power wire

Halogen-free wire, PVC wire etc.

ConnectorsIntegrated connector

pp

Power& LAN

16

Integrated connector etc.

Optical link & fiberHigh-speed LAN cable

Application of civil technology to automobiles

FY2009FY2009 1 t H lf R lt1 t H lf R ltGrowth Strategies: Information & CommunicationsGrowth Strategies: Information & Communications


4,000 300

Optical & Electronic devices(including Sumitomo Electric Device Innovation from 2009)

Fiber ・Cable/Accessories.

CommutureAccess network equipment

Sales(¥bn)

Sales/Operating Income (billion yen)

400 30Others (until FY2007 Netmarks included)


Major goals(1) Enhance price competitiveness and reduce costs.(2) Capture overseas demand for broadband- and FTTH-related products and expand

Operating income(¥bn)

80 3

91.5

285.0275.6

333.1

275.03,000

200

250

300

25

20

(2) Capture overseas demand for broadband and FTTH related products and expandbusiness globally (Europe, U.S., China and Asia)

(3) Increase market share for photonic products and expand 10G Ethernet product line-up.(4) Develop networking equipment for next-generation network (NGN) and increase sales.

Develop and expand sales of wireless-related products.

Current achievements

86.5 43.752.135.7

41.948.6

30.6

33.730.9

80.379.087.1

12.6

8.1

2,000

100

150200 15

10

Optical fibersExpanded exports to growing overseas markets (China and India) to offset stagnantdemand in JapanJoint venture established with Futong Group to expand production capacity and sales inChina・Preform and fiber manufacturing company established in Hangzhou City (operation

h d l d t i S t b 2010)

34.031.632.5

82.6

78.481.486.66.55.0

0

1,000

0

50

2007 20082006 2009 forecast

100

5

scheduled to commence in September 2010) ・Optical cable manufacturing company established in Chengdu City (operation commenced in December 2008)

・Holding company established in Hong Kong (integrating two manufacturing companies in Huanan District)

Promoting expansion of optical cable sales with Opticable, (Nexans’ subsidiary in Belgium , investment made in Dec 2008)

146

NGN-related product sales forecastFY2007 = 100changes

investment made in Dec. 2008)Optical & Electronic devicesTransformation of Eudyna Devices Inc. (JV with Fujitsu, hereinafter EUD) into a whollyowned subsidiary in April 2009.Proceeded with reorganization of SEI and EUD in August and established Sumitomo Electric Device Innovation (hereinafter SEDI) to pursue synergy effects.・Enrich the product line up from Access networks to higher backbone networks

120

160

7342

100

146123

changes

Access network

NGN NGN serviceservicelaunched launched in Marchin March

・Enrich the product line-up from Access networks to higher backbone networks ・Integrate sales bases into SEI and utilize SEI’s business operations, brands, and networks・Integrate R&D sections into SEI and pursue greater efficiency and acceleration in R&D・Integrate manufacturing and development sections into SEDI and pursue greater efficiency

in manufacturing.Integrated production commenced for optical and electronic devices in Suzhou, China(April 2008)

40

80

22 30

51 5198 NGN-relatedproducts

network equipment

in March in March 20082008

Home network appliances

Broadband access equipment

(April 2008)・Promote production shift from Japan to China and pursue cost reductions

Access network equipmentsAdvanced investment for NGN-related products (GE-PON, HGW, IP-STB, etc.) has peakedout; therefore, focus on favorable starting orders for new products such as wireless-relatedequipmentEntry into growing overseas markets

17

0

07年 08年 09年推

222 q p

2007 2008 2009 Forecast

Entry into growing overseas markets・Sales expansion in Taiwan, Hong Kong and mainland China, mainly with GE-PON

FY2009FY2009 1 t H lf R lt1 t H lf R ltOptical Fibers and Cables: InitiativesOptical Fibers and Cables: Initiatives


200 In China, demand has greatly expanded (over 50% from previous year) mainly for cell

Demand trends of optical fiber

150

Million Kmｆ/year

others

Japan

50% from previous year), mainly for cell phones and metal wire replacement.⇒ Further reinforcement of Chinese bases

More active use of cable manufacturing d l JV ith F t

50

100 North America

Europep and sales JVs with Futong

Early start-up of a local preform manufacturing company (scheduled operation start: September 2010)

0

50

'06 '07 '08 09

China

p p )

Demand increase is expected in the "Others" areas.Sales expansion in Asian countries promoted’09 Forecast'06 '07 '08 09

Area Demand climateProduction

bases Company situation

Sales expansion in Asian countries promoted.Year-ahead forecast reviewed

’09 Forecast

China JV with Futong Marked increase in orders; production to capacity

North America SEL

Demand decreased by slightly over (10)%; promotion of sales expansion with already established products

Europe JV with Nexans Despite stabilized demand, orders have increased, thanks to JV synergy.

Japan Yokohama, TochigiWith the number of FTTH subscribers slow to increase, domestic demand has slowed, while exports have increased.

18

Total Overall increase in orders, mainly thanks to increased demand in China

FY2009FY2009 1 t H lf R lt1 t H lf R ltGrowth Strategies: ElectronicsGrowth Strategies: Electronics


Electronic wires FPCs Semiconductors OthersOperating income(¥bn)Sales

Sales/Operating Income (billion yen) Major goals and current achievements

Major goals(1) Focus on products in growth business areas (cell phones, liquid crystal

displays, storage devices and game consoles, etc.) and expand sales.

182.9

220.0223.020.0

2,500

3,500

250

300

Electronic wires FPCs Semiconductors Others (¥bn)(¥bn)

250 25

300 30

displays, storage devices and game consoles, etc.) and expand sales.(2) Strengthen global sales and production structure.(3) Increase sales of high value-added products and reduce costs for mainstay

products.(4) Launch new products and develop new technologies.

Current achievements

60 9

49.6 58.5

56.5

48.857.6

71.975.1165.0

182.9

17.2

1,000

1,500

2,000

100

150

200200

150

100 10

15

20Current achievements

Electronic wiresUse of ultra-fine coaxial cables in fewer cell phone models sold outside Japan; expanded sales of ultra-fine coaxial cables in health care and other new areasSmooth startup and sales expansion of tab lead mounted in automobiles

42.554.969.875.3

12.8

19.823.013.9

60.9

1.1

4.5

0

500

0

50

2007 2008 2009予想2006

50 5

2009 forecast

Smooth startup and sales expansion of tab lead mounted in automobiles (FC)Captured demand for products for electronics in China (halogen-free electronic wires, Sumicard, etc.)Competitiveness ensured through overall cost reduction

FPCs

172 176200

Sales of ultra-fine coaxial cables, FPCs and semiconductors

FPCsStrengthened overseas sales structure and expanded sales to non-Japanese customersExpanded sales of high value-added products for smartphones and game consoles, HDD, etc.Expanded sales of surface-mounted or modularized products

74112

130 138100

138

172 167 176

100

150

200 (FY2005 figures = 100(FY2005 figures = 100))

FPCs

p pCost reductions through shifting upstream processing overseas (ex. China)

SemiconductorsGaN substrates: expanded sales for Blu-Ray applications; expanded application of high-power LEDs to more appliances

21 21 21 15 20

31 43 3922 18

48

74 130 138

0

50

100 FPCs

Ultra-fine coaxial cables

Semiconductors

pp g p ppAccelerated development and early commercialization of GaN substrates for Green LDSales expansion and market share increase of GaAs for cell phones

OthersPromotion of microfiltration water treatment membrane module business

19

15 200

20052005 20062006 20072007 20082008 20092009

Semiconductors Promotion of microfiltration water treatment membrane module businessEarly launch of metallic nanoparticle material business

FY2009FY2009 1 t H lf R lt1 t H lf R ltFPC: Initiatives and AchievementsFPC: Initiatives and Achievements


1,140 1,200 1 0901 2001,400

()は前年同期比増減率

Million units/year

60 9

70¥Bn/year

Sales forecast for FPCWorldwide output forecast for cell phones

1,050 1,063 938

, 1,090

600

800

1,000

1,200 ()

Cell phones 49.6

58.5 56.560.9

54.960(9%)

90 137 1520200

400

'07 '08 '09

Smartphones

31.9 2531.9

28

45.6

49.650

2H07 08 09

24.426.4

28.7

30

40 2H

The number of cell phones produced worldwide decreased by 9% in 2009 (by 20% in Japan).O

Further sales promotion to 20

30On the other hand, the smart phone market continued growing, by 11%.

Further sales promotion to non-Japanese cell phone manufacturersCapturing demand in the expanding smart phone marketSales promotion for use in HDD and game

l

21.2 23.226.6

31.5 29 26.210

Focusing on high value-added products

1H

consolesOverseas relocation (China etc.) of upstream processes for cost reductionChinese operation to be switched from commissioned processing to independent financing, to commence

0

FY05 FY06 FY07 FY08 FY09 FY09

20

p g p g,integrated production in a new plant (2010) FY05 FY06 FY07 FY08 FY09 FY09

⇒ Increase income expected, despite severe demand conditions

Forecast(revised)

Forecast(original)

FY2009FY2009 1 t H lf R lt1 t H lf R ltGaN Substrates: Product Development and Future InitiativesGaN Substrates: Product Development and Future Initiatives


Development of the world's first pure green laser

The world's longest wavelength, 531 nm (pure green)

For Blu-ray Disc (blue-violet laser)Market trend: Sales increase eventually for

531 nm (pure green)Free wavelength selection possible in the green region⇒ Covers all wavelengths in the green

rangeLittle change in transmitting

AV application, but not for PC application, contrary to expectations

Technological trend: Customer yield improvement, chip wavelength under high electric current⇒ Usable for high output applications

Progress of expansion of GaN applicationsAccelerated development for commercialization

H i ti ith j t k t t

size reduction⇒ Promote expansion of applications other than Blu-Ray

Progress of expansion of GaN applications Harmonization with projector market entryExploitation of laser TV and other new applicationsExpansion of GaN application making use of

superior GaN features (heat dissipation and conductivity = high level power)

Laser display image

Due to development of

conductivity = high-level power)Since May 2009Sale commenced for LED applications (white high-power LED for appliances)

Mirror device

Optical systemhigh-output green full-range laser, realized RGB3 laser light sources.

Red RG

Liquid crystal High-luminance LED li hti

LED headlight for automobiles G

21

GreenBlue B

backlight light source

LED lighting for automobiles G

FY2009FY2009 1 t H lf R lt1 t H lf R ltGrowth Strategies: Electric Wire, Cables and EnergyGrowth Strategies: Electric Wire, Cables and Energy



Others売上高 Major goals(1) Continue structural reforms in mature business areas and

Magnet wires

Copper wire rods

Electric power cables

Operating income(¥bn)

Sumitomo Densetsu Co Ltd

Nissin Electric Co., Ltd.

Sales(¥bn)


594.8

7,000

450

500

(1) Continue structural reforms in mature business areas and accelerate cost reductions.

(2) Capture active energy-related demand in overseas markets suchas China, India and the Middle East.

(3) Develop more products for automobile and electric industries.

cables (¥bn)Co., Ltd.

70050

45

102 3

147.5

536.1

501.8

5,000

6,000

350

400

450 ( ) p p(4) Explore new business opportunities in the fields of energy/resource

conservation and environmental protection.

Current achievementsCapture Asian and Middle Eastern demand for electrical

600

500

40

45

35

58.462.2

52.4

102.3

134.9405.0

4,000

250

300

350infrastructure and expand production bases globallyJoint venture established by J-Power Systems Corporation (50%-owned equity method affiliate) and local capital in India (established in January 2008, operation scheduled to commence in 2010); another JV established in Saudi Arabia (to be established in July 2009

500

40030

35

25

131 5

66.9

127.4

147.8 110.142.660.0

11 9

18.7

2 000

3,000

150

200

250 another JV established in Saudi Arabia (to be established in July 2009, operation scheduled to commence in 2011)

Development and sales expansion of products for recyclable energy (solar, wind, etc.) and electric-efficient infrastructure Development and commercialization of new magnet wires for high-

30020

25

15

88.0109.762 1

120.0

136.8

137.3131.5

4.5

8.9

11.9

1,000

2,000

50

100

150 Development and commercialization of new magnet wires for highstrength and high-voltage applications (for HEV, etc.)Production system adjustment and cost reduction in response to decreased demand for magnet wiresIncreased production capacity for Celmet porous metal used in batteries for hybrid cars

200

100

10

15

5

35.124.137.942.7

62.1

0 0

50

2007 2008 2009予想

batteries for hybrid carsExpand sales of air cushions and trolley wire in response to increasing demand for railway infrastructureCommercialization of thermal-control devices for electronics sectorR&D and practical application of superconducting cables and

2006

5

2009 forecast

22

apparatuses


Actions for Renewable Energy and Electric Power EfficiencyActions for Renewable Energy and Electric Power EfficiencyFY2009FY2009 1st Half Result1st Half Result

Large scale power

In addition to existing products, we are developing products that promote renewable energy and electric power efficiency.

HouseDirect-current (DCCV) cableElectric wire for solar power

Power transmission/distribution

Mega solar system

Large-scale power generator

Direct current (DCCV) cable (JPS)

pgeneration (Box WH)

Direct-current transmission reduces power

network

Two-way

Plant

Electric wire connecting solar

loss.Demand is increasing for oil-free, environment-friendl CV for Converter Transformer

Substation

Wind power

generator

Power conditioner for solar powerSolar power generation system design

panels , widely in use from household to mega solar.

friendly CV for submarine cable and other uses.

Converter TransformerBreaker

Power conditioner for solar power generation system

(Nissin Electric Co., Ltd.)

Solar power generation system design and installation (Nissin Electric Co.,

Ltd. and Sumitomo Densetsu Co., Ltd.)

Reduced loss50% reduction from the present level of electricity

DC-to-AC conversion of

Demand for low-loss cables, equipment and converters for new installation and renewal,

High-temperature superconducting cable

Solar power present level of electricity

loss during underground transmission

Space savingPower-transmission capacity

conversion of solar power

High (95%) conversion rate

d l

,in preparation for next-generation power networkPower (DC) transmission via superconducting

pgeneration system in Tuvalu

200 times greater than copper cable of the same surface area

Saves spaceReduces construction cost

reduces loss

Wide input voltage range covering

via superconducting cables from solar (wind) power generation systems, highly efficient conversion by SiC i t

Since 1993, approximately 800 design, installation and equipment supply assignments have been handled by Sumitomo

23

co e gvoltage fluctuation

invertorshave been handled by Sumitomo Densetsu, considered one of Japan’s best in this domain.

FY2009FY2009 1 t H lf R lt1 t H lf R ltCapturing Demand in Railway Infrastructure DevelopmentCapturing Demand in Railway Infrastructure Development


Used in almost all train cars, including Shinkansen and subway trains.2008 d ti k t h

Growing environmental consciousness

Background of increasing demand in railway infrastructure development

Air cushions

2008 domestic market share: Approx. 40% (1st rank)(Estimated worldwide market share: about 14%, 3rd rank)

Economic policy measures of national governmentsRaised awareness of transportation efficiencyIncreasing number of megalopolises =

Reduces car vibration, enhancing rider comfort

and safety

3rd rank)Overseas production and sales networks are currently being expanded and improved in view of increasing demand in China, India etc

g g pgrowing demand for urban railway systems and inter-city rapid railway systems

Trolley wire

Chassis of railroad car

Air cushion (2 cushions are used f h i ) India etc.Trolley wire

Widely used in Shinkansen, conventional railway and subway systemsPower supply to train cars

2008 sales (actual): 1 8 billion yen (including equipment)

Sept.2009 Established manufacturing and sales JV

of air cushions and violation-proof rubber products

for a chassis)

2008 sales (actual): 1.8 billion yen (including equipment)

2.8

2 5

3.0

¥bn/year

Sales forecast for air cushions

Capturing demand from overseas projects

（KTS High-Tech Rubber Co., Ltd.）

1.2 1.3

1.2

1.4

2.0 2.2

1.5

2.0

2.5 ¥bn/year

Domestic

p j

Using JV with local Chinese investors (Yantai JSI Electric Industry Co., Ltd.)

0.30.8 0.9

1.61.1

0 0

0.5

1.0

Overseas

24

0.0 FY07 FY08 FY09 FY10Trolley Wire

FY2009FY2009 1 t H lf R lt1 t H lf R ltGrowth Strategies: Industrial MaterialsGrowth Strategies: Industrial Materials



Major goals(1) A l t l b l b i th (Gl b l T 3 d t )


SpecialSales

301 9

3,500 500

(1) Accelerate global business growth (Global Top 3 products).(2) Strengthen core technologies (new materials and product development,

processing technologies, etc.) and pursue further differentiation.(3) Develop more products for industries other than automotive, such as

aviation and energy.(4) S t bl l f t t d th t i l

Special steel wires Hard materials A.L.M.T. Others

Sales(¥bn) Sintered parts Operating income

(¥bn)

350 50

83.088 6

282.1

301.9295.5

2 500

3,000

400

(4) Secure stable supply of tungsten and other raw materials.

Current achievementsSpecial steel wires

Acquired prestressing wire demand for infrastructure (bridges, airports etc )

300

40

73 764.9

76.088.6

225.0

26.1

30.3

2,000

2,500

300

airports, etc.) Integrated production and cost reduction of spring OT wires and saw wiresExpanded sales of saw wires for solar cellsExpanded overseas sales and cost reduction of steel cordsGlobal business development in partnership with Sumitomo Rubber

250

20030

35.145.241 2

40.9

58.573.768.3

1,500200

Global business development in partnership with Sumitomo Rubber Industries

Hard materialsStrengthened emerging countries’ sales: established branches in China (ex . Dalian , etc)Integration of production centers for TA and CBN and cost

15020

28.6

45.6

59.857.5

31.141.2

500

1,000

100

Integration of production centers for TA and CBN, and cost reductionSales expansion into new areas outside the auto industry (aviation, energy, railways, etc.)Continued joint research with Nagoya University concerning recycling technologies for cemented carbide tools

100

50

10

59.566.940.239.9 0.5

2.4

0

500

02009予想200７

recycling technologies for cemented carbide toolsA.L.M.T.

Sales expansion and cost reductions for liquid crystal target materials, heat sinks and ultra-fine diamond tools

Sintered partsIntegration of general product manufacturing processes at

20082006

50

2009 forecast

25

Integration of general product manufacturing processes at Okayama Plant, and cost reductions

FY2009FY2009 1 t H lf R lt1 t H lf R ltHard Materials: Initiatives for Market DevelopmentHard Materials: Initiatives for Market Development


2007

N th North

2012 Vision Initiatives

13%JapanEurope

NorthAmerica

12%JapanEurope

NorthAmerica

1. ChinaExpanded branch office network: Shanghai/Guangzhou/Beijing + Dalian + Chongqing + Chengdu + ShenzhenIncreased personnel from Japan (15-person team):

i f d i t t li dBy area 52%19%

Japan

Asia and China

Europe18% 45%

Asia and China

preinforced responsiveness to tooling needsExpanded manufacturing base + tool engineering center established

2. India

16%Asia and China

25% Local distribution network expandedLocally manufactured products increased (Multi-drill, CBN) → reinforced tooling responsiveness

73 7 billi 100 billi

5%I

OtherElectric Other

1. Development of innovative new materials

Heat-resistant alloy processing for aircraft and generators → Goal: 1.5 times greater efficiency vs. currently

73.7 billion yen 100 billion yen

5%

%

12%

8%

Automobile

Ironand

steel

15%

40%11% Automobile

ElectricBy use 2. Development of industrial diamond and precision tools

Target marketg y y

used ceramicsHard-to-cut cast iron processing for construction, industrial machinery and automobiles → Goal: 3 times greater efficiency vs. currently

used ceramics

55%

20%

Industrialmachinery

40%

21%13%

Industrialmachinery

Iron and steel (nano-diamond, SC diamond, diamond coating)

Reinforced ties with precision processing tool and machinery manufacturers

Target market Medicine, communication, electro-optical components, precision dies

26

machinery manufacturers3. Sales expansion of optical components for solar cell processing

FY2009FY2009 1 t H lf R lt1 t H lf R ltResearch & Development Research & Development ～～ developing new businesses by utilizing core technologies developing new businesses by utilizing core technologies ～～


Thin film-type wires

New composite material of CBN and ceramics

Nano-Polycrystalline Diamond Challenge to innovate materials and systems technologies that impose a lower

environmental burden

Shipboard superconducting motor

Automotive components for eco cars

High-performance thin motorSuperconducting coil

Tungsten Recycling technologies

Electric Wire & Cable, Energy Industrial Materials p

High-density battery materials Thin film battery

Bismuth-based superconducting wireEnvironment and

Resources

Improve Business

Material innovation for next-generation safe

and environment-friendly cars Water treatment system (including ballast water)

Near-infrared broadband

Reactors for HEV/EVWiring harness lightweight technologies

Automotive optical LAN

HEV/EV related technology

Electronics Automotive

Presence Worldwide, Strengthen Leading

Technologies Environment-friendly and resource-saving materials

innovation

Water treatment system (including ballast water)

light source

Power deviceGreen laser

Magnesium alloys

Femtocell（ultra-small

wireless

Reactors for HEV/EV

Information & Communications LifeSafety and

Mobile communication network

Magnesium alloyswireless base station)

Life Science

Safety and Ubiquitous

Creation of non-communication b i tili i ti l

Product development aimed at creating

Magnesium alloys

GaN substrates

Blue-violet laser diode

Fiber laser High-function glass

Next-generation transmission technologies (40G ･100G)

Efficient wirelessamplifier

businesses utilizing optical technology

next-generation optical communication businesses

Expand repeaters, ubiquitous terminals and

Wireless amplifiers and devicesVisual communication software

27

GaN substratesg gPONComposition imaging system using near-infrared (NIR) light

Near-infrared camera

Photonic crystal fiber

Optical USB

Expand repeaters, ubiquitous terminals andITS devices to respond to integration of

communications and broadcasting as well asintegration of wire and wireless


Return to Shareholders: Dividend Amount & Payout RatioReturn to Shareholders: Dividend Amount & Payout RatioFY2009FY2009 1st Half Result1st Half Result

For FY 2009, dividend is ¥14/share as initially planned.

25yen per share

Annual dividend payment \20/share

102

15

20Annual dividend payment

Intermediate dividend payment \17/share\18/share

\14/share

Memorial dividend

107

7

8

10

15

\10/share

\13/share

\10/share

\14/share

1011

5

4 4

5

7

5

10

\8/share\8/share

54 4

56

7

10

7

0

5

2003 2004 2005 2006 2007 2008 2009 (estimate)

20022001

34.29 48.01 76.43 100.22 112.74(26.89)11.03

23.3% 20.8% 17.0% 17.0% 17.7% 82.6% 85.4%－90.7%

21.78 16.39Net income per share (yen)

Dividend payout ratio

28


Sumitomo Electric Group Corporate Social Responsibility (CSR) ActivitiesSumitomo Electric Group Corporate Social Responsibility (CSR) ActivitiesFY2009FY2009 1st Half Result1st Half Result

1. Establishment of Sumitomo Electric Group Social Contribution Fund (April 2009)Sumitomo Electric has established a fund whose objectives are to support"Sumitomo Business Spirit" and "Sumitomo Electric

Sumitomo Electric Group Basic Policies on Social Contribution Examples of Sumitomo Electric’s Social Contribution Activities

Sumitomo Electric has established a fund whose objectives are to support human resources development and academic research and studies, including assumption of responsibility for donations to universities and endowments of scholarships which were originated prior to establishment of this fund.

(1) Monetary contributions toward university courses

Contributing to

improvement f

Respecting human

Attaching importance to

Sumitomo Business Spirit and Sumitomo Electric Group Corporate Principles" focus on the following:

( ) y y(2) Granting of scholarships for local students studying at overseas universities (3) Granting of scholarships for international students to study in Japan(4) Subsidies for primary, secondary and tertiary education in Japan and

overseas(5) Support for of academic and research activities (6) Fostering of personal development of young people through support for

sports cultural activities and the arts

of environment and society

human resources

importance to technology

sports, cultural activities and the arts

2. Establishment of a special subsidiary for the employment of disabled personsIn FY2008, Sumiden Friend Corporation was established to promote the employment of disabled persons (12 persons employed)

1. Implementing global-scale efforts toward human resource development, advancement of research and academic studies, and environmental conservation

3. Systems for supporting employee involvement in social contribution activitiesVolunteer leave system and Matching gift program* introduced in 2007

4. Contributions to local communities

conservation.

2. Promoting community-oriented social contribution activities at Sumitomo Electric business locations around the world.

Sumiden FriendCorporation

Contributions to local environmental conservation (cleaning, tree planting, etc.)Opening of sports grounds, gymnasiums and other corporate facilities to the public; factory tours and other eventsCompany personnel serving as speakers, lecturers and instructors in local schools

5 Support for post-disaster restoration

3. Providing ongoing support for employees' social contribution activities.

5. Support for post-disaster restorationGroup-wide donation totaling 80 million yen for Sichuan (China) earthquake

victims

On the occasion of the 110th anniversary of its foundation (2007), Sumitomo Electric Group established its Basic Policies S i l C ib i Th G i l ib i i i i i h i b i “Gl i E ll

29* System in which an employee's donation to an external foundation is matched by an employer donation in the same amount.

on Social Contribution. The Group promotes social contribution activities with a view to becoming a “Glorious Excellent Company."

FY2009FY2009 1 t H lf R lt1 t H lf R ltFY2009FY2009 1st Half Result1st Half Result

Appendix

30

FY2009FY2009 1 t H lf R lt1 t H lf R ltNew MidNew Mid--term Planterm Plan““VISION 2012”VISION 2012” ～～ Becoming a Glorious Excellent CompanyBecoming a Glorious Excellent Company


Glorious Excellent Company

“VISION 2007” Sales &Marketing

Portfolio: 5 business segments

Electric Wire & Cable, Energy Electronics

“VISION 2012”（Second 5-year plan)

FY2012 targetsSales: ¥3,000 bn

（First 5-year plan）FY 2007 targets (initial)

Sales: ¥2,000 bnOperating income: ¥120 bn

Marketing

CorporateStaffR&D Manufacturing

Industrial Materials

Information & Communications

Sales: ¥3,000 bnOperating income:¥210 bnROE: 10.0％

“Strengthening of strategies”

Developing a profit-oriented growth portfolioROA: 8.0％“Gearing up for growth” Automotive

Developing a profit-oriented growth portfolio

Bolstering our business structure based on full implementation of capital and financial strategies

Optimizing Group management worldwide

Growth StrategiesExpand overseas operations(manufacturing, R&D, sales, logistics)Create corporate alliances and expandbusiness in a strategic manner

Be a global top competitor in “QCDD”(quality, cost, delivery and development)Exploit intellectual property (IP)

Withd f d f i

Global Top 3 Target

Raising Our Global Presence Strengthening Our Leading Technology

business in a strategic manner

Human resources development (SEI University)

Withdraw from underperforming non-core businesses and focus on core businessesAchieve global Top 3 status in sales, technology [and][or] profitability

• Sumitomo Business Spirit ・ Sumitomo Electric Group Corporate Principles

Human resources development (SEI University)

31

FY2009FY2009 1 t H lf R lt1 t H lf R ltPrioritized Investment in Growth Areas: Capital ExpenditurePrioritized Investment in Growth Areas: Capital Expenditure


(\bn)

Target segments Priority measures

Wiring HarnessesResponses to new orders

• Capital expenditure plan

131.6

121.9Automotive

- Responses to new orders Rationalization investmentIncreasing overseas production of connector

Tokai RubberResponse to orders streamlining etc

69.61,000

- Response to orders, streamlining, etc.

Information & C i ti

Increase production capacity in response to expanding demand for optical fiber in China

100

72.9 82.0Communications expanding demand for optical fiber in China

Rationalization investment

Arrange production bases for optimization

12.0

9.1

7 5

33.0

500

ElectronicsArrange production bases for optimizationFPC: Increase production line

Rationalization investment50

18.39.5

.

10.99.5

7.514.5


Increase production of CelmetBusiness development in Asia by Nissin Electric Co., Ltd.

10.021.1 22.6

15.0

0

y ,

IndustrialMaterials

Limited investment in minimal areas, focusing on order responsiveness streamlining safety and quality

32

2007 2008 2009(E)Materials order responsiveness, streamlining, safety and quality

FY2009FY2009 1 t H lf R lt1 t H lf R ltPrioritized Investments in Growth Areas: R&D ExpensesPrioritized Investments in Growth Areas: R&D Expenses


800(\bn)

Target segments

Environmental protection(HEV/EV)

High-voltage harnessesThin diameter（Cu-SUS）harnesses

Market trends Priority measures• R&D expenses plan

75.073.072.3

800 Automotive Lightweight Safety (sensors, cameras)Computerize

Reactors for HEV/EVElectric Control UnitsPower Distributors

High speed optical links/modules

80

38 939.0

600 Information&

Communications

Higher backbone network capacityExpand FTTH/wireless accessIntegration of communications and

High-speed optical links/modulesOptical switches, Waveguide partsMonitoring systemsOptical access equipment, Wireless access equipment, IP terminal

60

38.941.4

400

CommunicationsbroadcastingDevelop new products for NGN and Green IT

equipment, Image distribution equipment Power-saving technologyIncreased investment in Eudyna Device as a consolidated subsidiary

40

13.4 17.5

400

Electronics

More compactness, high density in devicesIncreased demand for power devices

High-performance FPC※High-density mounted parts/materials,Lithium batteriesGaN/SiC/AlN

40

7.17.9 5.5

13.412.0

17.5

200

devicesLightweightSophisticated semiconductor equipment

GaN/SiC/AlNMagnesium alloysDiamond electron sources

E i /

20

4.54.1 4.0

9.6 8.56.9

0


Energy -saving,Environment protection

High-temp. superconducting wires/cables/coils

Industrial High-precision machining High-performance carbide/diamond tools

33

0

2007 2008 2009(E)※ Flexible Print Circuit

Materials Scarcity of rare materials Research for Tungsten recycling

FY2009FY2009 1 t H lf R lt1 t H lf R lt1H/FY2009 Financial Results1H/FY2009 Financial Results


Sales and operating income (OI) by business segment

Sales OI Sales OI Sales OI Sales OI Sales OI(\bn)

1H/FY2008 Y-o-YY-o-YResults ① Forecast ②

1H/FY2009Results③ ③－②③－①

Automotive 576.9 24.4 330.0 (17.0) 349.4 (3.1) (227.5) (27.5) ＋19.4 ＋13.9

Information &C i ti 134 0 0 2 130 0 0 129 0 0 8 (5 0) ＋0 6 (1 0) ＋0 8Communications 134.0 0.2 130.0 0 129.0 0.8 (5.0) ＋0.6 (1.0) ＋0.8

Electronics 105.7 5.2 70.0 (3.5) 72.7 (0.2) (33.0) (5.4) ＋2.7 ＋3.3

Electric Wire &Cable, Energy 299.8 6.5 190.0 (3.0) 183.6 (1.1) (116.2) (7.6) (6.4) ＋1.9

Industrialdust aMaterials &

Others174.2 13.2 100.0 (6.5) 103.9 (3.4) (70.3) (16.6) ＋3.9 ＋3.1

Eliminations (42.8) (0.3) (30.0) 0 (26.3) 0 ＋16.5 ＋0.3 ＋3.7 0(42.8) (0.3) (30.0) 0 (26.3) 0 ＋16.5 ＋0.3 ＋3.7 0

Total 1247.8 49.2 790.0 (30.0) 812.3 (7.0) (435.5) (56.2) ＋22.3 ＋23.0

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FY2009FY2009 1 t H lf R lt1 t H lf R ltFY2009 Financial ForecastFY2009 Financial Forecast


Y-o-YFY2008 FY2009

Sales and operating income (OI) by business segment

(\bn) Sales OI Sales OI Sales OI Sales OI Sales OI

Automotive 917 1 6 1 349 4 (3 1) 425 6 20 1 775 0 17 0 (142 1) +10 9

2H/Forecast Forecast②Results① 1H/Results ②－①

Automotive 917.1 6.1 349.4 (3.1) 425.6 20.1 775.0 17.0 (142.1) +10.9

Information&Communications 275.0 5.0 129.0 0.8 156.0 5.7 285.0 6.5 +10.0 +1.5

Electronics 182.9 1.1 72.7 (0.2) 92.3 4.7 165.0 4.5 (17.9) +3.4

Electric Wire&Cable,Energy 536.1 8.9 183.6 (1.1) 221.4 5.6 405.0 4.5 (131.1) (4.4)

IndustrialM t i l 282 1 2 4 103 9 (3 4) 121 1 3 9 22 0 0 ( 1) (1 9)Materials&Others

282.1 2.4 103.9 (3.4) 121.1 3.9 225.0 0.5 (57.1) (1.9)

Eliminations (71.2) 0 (26.3) 0 (28.7) 0 (55.0) 0 +16.2 0

Total 2,122.0 23.5 812.3 (7.0) 987.7 40.0 1,800.0 33.0 (322.0) +9.5

35

FY2009FY2009 1 t H lf R lt1 t H lf R ltForwardForward--looking Statementlooking Statement


This presentation contains various forward-looking statements that are based on current expectationsand assumptions of future events. All figures and statements with respect to the future performance,projections, and business plans of Sumitomo Electric and its affiliated companies constitute forwardl ki t t t F t th t ld t l lt t diff t i ll i l d b t tlooking statements. Factors that could cause actual results to differ materially include, but are notlimited to:

1. Market and economic conditions in the United States, Europe, Japan and other Asian countries, especially increases and decreases in personal consumption and capital expenditure.

2. Fluctuations of currency exchange rates, especially between the Japanese yen and the U.S. dollar, the Euro and Asian currencies.

3 The ability of Sumitomo Electric and its affiliated companies to cope with rapid technological3. The ability of Sumitomo Electric and its affiliated companies to cope with rapid technologicaldevelopment.

4. Changes in financial, management, environmental and other assumptions.5. Current and future laws and regulations in foreign countries involving trading and other activities.6 Ch i th k t l f iti d b S it El t i d it ffili t d i6. Changes in the market value of securities owned by Sumitomo Electric and its affiliated companies.

Please be advised that there are possibilities actual sales and profits could be different from thosedescribed in these materials. Sumitomo Electric and its affiliated companies are not obliged to updateand make public any forward-looking statements after releasing these materials.

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