CEO Message

We would like to begin this message by expressing gratitude to our shareholders and investors for their ongoing support.

1. Operating and financial review
During the fiscal year ended March 31, 2012 (the period from April 1, 2011 to March 31, 2012), the global economy faced concerns about financial crisis, raising the specter of recession, mainly linked to the European sovereign debt crisis that began in Greece and the slowdown in the U.S. economy. Some emerging countries, meanwhile, have tightened their monetary policies to control inflation. In the Japanese economy, the outlook has become increasingly uncertain, given the Great East Japan Earthquake, the flooding in Thailand, the record appreciation of the yen, and the weakness in overseas demand. During the fourth quarter of the fiscal year under review, the economy staged a moderate recovery, driven by a rally in export businesses resulting from the weaker yen and a recovery in the U.S. economy. However, the Japanese market has entered the new fiscal year facing an uncertain future in the wake of rising crude oil prices, power shortages caused by shutting down of nuclear power plants, and other factors.

The material handling and logistics industry has continued to confront a difficult business environment, as the pace of recovery in demand remained moderate in Japan, despite demand for restoration from the damage caused by the Great East Japan Earthquake.

In this environment, however, the Daifuku Group's earnings have steadily bounced back from the decline experienced after the 2008 global financial crisis. This rebound is a result of tremendous efforts across the Group, continued from the previous fiscal year.

Orders and sales increased, as the Group responded to rising demand for investment in emerging economies and North America in the automotive sector, met needs for semiconductor miniaturization in the semiconductor sector, and expanded its frameworks through M&A in the airport baggage handling system and car wash machine sectors. As a consequence, the Group received orders of 195,217 million yen, increasing 8.3% from a year earlier, and recorded net sales of 198,052 million yen, a rise of 24.4%. Order backlogs at the end of the fiscal year under review (approximately 90,500 million yen) were slightly lower than the backlogs of the previous fiscal year (approximately 93,400 million yen). However, the Group has made an excellent start in the following fiscal year ending March 31, 2013, receiving orders for large projects for automobile factories in North America that had been postponed from the previous fiscal year.

In terms of profits, the Group maintained the upward momentum of its operating income, aided by the recovery in business volumes and the firm performance of the service business. It also benefited from strong sales in the fourth quarter of the fiscal year under review. Ordinary income was influenced by factors that arose as a result of foreign exchange losses resulting from the appreciation of the yen, market valuation losses on stockholdings due to an overall decline in stock value, and the reversal of deferred tax assets under the revised corporation tax law. Nonetheless, it unexpectedly outperformed the forecast due to the depreciation of the yen and a rise in stock value over the end of the fiscal year under review. As a result, the Group recorded operating income of 4,217 million yen (improving 144.3% from a year earlier) and ordinary income of 4,096 million yen (improving 204.5%). It also recorded net income of 1,269 million yen (up 371.3%).

These consolidated figures include the performance of the airport baggage handling business operated by Logan Teleflex (UK) Ltd., Logan Teleflex (France) S.A.S., and Logan Teleflex, Inc. (hereinafter collectively referred as "Logan Teleflex"), all shares of which the Group acquired in April 2011. The Group’s orders include a backlog of approximately 6,000 million yen for orders received by Logan Teleflex as of March 31, 2011.

2. Outlook for the fiscal year ending March 31, 2013
The Group has made the following results forecast for the fiscal year ending March 31, 2013:

- Orders received: 210 billion yen (Up 7.6% year on year)
- Net sales: 205 billion yen (Up 3.5% year on year)
- Operating income: 6 billion yen (Up 42.3% year on year)
- Ordinary income: 5.5 billion yen (Up 34.3% year on year)
- Net income: 3 billion yen (Up 136.3% year on year)

3. Basic policy for dividends
Daifuku regards the return of profits to shareholders as its most important management task and adopts a performance-based policy for dividends from surpluses based on consolidated net income, with the aim of achieving additional profit distribution to shareholders. We appropriate the remaining surplus to internal reserves for future growth.

For the fiscal year under review, Daifuku paid an interim dividend of 5 yen per share and will pay a year-end dividend of 10 yen per share, making an annual dividend 15 yen per share. With respect to dividends for the fiscal year ending March 31, 2013, the Company plans to pay an annual dividend of 15 yen per share (an interim dividend of 5 yen per share and a year-end dividend of 10 yen), taking the results for the fiscal year under review and the current business environment into comprehensive consideration.

In addition, Daifuku has introduced a shareholder special benefit program, which offers discounts at more than 300 bowling alleys nationwide to which it has delivered its products and equipment.

We respectfully ask our shareholders and investors for their continued support.