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During the year under review, the aluminum industry experienced a significant decline in demand for products from its principle customers in the automotive, electrical and electronics industries as a result of large-scale production cutbacks and inventory adjustments in these and related industries. Sudden fluctuations in raw material prices, such as a steep first-half rise in the price of aluminum in the first half and the subsequent sharp decline in raw material prices during the second half, exerted a large influence on corporate earnings.
Given these circumstances, in accordance with the three-year Mid-Term Management Plan (for the period from fiscal 2007 to fiscal 2009), the NLM Group strove to create new businesses and products while proceeding with business structure renewal in line with the shift in demand. We implemented decisive emergency measures, including the streamlining and rationalization of sales, production, distribution and all our business processes to reduce costs and deferred nonessential capital expenditure to significantly cut expenses. Despite these efforts, consolidated net sales were ¥554.1 billion, a significant decrease compared to the previous year. On the earnings front, we posted a consolidated operating loss of ¥11.9 billion despite structural improvements to reduce costs in line with lower sales and losses on inventory valuation due to falling product prices. Moreover, a loss on the impairment of fixed assets related to the realignment and consolidation of manufacturing sites in the Building Materials Operation, business restructuring and other special losses, and additional retirement allowances for the early retirement program due to workforce downsizing resulted in a ¥31.4 billion consolidated net loss.
Under these circumstances, I regret to announce that there will be no year-end dividend payment. I would like to ask for the understanding of our shareholders regarding this decision.

Sales in the Aluminum Ingot and Chemicals segment decreased 22.7% year on year, to ¥120.7 billion, while operating profit fell 91.8%, to ¥0.7 billion.
Sales in the Aluminum Sheet and Extrusions segment decreased 15.9%, to ¥66.8 billion. Operating results for this segment deteriorated, resulting in an operating loss of ¥5.7 billion, down ¥7.4 billion from the operating profit of ¥1.6 billion in the previous year.
Sales in the Fabricated Products and Others segment decreased 10.1% to ¥226.5 billion, and operating profit decreased 69.9% to ¥4.0 billion.
Sales in the Building Materials segment fell 12.6%, to ¥140.1 billion, with an operating loss of ¥7.9 billion, a ¥4.9 billion decrease.

In March 2009, we announced the realignment and consolidation of manufacturing sites and additional downsizing in our Building Materials operation.
In August 2009, we transferred a large part of the Shin Nikkei Co., Ltd., Funabashi Complex (Chiba Prefecture) production department to the Hokuriku Complex (Toyama Prefecture) and the Fujioka Plant (Tochigi Prefecture), significantly reducing the scale of operations in line with the realignment and consolidation of manufacturing sites in our Building Materials Operation. In addition to the reduction of 400 employees in the previous year, we downsized our workforce by another 200 employees by the end of June 2009. Furthermore, of the ¥15 billion in special losses recorded in the period under review, ¥8.5 billion represents the aforementioned structural reforms.
Furthermore, in July 2009 we announced the decision to transfer all shares of Shin Nikkei to the JS Group Corporation, Japan's largest residential aluminum sash manufacturer. April 1, 2010, is the target date for this transfer. However, the transfer amount and other specific conditions have yet to be determined. Consequently, we have not yet calculated the potential impact of this transfer on future operating performance.
Note: For details, please see the Special Feature section.

In January 2009, Shin Nikkei Co., Ltd., which manufactures and sells resin window sashes for office and apartment building windows, was determined to have falsified results of performance tests for fireproof resin window sashes to obtain accreditation by the Ministry of Land, Infrastructure, Transport and Tourism and was selling fire retardant sashes that did not conform with the certified fire retardant materials specifications. These products were sold from October 2005 to January 2009 and used on approximately 90 constructed buildings. The products in question are currently being upgraded.
The NLM Group takes this issue very seriously and is thoroughly investigating the cause of this problem while formulating and promoting renewed countermeasures to prevent recurrence, focusing on enhanced compliance awareness and strengthened quality control in the development process. At present, we are moving forward with a robust action plan based on these measures.

Severe business conditions are expected to continue in fiscal 2009 in the construction, automotive, electrical and electronics industries and the business environment surrounding the NLM Group. Although we can expect some declines in raw materials prices and inventory adjustments by our customers, we must also assume our manufacturing volume will remain at a low level.
Given these conditions, for fiscal 2009 we forecast net sales of ¥470 billion, operating profit of ¥9 billion and ordinary profit of ¥2 billion. Within this severe environment, we will aim for sustainable growth by strengthening our customer-oriented sales force and accelerating the development of overseas business. At the same time, we are striving to strengthen our earnings base by developing new products and businesses, and cultivating business in growth fields. In these ways, we are making a concentrated Group effort to take advantage of our technological prowess and abundant knowledge of aluminum.
With the transfer of Shin Nikkei, our business will be significantly transformed in the next fiscal period. However, we will continue to provide various products to a wide range of fields as a comprehensive aluminum manufacturer. As a group, we intend to continue striving to enhance competitiveness in each of our businesses and become a strong corporate group through the efforts of all our employees.
I would like to ask for the continuing support of our shareholders in these efforts.

August 2009

Takashi Ishiyama
President and CEO

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