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 the fiscal year ended March 31, 2013 (the period from April 1, 2012 to March 31, 2013), the global economy faced concerns about the unsolved European sovereign debt crisis, which had negative repercussions for economic growth in China and other emerging countries, although the U.S. economy remained firm. The Japanese economy also weakened with a decline in export performance. However, the depreciation of the yen and the rise in stock prices has raised expectations that Japan will return to economic growth.

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

Despite these operating conditions, the Daifuku Group recorded robust orders for automobile factories in the United States, Mexico, and Asia, while orders from the e-commerce sector for large distribution centers within Japan benefited earnings. Increased sales of systems for automobile factories worldwide and for semiconductor factories in the United States, Taiwan, and South Korea also contributed to earnings. As a consequence, the Group received orders of 210,990 million yen, increasing 8.1% from a year earlier, and recorded net sales of 202,337 million yen, a rise of 2.2%.

These orders include a backlog of about 6.5 billion yen as of the end of October 2012 for orders received by Elite Line Services, LLC, a U.S. company that joined the Group in November 2012 and that provides operation and maintenance services for airport facility equipment.

In terms of profits, operating income increased significantly, mainly attributable to the efforts of Daifuku Co., Ltd. in exacting and comprehensive project management, as well as in cost cutting. In addition, the initial forecast was exceeded, backed by the effect of standardization of the photovoltaic related products manufactured by Contec Co., Ltd. Non-Japanese subsidiaries, especially in Asia, also bolstered the Group's earnings. Meanwhile, non-operating income increased, influenced by foreign exchange gains resulting from the depreciation of the yen. The Group posted an impairment loss of bowling-related assets as an extraordinary loss, reflecting market trends and the performance of the bowling-related business. Consequently, the Group recorded operating income of 8,010 million yen, improving 89.9% from a year earlier, ordinary income of 7,999 million yen, increasing 98.9%, and net income of 4,439 million yen, up 262.9%.

Under the three-year business plan, "Material Handling and Beyond," Daifuku set targets of sales of 220 billion yen and operating income of 11 billion yen for the fiscal year March 31, 2013, the final year of the plan. The recent business environment has remained harsh and the Company has fallen short of those targets.

Nevertheless, Daifuku has seen a clear recovery from the effects of the 2008 global financial crisis. This recovery has been supported by the Group's efforts to develop new products, businesses, and markets.

To further sustain this upward momentum, Daifuku will aim to achieve sales of 280 billion yen and an operating income ratio of 7% for the fiscal year ending March 31, 2017, under its new four-year business plan, "Value Innovation 2017," which began in April 2013.

2. Outlook for the fiscal year ending March 31, 2014
Daifuku has made the following earnings forecast for the fiscal year ending March 31, 2014, as follows:

- Orders received: 230 billion yen (Up 9.0% year on year)
- Net sales: 225 billion yen (Up 11.2% year on year)
- Operating income: 8.5 billion yen (Up 6.1% year on year)
- Ordinary income: 8 billion yen (Up 0.0% year on year)
- Net income: 5 billion yen (Up 12.6% 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.

Under the new four-year business plan, Daifuku aims for a medium- to long-term dividend payout ratio of 30%, as one of the challenges in sustaining growth in dividends per share.

For the fiscal year ended March 31, 2013, 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, 2014, Daifuku 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 ended March 31, 2013 and the current business environment into comprehensive consideration.

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