To Shareholders & Investors

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

In the first half of the fiscal year ending March 31, 2010 (the period from April 1, 2009 to September 30, 2009), economic conditions remained severe, reflecting weak consumer spending and a substantial decline in capital investment. Still, the global economy began to show signs of recovering from the severe economic recession that had shaken Japan, the United States, Europe, and the rest of the industrialized world since the fall of 2008.

For the Daifuku Group, consolidated net sales to food and pharmaceutical manufacturers, and to distribution centers including for pharmaceutical wholesalers remained strong, thanks to their relative resilience to difficult economic conditions. However, the sharp decline in capital spending in the manufacturing sector had significant repercussions for the Group. As a result, orders were down 65.4% year over year, to 51,874 million yen, and net sales declined 41.8% year over year, to 73,288 million yen. The large fall in orders was attributable partly to the concentrated posting of large projects in the first quarter of the previous year, as well as the posting of an order backlog of approximately 18.5 billion yen at the close of the term ended December 31, 2007 for Jervis B. Webb Company, a U.S. company that was wholly acquired by Daifuku at the end of 2007, in the first quarter of the previous year.

In profit terms, we recorded an operating loss of 782 million yen, down 10,975 million yen year over year, and an ordinary loss of 946 million yen, a drop of 11,109 million yen, reflecting a fall in the capacity utilization at factories associated with reduced sales and orders, tougher competition for orders, and the posting of an operating loss in the Electronics business. As a consequence, net income stood at only 41 million yen, down 99.3% from the same period of the previous year.

Meanwhile, our results have outperformed the forecast for this first half, which we announced on August 12, 2009 and which anticipated an operating loss of 1,500 million yen, an ordinary loss of 1,900 million yen, and a net loss of 900 million yen. This reflects a concerted and comprehensive effort to reduce overhead costs, cost cutting for projects in Japan and North America, and careful project management.

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