Hitachi Metals, Ltd. (Oct. 31, 2000) Code: Shibaura 1-chome, Minato-ku, Tokyo

Transcription

1 Hitachi Metals, Ltd. (Oct. 31, 2000) Code: Shibaura 1-chome, Minato-ku, Tokyo Consolidated Financial Report for the 6-month period ended September 30, 2000 Contact: Shigeru Ishigay, General Manager Corporate Communications Department Tel: Stock Exchange where listed (section): Tokyo(First), Osaka(First) 1. Performance over the year, April 1, 1999 to September 30, 2000 (Figures are rounded to the nearest million yen) (1) Consolidated Operating results 9/00(interim) 9/99(interim) (Change) 3/00 Net Sales ( million) 237, , % 463,470 Operating income ( million) 14,917 7, % 21,193 Ordinary income ( million) 14,716 5, % 16,297 Net income ( million) 2,411 (29) (1,246) Net income per share ( ) (6.75) (0.08) (3.49) Diluted net income per share ( ) Notes: Profit (loss) on equity method investment: 9/ million 9/ million 3/ million Profit (loss) on Revaluation of derivative transactions: 340 million No change have been made in accounting policy. (2) Consolidated Financial Standing 9/00(interim) 9/99(interim) 3/00 Total assets ( million) 533, , ,195 Shareholders equity ( million) 180, , ,117 Shareholders equity ratio(%) Shareholders equity per share ( ) (3) Consolidated cash flows ( million) 9/00(interim) 3/00 Cash flows from operating activities 23,255 27,793 Cash flows from investment activities (4,805) (19,473) Cash flows from financing activities (22,383) (11,107) Cash and cash equivalents at yearend 48,051 52,194 Notes: Consolidated subsidiaries and application of the equity method Number of consolidated subsidiaries : 71 Equity method applied non-consolidated subsidiaries : None Equity method applied affiliates : 16 (4) Consolidated scope and changes to the application of the equity method Consolidation : New companies None Companies removed 14 Equity method : New companies coming under equity method None Companies removed 1 2. Forecasts of results for the term, April 1, 2000 to March 31, 2001 At yearend Net sales ( million) 490,000 Ordinary income ( million) 34,200 Net income ( million ) 12,000 Reference: Expected net income per share (full-year basis) consolidated: 33.60

2 Consolidated subsidiaries: 71 companies 41 domestic companies Hitachi Tool Engineering, Ltd. Kuwana Create Co., Ltd. Hitachi Metals Techno, Ltd. Hitachi Metals Construction Co., Ltd Hitachi Kinzoku Shoji,Ltd. Nikki Plantech, Ltd. HMY, Ltd. Kyushu Techno Service, Ltd. Tokyo Seitan, Inc. Moka Technos Co., Ltd. Hitachi Valve, Ltd. Auto-tech, Ltd. Hitachi Metals Estate, Ltd. Kusunoki, Ltd. Tokyo Seimitsu Kogyou, Ltd. Hiyoshi Kouzai, Ltd. HMW, Ltd. Hitachi Metals Trading Co., Ltd. Hitachi Metals Kiko Co., Ltd. Nichiei Corporaqtion Hitachi Metals Kumagaya, Ltd. Nichiwa, Co., Ltd. Hitachi Ferrite Electronics, Ltd. Hitachi Metals Intec, Ltd. Denshi Tech, Ltd. etc. 30 overseas companies Hitachi Metals America, Ltd. Hitachi Magnetics Corporation Central Coating & Assembly, Inc. Ward Manufacturing Inc. AAP St. Marys Corporation Hitachi Metals North Carolina, Ltd. Newport Precision Inc. ACP Manufacturing Company LLC. Hitachi Metals Europe GmbH Hitachi Metals Singapore Pte. Ltd. Hitachi Metals Hong Kong, Ltd. Hitachi Metals Australia, Pty. Ltd. Hitachi Metals Electronics (Malaysia) Sdn.Bhd. Hitachi Ferrite (Thailand), Ltd. Luzon Electronics Technology, Inc. Luzon Magnetics, Inc. P.T.Bukaka Forging Industries etc. 2

3 Consolidated Management Policies 1. Management s Fundamental Policies The goal of Hitachi Metals, Ltd., is to be the best possible company, effectively and continuously meeting the needs of shareholders, investors, customers, employees, and business partners. To achieve this goal, the Hitachi Metals Group follows the fundamental policy of quality growth, expanding business in markets driven by global demand and in fields which leverage the Group s distinctive, high-quality, high-value-added services and products to meet the needs of a broad range of industries. 2. Policy Regarding the Distribution of Profits The Hitachi Metals Group believes that ensuring fair, long-term returns for shareholders is a fundamental obligation of all companies, and that this is best accomplished amid today s changing customer needs and technologies by strengthening competitiveness, increasing profits available for distribution to shareholders, and enhancing corporate value through quality growth. To this end, the Group s fundamental policies with regard to dividends are to strengthen and support a financial structure that makes significant investment possible and to maintain stable dividends. The Group is looking optimistically at future business expansion, and will effectively invest retained earnings in such activities as the development and commercialization of new materials, the creation of new businesses, the rationalization of facilities, increases in production for highly competitive products, and the establishment of a global network. 3. Medium-Term Management Strategy and Key Issues (1) Medium-Term Management Goals The growth of a borderless economy brought about by the IT revolution, the spread of megacompetition, the growing role of electronics in society and industry, and the increasing importance of safety and the environment are changing our markets and our customers needs. We have a long history with metals and materials in cutting tools, high-grade ductile cast-iron products, rolling-mill rolls, cast-iron joints and others, and we enjoy strong market share in these product fields. They have supported our earnings, and we anticipate that these markets will develop even further in the future. The Hitachi Metals Group has focused on expanding business and product lines in electronics and environment-related fields. In the future, we will further reorganize our businesses to emphasize earnings and expand our activities in growth sectors. These efforts will focus on the selection of the most promising products and businesses and the concentration of management resources in those areas, while paying close attention to the needs of industry and society. Our product strategy targets those markets with the potential for achieving economies of scale and growth as well as fields optimized for IT, the environment, and energy efficiency. Our strategy for overseas business is comprehensive, centering on proximity to the market, low costs, and firmly implanting necessary technologies in each region while promoting the establishment of a production network that meets the distinctive needs of our products and businesses. Our financial strategy calls for reducing the interest-bearing debt ratio and improving capital efficiency. Accordingly, we are aiming to achieve a 10% consolidated return on shareholders equity (ROE) by fiscal

4 (2) Structural Reform We plan qualitative structural reforms, building a base for future growth by continuing to strengthen the structural reforms begun in fiscal By increasing the autonomy of our business units, reorganizing our headquarters, and reducing the workforce we are speeding up the decision-making process and swiftly establishing an energetic, efficient management structure that is in tune with the times. The pursuit of these measures will allow us to enhance our corporate structure on a consolidated basis, restructure our core businesses, and strengthen our marketing network as well as develop new products and launch new business ventures at a faster pace. (3) Environmental Concerns With regard to environmental concerns, Hitachi Metals promotes corporate activities considerate of the earth, such as stressing environmental protection in its production activities and making reduced environmental impact a prime consideration in product development. We released an environmental report in August 2000 and, in the future, we will further develop our environmental disclosure activities through environmental accounting reports and other means. 4. Measures to Enhance Corporate Governance From the standpoint of corporate governance, in addition to the establishment of the management structure mentioned previously, we will maintain our obligations as a publicly traded company of maintaining good business practices and promoting transparency. Our efforts to realize this are not limited to the bottom line of our financial statements or the simple adherence of our corporate officers and employees to the Action Plan. We also pursue such continuing, timely, high-quality disclosure activities as the regular release of mediumterm management plans and business plans for individual business units. 5. Fundamental Policies with Regard to Interested Parties Hitachi, Ltd. is the parent company and leading shareholder of Hitachi Metals with 55.1% of shares outstanding. To ensure that management properly reflects the opinions of the parent company, two members of the Board of Directors of Hitachi serve concurrently as a director and an auditor on the Board of Hitachi Metals. Hitachi Metals is fundamentally autonomous in its relations with Hitachi and the Hitachi Group. As a member of the Hitachi Group, the Hitachi Metals Group follows a course of close cooperation with Hitachi Ltd. and other Hitachi Group companies in the course of its business pursuits. To this end, Hitachi Metals utilizes the management resources of the Hitachi Group to provide products and services of the highest quality in response to the needs of its customers and the market. 4

5 Consolidated Interim Results 1. Overview of Conditions during the Interim Period Looking at the global economy during the interim period, capital investment was strong in the United States centering on IT and personal consumption was bullish against the backdrop of a strong labor market. Led by exports, Asian economies recovered with growth in the market for electronic components while European economies were also bullish amid recoveries in personal consumption and capital expenditures. Although Japan s economy contracted due to cuts in public spending and the lessening of the impact of tax cuts for housing investment, IT fields, mobile communications devices in particular, led a recovery in private-sector capital investment, while personal income showed signs of a modest recovery and exports increased. Regarding fields in which the Hitachi Metals Group is active, in electronics, global sales of computers, semiconductors, liquid crystal displays, and mobile communications were strong. In Japan, construction remained stagnant, along with residential housing and public works. Sales to the automobile industry were particularly strong, especially in the United States, while the introduction of new makes and models set the tone for a recovery in the domestic automobile market. Although the steel industry suffered from weak domestic demand, exports to other parts of Asia performed well and set a bullish tone overall. Against this backdrop, the Hitachi Metals Group worked to increase orders through marketing activities focused on meeting the needs of its customers, developing new markets, creating and mass producing new products, and other means. As a result, the Group recorded net orders of 268,143 million and net income of 237,301 million for the first half of fiscal 2000, resulting in operating income of 14,716 million and net profits of 2,411 million for the interim period. Net cash provided by operating activities during the interim period totaled 23,255 million, while net cash used in investing activities amounted to 4,805 million. Free cash flow, defined as net cash provided by operating activities minus net cash used in investing activities, totaled 18,450 million. Net cash used in financing activities was 22,383 million, resulting in cash and cash equivalents of 48,051 million at the end of the interim period. The interest-bearing debt ratio decreased 3.0 percentage points, or 191,113 million, to 35.8%. An interim dividend of 5 per share was set the same level as the previous interim dividend in September Regarding our medium-term management issues, we have devised a comprehensive corporate strategy, promoted greater utilization of IT, and strengthened the Group structure to allow more effective consolidated management and enhanced Company-wide marketing efforts. Measures to reduce staff levels overall are also proceeding smoothly. The restructuring of Group companies is also underway, which is boosting consolidated financial strength. With an eye toward new products and new businesses, R&D units have been directly linked to business units, which has increased the pace of new product development. In the future, the further development of a system of target-based management will allow us to unlock the potential of individual employees. To reduce the size of the headquarters, we have promoted increased efficiency and outsourcing for routine work. Finally, we are considering further strengthening the functions of top management as well as revisions to our business structure. Results of operations by business segment are as follows. 5

6 High-Grade Metal Products and Materials Sales in the High-Grade Metal Products and Materials segment rose due to a recovery in the domestic automobile market and strong sales for mobile phones and other telecommunications equipment. Although prices for some materials for parts and engines declined in Japan, sales increased overall due to the strong performance of the automotive industry in North America. Sales of IC lead frame materials surged, propelled by the increased demand for PCs and mobile communications worldwide, while customer inventory adjustments led to lower sales of shadow mask materials. Sales of rolling-mill rolls increased, fueled by a recovery in domestic demand. Sputtering target materials also rose on the wave of strong demand for mobile communications equipment, CDs and PCs. As a result, sales for the segment through the mid-term point were 91,098 million, and operating income was 8,254 million. Electronics and IT Devices Domestic demand for ferrite magnets, principally for use in automotive applications, was strong, but unfavorable exchange rate movements for the euro led to a decline in exports and sales overall finished at approximately the same level as sales for the second half of the previous year. Bullish domestic demand for rare earth magnets was countered by a concentration of overseas orders for less profitable products, resulting in lower overall sales. Flourishing demand in Asia boosted sales of ferrite cores and wound parts for power transformers. In telecommunications components, production increases for mobile communications devices led to a significant surge in sales of isolators and antenna switch modules. Sales of MR and GMR heads for HDDs dropped sharply, as Hitachi Metals transferred that business to Hitachi. However, subsidiaries in Asia have begun producing materials for telecommunications applications and the Group is working to further improve the efficiency of its management resources. These factors resulted in net sales for the segment of 44,080 million, and operating income was 1,568 million. High-Grade Casting Components for Automobiles Sales of high-grade ductile cast-iron products dropped sharply following the completion of a large-scale spot order from a North American firm. Demand for aluminum wheels flourished, in line with the strong performance from the North American automobile industry. Sales of heat-resistant cast steel and high-grade cast iron exhaust system components soared due to the combination of strong sales by the North American automobile industry and the use of these products in meeting European environmental standards. Demand by the North American automobile industry also pushed sales of other aluminum products higher, and the segment as a whole recorded net sales of 48,032 million, and operating income was 2,995 million. Construction Components, Plant and Equipment Stagnant demand in domestic construction markets and the shift to a greater use of plastic and stainless steel materials led to lower sales of cast and anticorrosive fittings. Demand for stainless steel flexible connectors and electrofusion fittings also declined, primarily due to seasonal factors. Demand for internal systems for use in clean rooms for semiconductor fabs and LCD production sites generated strong demand, pushing sales higher. Sales of structural systems also moved ahead on strong sales for new products. Public-sector construction of wastewater treatment and garbage incineration facilities is typically concentrated in the second half of the fiscal year. Accordingly, sales were approximately half those of the second half of the previous fiscal year. In addition, public-sector demand for wastewater treatment facilities has declined, and local government budgets for garbage incineration facilities has also dropped off, resulting in lower sales for the this half compared with the first half of the previous fiscal year. Accordingly, sales for the segment amounted to 51,905 million, and operating income was 1,022 million. Services & Other Sales were strong both domestically and overseas, yielding net sales of 40,983 million, and operating income was 1,078 million. 6

7 2. Second Half Outlook Although capital investment in IT and personal consumption in the United States is expected to remain strong, there are signs of clouds on the horizon. Increased exports and personal consumption are forecast for Europe, but the decline of the euro and rising oil prices have fueled fears of higher prices. Although the strong U.S. economy and the recovery of the Japanese economy have led to greater demand for exports from Asia, driving in turn the domestic recoveries of many countries in the region, the stability of some of the area s governments and currencies remains an issue. In Japan, a continued economic recovery, driven by slow increases in capital investment, principally in IT, and personal consumption, has been forecast. However, surging oil prices, a slowdown in the U.S. economy, the continued effects of Japan s efforts to deal with bad loans, and a rise in interest rates forced by the further issue of government bonds are potential causes for concern. Against this backdrop, although we anticipate a temporary slowdown in the sales growth of electronics materials in the High-Grade Metals Products and Materials segment as well as in the Electronics and IT Devices segment as customers make inventory adjustments, we expect higher sales. While we foresee a decline in existing products in the High-Grade Casting Components for Automobiles segment, we believe increased demand for heat-resistant cast components and aluminum wheels will improve overall net sales. In Construction Components, Plant and Equipment, we expect the onset of seasonal demand as well as the introduction of new products to lead to increased net sales. Accordingly, our projections for the second half of the current fiscal period are: Net sales 490,000 million Operating income 34,200 million Net profits 12,000 million In the future, Hitachi Metals will continue to produce products with high added value through its policy of selection and concentration, enhance its structural reorganization, reorganize its businesses with an emphasis on profitability, and develop new business with an eye on fields where long-term growth is possible. Note: The outlooks for performance presented in this document and statements regarding future plans-excluding historical facts-represent the judgments of the management of the Company and are based on current conditions as well as certain premises and assumptions. In fact, changes in assumptions and prevailing conditions as well as other developments, along with a wide range of other factors may lead to outcomes that differ substantially from those presented in this document. For these reasons, the Company requests that all parties concerned refrain from relying exclusively on these outlooks when making investment and other decisions. 7

8 Consolidated Balance Sheets End of 9/00 End of 3/00 (difference) (A) (B) (A)-(B) ASSETS Current assets: Cash and deposits in banks 31,040 24,142 6,898 Notes receivable and accounts receivable 108, ,230 (7,218) Receivable for completed construction work 16,743 14,155 2,588 Negotiable securities 26,796 51,299 (24,503) Inventories 87,573 79,727 7,846 Deferred tax assets 12,923 14,996 (2,073) Other current assets 5,389 4, Total current assets 288, ,980 (15,504) Fixed assets: Tangible fixed assets 194, ,593 (2,093) Intangible fixed assets 2,102 2, Other 48,251 39,620 8,631 Total fixed assets 244, ,215 6,638 Total assets 533, ,195 (8,866) LIABILITIES, MINORITY INTERESTS and SHAREHOLDERS EQUITY Liabilities: Current Liabilities Accounts payable 57,365 56, Short-term debt 54,772 56,029 (1,257) Bonds redeemable within a year 3,069 9,010 (5,941) Accrued income tax 3,618 2, Deferred tax liabilities (7) Others 47,379 43,611 3,768 Total current liabilities 166, ,784 (2,326) Fixed liabilities Bonds and long-term debt 129, ,445 (13,176) Reserve for retirement allowances 31,325 (31,325) Reserve for retirement benefits 32,436 32,436 Reserve for directors retirement bonuses 1,543 1, Deferred tax liabilities 1,706 1, Others 11,977 12,124 (147) Total fixed liabilities 176, ,926 (11,995) Total Liabilities 343, ,710 (14,321) Minority interests 9,766 9, Shareholders equity: Paid-in capital 26,283 26,283 - Capital surplus 36,699 36,699 - Appraisal gain(loss) for other marketable securities 4,245 4,245 Consolidated Surplus 118, , Other (5,749) (6,237) 488 Total shareholders' equity 180, ,117 5,057 Total Liabilities, Minority interests and Shareholders' equity 533, ,195 (8,866) 8

9 Comparative Statement of profit and loss 1 st half fiscal 2000 (Sep. 30,00) (A) Ratio to Sales (%) 1 st half fiscal 1999 (Sep. 30,99) (B) Ratio to Sales (%) (A)/(B) (%) Fiscal 1999 (Mar. 31,00) Net sales 237, , ,470 Cost of sales 184, , ,237 Gross profit 52, , ,233 Sales, general and administrative expenses 38, , ,040 Operating Profit and loss 14, , ,193 Other income: Interest and dividends 943 1, ,181 Investment income based on equity method Other 5,430 3, ,370 Total 6, , ,034 Other deductions: Interest and discount charges 2,217 2, ,715 Other 4,669 5, ,215 Total 6, , ,930 Ordinary profit (loss) 14, , ,297 Extraordinary profit (loss) Retirement benefit trust gain(loss) (6,548) Gain from the disposal of stocks of affiliated Companies Write-off Discrepancies as a Result of Changes in Accounting (1,979) Loss on structural reform (392) - - (18,202) Burden of provisions for retirement allowances for prior years service - (2,211) - (5,853) Loss on revaluation of marketable securities - (700) - (700) Total 8, (2,911) (1.3) - (24,755) Income before income tax 5, , (8,458) Corporation and inhabitant taxes 3, , ,075 Adjustment account for corporate tax (49) (0.0) - (10,875) Minority shareholders income, etc. (460) (0.2) Net Income 2, (29) (0.0) - (1,246) Statement of Consolidated Surplus 1 st half fiscal 2000 (Sep. 30,00) (A) Fiscal 1999 (Mar. 31,00) (B) (Change) Consolidated surplus brought foward 118, ,021 (6,649) Increase of other surplus (120) Decrease of other surplus 2,087 5,523 (3,436) Cash dividends 1,786 3,571 (1,785) Directors bonuses Decrease of subsidiaries by the change of accounting rule - 1,666 (1,666) Net income of the year under review 2,411 (1,246) 3,657 Consolidated surplus carried forward 118, ,

10 Consolidated Statements of Cash Flows End of 9/00 End of 3/00 Cash flows from operating activities Net income before income tax 5,813 (8,458) Depreciation and amortization 12,336 28,180 Extra ordinary loss on structural reform ,202 Retirement benefit trust loss 6,547 Reserve for retirement benefits increase (decrease) 1, Loss on retirement of fixed assets Gain on sale of securities (1,357) (4,823) Loss on sale of securities 208 1,917 Interest earned and dividends received (943) (2,181) Interest paid 2,217 4,715 Exchange loss Increase in receivables 7,215 (5,663) Increase in receivables for completed construction work (2,588) (7,415) Increase in inventories (7,814) (4,066) Increase in payables 369 8,779 Other 2,162 1,661 Sub total 27,509 32,990 Earnings on interest and dividends 1,140 2,300 Interest paid (2,303) (4,663) Income tax and other tax paid (3,091) (2,834) Net cash provided by operating activities 23,255 27,793 Cash flows from investment activities Expenditures for acquisition of securities (280) (2,947) Proceeds from sale of securities 2,192 14,612 Expenditures for acquisition of investment securities (468) (214) Proceeds from sale of investment securities 4, Expenditures for acquisition of tangible fixed assets (12,654) (30,662) Proceeds from sale of tangible fixed assets 1,694 1,393 Expenditures for acquisition of intangible fixed assets (293) (545) Loan on long-term debt (122) (299) Withdrawal of long-term debt (Increase) decrease in short-term borrowings 51 (340) Other investment (28) (868) Net cash used in investing activities (4,805) (19,473) Cash flows from financing activities Increase (decrease) in short-term borrowings (453) (7,866) Proceeds from long-term debt 2,221 4,555 Payments on long-term debt (6,283) (7,875) Proceeds from issue of bonds 2,028 7,854 Expenditures for issue of bonds (18,078) (4,045) Dividends paid by parent company (1,786) (3,571) Dividends paid to minority stock holders (79) (159) Other financial 47 Net cash provided by (used in) financing activities (22,383) (11,107) Effect of exchange rate changes on cash and cash equivalents (210) (850) Net increase (decrease) in cash and cash equivalents (4,143) (3,637) Cash and cash equivalents at beginning of year 52,194 53,407 Net increase (decrease) in cash and cash equivalents by newly consolidated subsidiaries 2,424 Cash and cash equivalents at end of year 48,051 52,194 Listed cash and deposits to consolidated balance sheet at end of year and relation of listed cash and cash equivalents to consolidated statements of cash flows Cash and deposits 31,040 24,142 Securities (Money Market Fund, etc.) 17,011 28,052 Cash and cash equivalents at end of year 48,051 52,194 10

11 Segment Information Year under review (Apr. 1, Sep. 30, 2000) High-grade Metal Products and Materials Electronic and IT Devices High-grade Construction Casting Components, Components Plant and for Equipment Automobiles Services and Other Total Eliminated (Net Sales) or Others (Assets)) Consolidated Ⅰ.Net sales Sales to customers 76,347 34,531 45,397 42,707 38, , ,301 In-house sales 14,751 9,549 2,635 9,198 2,664 38,797 (38,797) - Total net sales 91,098 44,080 48,032 51,905 40, ,098 (38,797) 237,301 Operating expenses 82,844 42,512 45,037 50,883 39, ,181 (38,797) 222,384 Operating income 8,254 1,568 2,995 1,022 1,078 14,917-14,917 Ⅱ.Assets Total assets 183,163 68,001 73,813 85,108 61, ,429 61, ,329 Depreciation 4,732 2,600 2,433 1,459 1,010 12, ,336 Capital expenditure 5,953 3,101 1,740 1, , ,726 (Apr.1, Sep. 30, 1999) Ⅰ.Net sales Sales to customers 68,241 30,051 43,325 41,425 35, , ,145 In-house sales 13,746 8,678 1,381 6,407 2,087 32,299 (32,299) - Total net sales 81,987 38,729 44,706 47,832 37, ,444 (32,299) 218,145 Operating expenses 76,162 39,212 43,252 48,210 36, ,148 (32,299) 210,849 Operating income 5,825 (483) 1,454 (378) 878 7,296-7,296 Ⅱ.Assets Total assets 180,994 79,875 73,367 78,742 63, ,039 72, ,137 Depreciation 4,285 3,993 2,461 1,646 1,064 13, ,596 Capital expenditure 7,733 5,293 2,242 1, , ,887 (Apr.1, Mar. 31, 2000) Ⅰ.Net sales Sales to customers 148,062 62,337 87,552 95,571 69, , ,470 In-house sales 24,431 17,377 3,312 14,152 5,271 64,543 (64,543) - Total net sales 172,493 79,714 90, ,723 75, ,013 (64,543) 463,470 Operating expenses 158,601 79,806 88, ,870 73, ,820 (64,543) 442,277 Operating income 13,892 (92) 2,605 2,853 1,935 21,193-21,193 Ⅱ.Assets Total assets 179,831 68,132 75,668 84,795 60, ,757 73, ,195 Depreciation 9,223 8,389 5,080 3,212 1,941 27, ,180 Capital expenditure 11,321 11,240 4,164 2,922 1,071 30, ,207 11

12 Notes: Major Products : High-grade Metal Products and Materials Electronic and IT Devices High-grade Casting Components for Automobiles Construction Components, Plant and Equipment High-grade Specialty Steels for: Molds, Dies, Cutting Tool; Automotive parts; Aerospace parts; Nuclear Equipment Parts and Components for: Copying Machines; Office Automation Devices High-grade Electronic Materials for: IC Lead Frames; Shadow Masks; Sputtering Targets Nanocrystalline Soft Magnetic Materials(FINEMET TM ) Mill Rolls for: Steel, Nonferrous, Nonmetal Rolling Injection Molding Machine parts, Fine Ceramics, Structural and Functional Steel Frame Joints for Construction Equipment, Cutting Tool(Hitachi Tool Engineering, Ltd.) Ferrite and Rare Earth Magnets Magnetic Appliances: Electrophotographic Copying Machine Parts; Linear Motors; Dental Attachments Information and Communication Devices:Isolators; Multilayered Devices for Communication Systems; Piezoelectric Ceramics, Ferrite Cores, EMC Components, Magnetic Recording Heads for: High-Capacity FDDs Magnetic Encoders, Ceramic Scintillators, Optical Switches Ductile and Malleable Iron Castings, Heat-Resistant Castings and Iron Castings(HERCUNITE TM ) Aluminum wheels, Dies, Forging(Tokyo Seitan, Inc.) Malleable Iron Pipe Fittings, Polyethylene Electrofusion Fitting Systems Stainless Steel Piping Components: Flexible Connectors(SOFLEX TM ) Water-Cooling Equipment for Factory Facilities(Chilled Towers) Precision Mass Flow Control Devices for Semiconductor Manufacturing Equipment: Mass Flow Controllers; Metal Diaphragm Valves Enviromental Protection Equipment:Wastewater Treatment,; Sludge Treatment; Incineration; Soil Remediation Industrial Equipment: Silo Plants; Feed Plants Floor Tile Systems and Chains(Hitachi Metals Techno, Ltd.) Sales results by location Year under review (Apr. 1, Sep. 30, 2000) Japan Ⅰ. Net sales and operating income North America Asia Other Total 12 Eliminated or Others Consolidated Sales to customers 185,345 35,991 10,217 5, , ,301 In-house sales 22,996 1,113 4,385 1,443 29,937 (29,937) - Total net sales 208,341 37,104 14,602 7, ,238 (29,937) 237,301 Operating expenses 196,862 34,726 13,758 6, ,321 (29,937) 222,384 Operating income 11,479 2, ,917-14,917 Ⅱ.Assets 398,275 49,095 16,425 5, ,461 63, ,329 (Apr.1, Sep. 30, 1999) Ⅰ. Net sales and operating income Sales to customers 170,136 34,429 8,357 5, , ,145 In-house sales 20,441 1,045 5,300 1,485 28,271 (28,271) - Total net sales 190,577 35,474 13,657 6, ,416 (28,271) 218,145 Operating expenses 184,522 33,638 14,409 6, ,120 (28,271) 210,849 Operating income 6,055 1,836 (752) 157 7,296-7,296 Ⅱ.Assets 407,094 46,730 18,377 4, ,105 71, ,137 (Apr.1, Mar. 31, 2000) Ⅰ. Net sales and operating income Sales to customers 366,075 68,351 18,935 10, , ,470 In-house sales 43,000 2,146 11,045 2,870 59,061 (59,061) Total net sales 409,075 70,497 29,980 12, ,531 (59,061) 463,470 Operating expenses 391,312 67,157 30,163 12, ,337 (59,061) 442,277 Operating income 17,763 3,340 (183) ,193 21,193 Ⅱ.Assets 397,045 47,718 16,271 4, ,746 76, ,195

13 Overseas sales Year under review (Apr. 1, Sep. 30, 2000) North America Asia Other Total Overseas sales 31,613 28,619 11,277 71,059 Consolidated sales 237,301 Overseas sales as a share of consolidated sales 13.3% 12.1% 4.7% 30.1% (Apr.1, Sep.30, 1999) Overseas sales 31,333 22,156 9,088 62,577 Consolidated sales 218,145 Overseas sales as a share of consolidated sales 14.4% 10.2% 4.2% 28.7% (Apr.1, Mar. 31, 2000) Overseas sales 63,316 48,270 18, ,937 Consolidated sales 463,470 Overseas sales as a share of consolidated sales 13.7% 10.4% 3.9% 28.0% Note: Overseas sales represent sales made by the parent company and its consolidated subsidiaries in countries or regions other than Japan. 13

14 The Situation of Marketable securities and Derivatives Transactions 1.Securities Balance sheet value End of 9/00 Market price Valuation profit/loss Bond for maturity: Government bonds Municipal bonds Corporate Bonds 4,707 4,707 0 Other Total 4,707 4,707 0 Other securities: Stocks 5,712 13,772 8,060 Bonds Government bonds Municipal bonds Corporate Bonds 4,099 4, Other Other 19,066 19,068 2 Total 28,877 36,978 8, Difference between market price and contract value of derivatives transactions End of 9/00 Contract value Market price Appraisal gain/loss Exchange contract transactions: Exchange contracts U.S. dollars (buy) (11) U.S. dollars (sell) (3) Currency swap transactions: Coupon swap 5, Interest-rate swaps Receipts fixed payments variable 61, Receipts variable payments fixed 44,605 (620) (620) Total 110,

15 Hitachi Metals, Ltd. (Oct. 31, 2000) Code: Shibaura 1 chome, Minato-ku, Tokyo Non-consolidated Financial Report for the 6-month period ended September 30, 2000 Contact: Shigeru Ishigay, General Manager Corporate Communications Department Tel: Stock Exchange where listed (section): Tokyo(First), Osaka(First) 1. Performance over the year, April 1, 2000 to September 30,2000 (Figures are rounded off to the nearest million yen) (1) Operating results 9/00(interim) 9/99(interim) (Change) 3/00 Net Sales ( million) 151, , % 304,098 Operating income ( million) 6,627 4, % 12,074 Ordinary income ( million) 9,048 4, % 11,336 Net income ( million) 558 1,252 (55.4%) (12,753) Net income per share ( ) (35.71) Diluted net income per share ( ) Notes: 1. Average number of shares outstanding (9/00: 357,169,687, 3/00: 357,169,687) 2. No changes have been made in accounting policy. (2) Dividend 9/00(interim) 3/00 9/99(interim) Interim dividend per share ( ) Annual dividend per share ( ) (3) Financial standing 9/00(interim) 9/99(interim) 3/00 Total assets ( million) 350, , ,548 Shareholders equity ( million) 145, , ,655 Shareholders equity ratio(%) 41.4% 42.9% 39.3% Shareholders equity per share ( ) Notes: Number of shares outstanding at end of year (9/00: 357,169,687, 3/00: 357,169,687) 2. Forecasts of results for the term, April 1, 2000 to March 31, 2001 At yearend Net sales ( million) 319,000 Ordinary income ( million) 21,800 Net income ( million ) 7,300 Interim dividends per share ( ) 5.00 (Dividends at end of period per share) ( ) 5.00 Annual dividends per share ( ) Reference: Expected net income per share (full-year basis)

16 Sales Results and Orders Received by Operating Division 1. Sales results (Ratio by previous term) 1 st half 2000(A) 2 nd half 1999(B) 1 st half 1999(C) (A)/(B) (A)/(C) High-grade Metal Products and Materials 66,938 64,406 59, % 112% Electronics and IT Devices 26,926 28,795 25,592 94% 105% High-grade Casting Components for Automobiles 33,668 34,773 32,390 97% 104% Contruction Components, Plant and Equipment 24,121 34,958 23,451 69% 103% Total 151, , ,165 93% 107% 2. Export Sales results (Ratio by previous term) 1 st half 2000(A) 2 nd half 1999(B) 1 st half 1999(C) (A)/(B) (A)/(C) High-grade Metal Products and Materials 18,152 15,159 13, % 138% Electronics and IT Devices 13,497 15,033 11,686 90% 115% High-grade Casting Components for Automobiles 5,562 6,410 4,951 87% 112% Contruction Components, Plant and Equipment % 100% Total 37,775 37,117 30, % 124% 3. Orders received (Ratio by previous term) 1 st half 2000(A) 2 nd half 1999(B) 1 st half 1999(C) (A)/(B) (A)/(C) Orders received 154, , ,173 95% 106% of which Export 34,851 39,339 32,480 89% 107% of which Plant & Components for Construction 28,382 31,583 25,191 90% 113% Orders backlogs 60,849 57,922 58, % 104% 16

17 Comparative Balance Sheets ASSETS End of 9/00 (A) End of 3/00 (B) Change (A)-(B) Current assets: Cash and deposits in banks 10,907 4,871 6,036 Notes receivable 6,977 7,746 (768) Accounts receivable 55,408 63,200 (7,792) Receivables for completed construction work 17,323 14,707 2,616 Negotiable securities 22,708 44,534 (21,826) Products 5,517 5,536 (19) Semi-products 2,188 1, Materials 13,614 13, Work in process 25,331 22,779 2,551 Deferred tax assets 8,632 11,081 (2,449) Other current assets 10,403 9, Allowance for doubtful accounts (312) (353) 41 Total current assets 178, ,069 (20,369) Fixed assets: Tangible fixed assets Buildings 22,444 23,150 (706) Machinery 48,317 49,901 (1,583) Land 20,834 20,973 (139) Construction in progress 4,857 3,346 1,511 Other 5,660 5,758 (98) Total tangible fixed assets 102, ,130 (1,016) Intangible fixed assets (4) Investments, etc. Investment securities 10, ,406 Stock of affiliated company 29,469 29,466 2 Long-term loans 12,038 13,027 (989) Deferred tax assets 6,294 6,346 (52) Other 11,224 11,775 (550) Allowance for doubtful accounts (149) (1,714) 1,565 Total investment, etc 69,109 59,728 9,381 Total fixed assets 171, ,478 8,359 Total assets 350, ,548 (12,009) 17

18 Comparative Balance Sheets LIABILITIES and SHAREHOLDERS EQUITY Liabilities: Current Liabilities End of 9/00 (A) End of 3/00 (B) Change (A)-(B) Accounts payable 30,851 36,579 (5,728) Short-term debt 17,362 14,754 2,607 Accrued payables 7,588 8,064 (475) Accrued income tax (45) Expenses payable 7,759 8,974 (1,215) Advances received 10,243 7,727 2,516 Other 3,881 3, Total current liabilities 77,722 80,038 (2,315) Fixed liabilities Bonds 54,900 64,900 (10,000) Convertible Bonds 28,859 28,859 - Long-term debt 15,642 18,707 (3,064) Reserve for retirement allowances - 26,758 (26,758) Reserve for retirement benefits 27,051-27,051 Reserve for directors retirement bonuses Others Total fixed liabilities 127, ,854 (12,078) Total Liabilities 205, ,892 (14,394) Shareholders equity: Paid-in capital 26,283 26,283 - Capital surplus 36,699 36,699 - Profit reserve 6,570 6,570 - Special depreciation reserve (63) Special reserve 68,580 86,580 (18,000) Retained earnings at end of year 2,571 (14,264) 16,835 (Net income for the year) 558 (12,753) (13,312) Appraisal gain(loss) for other marketable securities 3,611-3,611 Total shareholders' equity 145, ,655 2.,384 Total Liabilities and shareholders' equity 350, ,548 (12,009) 18

19 Comparative Statement of profit and loss 1 st half Ratio 1 st half Ratio (A) Ratio fiscal 1999 fiscal 2000 to fiscal 1999 to / to (Mar.31,00) (Sep.30,00) Sales (Sep.30,99) Sales (B) Sales (A) (%) (C) (%) (%) (%) Net sales 151, , , Cost of sales 127, , , Gross profit 24, , , Selling, general and administrative expenses 17, , , Operating Profit and loss 6, , , Other income: Interest and dividends 1,982 1, ,555 Other 4,340 3, ,318 Total other income 6, , , Other deductions: Interest payment ,849 Other 3,043 4, ,762 Total other deductions 3, , , Ordinary profit (loss) 9, , , Extraordinary profit (loss) Retirement benefit trust gain 4,479 Gain from the disposal of subsidiaries 27 Retirement benefit trust loss (11,027) Write-off Discrepancies as a Result of Changes in Accounting (1,457) Loss on structural reform (392) (28,261) Allowances for severance indemnities in relation to benefit pension funds (2,221) (5,097) Loss on liquidation of affiliated company, etc. (13) (13) Total (8,370) (5.5) (2,224) (1.6) (33,372) (10.9) Income before income tax , (22,035) (7.2) Corporation, inhabitant and enterprise taxes Adjustment account for corporate tax 78 (748) 9,471 Net income (Loss) , (12,753) (4.2) 19