The Japanese economy experienced price rises for raw materials, including crude oil, during the interim consolidated fiscal term, but equipment investment increased and personal consumption recovered, supported by the recovery of corporate earnings.The domestic economy has seen improvement in general.Internationally, Europe and Asia performed well, with exports at the core, but the economic prospects in the U.S. became less certain with a slowdown in the housing demand that has been boosting the economy.

For the Yanmar Group, the small industrial engine and construction machinery businesses continued their strong performance of last year at home and abroad and the large marine engine business grew significantly thanks to strong maritime demand worldwide.As a result, the interim consolidated sales increased by ¥7.2 billion, 3% more than in the same period of the previous year, to reach ¥272.2 billion.

The interim consolidated ordinary income of the Yanmar Group reached ¥16.5 billion, (an increase by ¥4.4 billion, 36% more than in the same period of the previous year), and the ratio of ordinary income/loss to consolidated sales marked 6.1% growth.The net income for the interim consolidated fiscal term was ¥9.9 billion, (an increase of ¥3.2 billion, 47% more than in the same period of the previous year.)

Overseas sales through Yanmar’s group-wide global operations, which have been particularly targeted in the group’s growth and expansion strategy, rose to ¥104.5 billion, or 38% of consolidated sales.

In the latter half of the 2007 fiscal year, although some concern remains about business recession in the U.S., overseas markets are expected to improve with Europe and Asia at the core.

The domestic market should continue to do well in general supported by the upward momentum of the business environment.The domestic agricultural market will continue to be severe due to the change of agricultural policy by the government.

Under such circumstances, we expect the consolidated business results for the whole fiscal year to be as follows: sales of ¥538.6 billion (an increase of ¥9.1 billon over the previous term); operating income of ¥28.0 billion (an increase of ¥8.8 billion); and ordinary income of ¥28.0 billion (an increase of ¥8.7 billion).