Daikin capitalized on signs that the world economy had bottomed out in fiscal 2010 to expand sales in emerging markets including China and other Asian countries, expand sales of existing products and reinforce our environmental products business in Europe and North America, and expand sales in Japan by maximizing opportunities presented by the heat wave and Eco Point program. While we also faced adverse conditions, namely surging prices in raw materials markets and the appreciation of the yen, we were able to achieve a "V-shaped recovery" marked by substantially higher year-on-year net sales, operating income, and operating income margin, through enacting further reductions in total costs and ongoing efforts to strengthen our management structure.

Driven by the high-growth engine of emerging economies, the prospects for the world economy remain strong. However, fueled by factors such as the rising cost of resources and raw materials, financial uncertainty in Europe, and the aftermath of the Great East Japan Earthquake, the risk of an economic downturn is still a concern.

We the Daikin Group have begun implementing our new strategic management plan Fusion 15, which includes themes to maximize short-term profit, fully enter emerging markets, including India and Brazil, and expand our environment-related innovation businesses in such areas as heating, hot water supply, applied systems, and filters. We intend to forcefully carry out the themes of Fusion 15 to realize future growth and development.

While Daikin Group factories and other facilities suffered only minor damage in the earthquake and tsunami that struck Japan on March 11, we have been affected by shortages of parts needed in air conditioner production. By concentrating our efforts on mitigating this situation, we have been able to rapidly restore normal levels of production. At the same time, companies are now expected above all to lend their support to the restoration and achieve economic growth and social contribution. We will strive to meet this social mission by offering products and systems equipped with unique Daikin technology that satisfy market needs emerging subsequent to the earthquake related to electricity conservation and restoration policy.

We also believe that the increasing awareness of energy policy issues will lead to global needs for electric power conservation. In addition to our renowned high-efficiency air conditioning equipment, we also possess a range of control technologies to reduce power consumption during equipment operation and intend to expand the global market for energy-saving solutions.

On behalf of Daikin Group, I respectfully ask for your continued understand and support.

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