Transportation & Construction Systems Business Unit

== HEADER ==

Organization

Planning & Administration Dept., Transportation & Construction Systems Business Unit
Ship, Aerospace & Transportation Systems Division
Automotive Division, No. 1
Automotive Division, No. 2
Construction & Mining Systems Division

Performance
Highlights
(Billions of yen)

	FY2011	FY2012	FY2013 forecast
Gross profit	149.5	120.3	115.0
Operating profit	33.3	24.5	-
Share of profit of investments accounted for using the equity method	22.2	27.2	-
Profit for the year (attributable to owners of the parent)	40.5	44.8	38.0
Total assets	1,166.3	1,264.2	-

* Results for past fiscal years were recombined in accordance with organizational reforms effective fiscal 2013.

Message from the General Manager

Naoki Hidaka General Manager, Transportation & Construction Systems Business Unit

We aim for global business development to stay ahead of the times and prevail swiftly in all products and markets involving “motion.”

We take pride in our business unit's mission to prevail swiftly in all products and markets involving “motion.” I want our business unit to grow to lead the entire Company by keeping abreast of global trends and staying ahead of the times.

To this end, we will ceaselessly rise to the challenge and create new value, so as to further strengthen our businesses with an edge heading toward fiscal 2019.

As a longer-term strategy in the field of ship, aerospace, and transportation equipment projects, we will enhance our highly profitable business portfolio including ship-owning and aircraft leasing.

In the automotive field, we will expand our value chain covering a wide territory from manufacturing to auto leasing and retail finance, as well as accelerate global development.

As for construction equipment, we look to set ourselves apart from rivals by adding depth to our sales and service operations in emerging countries and resource-rich nations, and our rental business in developed countries.

Business Unit Overview

We are advancing our upstream, midstream, and downstream operations in the areas of ships, aircraft, railway, automobiles, and other transportation systems as well as construction equipment. In the ship, aerospace, and railway business field, we run a leasing business focused on aircraft, in joint venture with Sumitomo Mitsui Finance and Leasing Co., Ltd. and Sumitomo Mitsui Banking Corporation. In addition, we import and export commercial aircraft components and defense-related equipment. Moreover, we are also the only trading company with an equity stake in a shipbuilding company, and we operate ships that we own and co-own as well. Our strengths also extend to the export of public transportation systems and railcars.

In the automotive field, our growing global value chain covers manufacturing, wholesale, retail, leasing and retail finance services. In the construction equipment field, we have the highest transaction volume of construction equipment among trading companies. In addition to construction equipment sales handled through our global network, we are establishing our value chain more firmly by expanding our comprehensive mining equipment services and rental operations. We are also developing the agricultural machinery sales business.

Fiscal 2012 Results

Business Performance

Profit for the year rose ¥4.3 billion year on year to ¥44.8 billion in fiscal 2012. In addition to earnings recovery in the Asian automobile finance business, growth was driven by contributions from earnings at the aircraft leasing business newly acquired in June 2012 and other non-recurring profit.

Main Investment and Loans

Acquired a controlling interest of U.S. construction equipment rental company, Sunstate Equipment Co., LLC
Jointly acquired Irish aircraft leasing businesses, SMBC Aviation Capital Limited

Business Field Overview: What We Aim to Be

Automotive Field

Auto parts manufacturer KIRIU Corporation's Thailand plant undergoing production capacity expansion

What We Aim to BeWe will expand our earnings base in the automotive value chain and speed up global development.

Business Environment: Looking ahead, we anticipate sustained growth in demand in emerging countries as motorization takes hold. In developed countries with mature markets, we foresee new growth opportunities arising due to business model innovation and strategic alliances.

Strengths and Strategies: In finance businesses, we will pursue development overseas in collaboration with Sumitomo Mitsui Auto Service Company, Limited, which has become Japan’s largest automobile leasing group. In automobile and motorcycle financing operations in Indonesia, we aim to leverage our robust customer base and business infrastructure to expand development to peripheral businesses. In manufacturing, we are expanding business in emerging markets—
especially in Asia and Mexico—centered on the automobile parts manufacturer KIRIU Corporation, and will also concentrate on automobile manufacturing. In automotive sales operations, we will bolster sales in Libya, Iraq, Myanmar and other emerging countries where swift economic development is seen moving ahead.

Actions for What We Aim to Be: At our Mexican automobile manufacturing joint venture with Mazda Motor Corporation, we are targeting production and sales to North and Latin America within fiscal 2013.

Construction Equipment Field

Construction equipment for rent at Sunstate Equipment Co., LLC in the U.S.

What We Aim to BeWe aim to deepen our sales and service operations in emerging and resource-rich countries and our rental business in developed countries.

Business Environment: Demand for construction equipment is expected to expand in emerging countries due to heightened infrastructure development. Rental demand is also projected to climb in the biggest rental market for construction equipment—the U.S.—in large part due to a recovery in construction investment.

Strengths and Strategies: Our construction equipment business in Canada has become our greatest earnings driver, thanks to diversification and active investment primarily in the mining equipment business in past years. We are aiming to make China and Russia stable earnings pillars next to Canada by bolstering the operating infrastructure of our sales subsidiaries there. Furthermore, we are working to expand our earnings base in emerging countries by developing business in the Middle East and Asia. In Mongolia, Russia and other countries, we aim to develop a comprehensive mining equipment business closely tied to customers. In developed countries, where renting is becoming more prominent than ownership, we aim to promote the construction equipment rental business.

Actions for What We Aim to Be: We increased our equity stake to acquire a controlling interest in Sunstate Equipment Co., LLC, a major construction equipment rental company in the U.S. We intend to expand our construction equipment rental business in North America even more including our existing business company in Canada, with an eye to becoming a leading company in the industry.

Ship, Aerospace & Transportation Systems Field

Aircraft leasing in joint venture with the Sumitomo Mitsui Financial Group

What We Aim to BeWe will establish a stable longer-term earnings base for the ship, aircraft, leasing, and railway business.

Business Environment: Although the marine freight market is lackluster, the tide is turning toward environmentally friendly, energy-efficient ships, and there is growing demand for asset replacement and purchases in anticipation of recovery. We also expect increased longer-term demand for commercial aircraft on the back of growth in emerging countries, as well as growing global demand for railways driven by a modal shift in transportation.

Strengths and Strategies: In the railway business, we aim to win large orders continuously in North America, Southeast Asia and also other regions based on expertise amassed in the construction of urban railway systems.

Actions for What We Aim to Be: We won a contract together with a state-owned Vietnamese general contractor for civil engineering work (excluding the underground section) on Vietnam’s first urban railway, Ho Chi Minh City Metro Line 1. In Ho Chi Minh City where growth and development are expected to keep gaining steam, we will work to ease increasingly problematic traffic congestion and alleviate air pollution.

CSR Through Business Activities

1,200 Prius Vehicles to be Delivered for the Ukraine Police Force

Prius hybrid vehicles delivered to the Ministry of Internal Affairs of Ukraine

Sumitomo Corporation signed an agreement with the Ministry of Internal Affairs of Ukraine to deliver about 1,200 Toyota Prius hybrid vehicles for use as police vehicles. The vehicles will be delivered in stages starting in 2013.

This project to replace police vehicles is part of Green Investment Scheme activities under the international carbon emissions trading system arranged through an agreement formed between the New Energy and Industrial Technology Development Organization (NEDO) and Ukraine’s State Environmental Investment Agency. Under this scheme, NEDO purchases greenhouse gas emissions credits from Ukraine, which uses the funds received toward national environmental protection measures.

Replacing the current fleet of police vehicles with new vehicles featuring the latest hybrid technologies will enable large fuel efficiency gains and a reduction of fleet CO² emissions by up to 70%, providing a boost to environmental awareness in Ukraine. We will continue to promote a wider uptake of hybrid vehicles in Ukraine as a way of helping to reduce the burden of vehicular activity on the environment.