Message from President

The operating environment in the fiscal year ended March 31, 2010 remained unpredictable, despite the global economy showing some recovery during the recessionary phase following the "Lehman shock." While overall demand for Kuraray products is on a recovery track, by business and region the degree of recovery varies.

Given these conditions, the most urgent, high-priority task for the Kuraray Group has been to improve its profit structure as set out in the "GS-Twins" action plan. To this end we have worked in unison throughout the Group, making concerted efforts to lower fixed costs, reduce capital expenditures and slash inventories.
As a result, although the Kuraray Group's consolidated net sales for fiscal 2009 (April 1, 2009 to March 31, 2010) declined 11.7% compared with the previous year to ¥332,880 million due to sluggish demand and the appreciation of the yen, operating income increased 4.0% year on year to ¥30,451 million, ordinary income increased 7.9% to ¥28,925 million and net income rose 25.7% to ¥16,315 million.

Nonetheless, although we have made great strides toward recovery from the performance setbacks incurred with the Lehman shock, we cannot yet say that we are fully recovered. Consequently, in fiscal 2010 we will continue to promote all-out, Groupwide efforts to achieve the GS-Twins' goal of improving our profit structure, and will aggressively implement measures that lead to further business expansion and growth. By undertaking these initiatives, we aim to achieve net sales of ¥360,000 million, operating income of ¥43,000 million, ordinary income of ¥41,000 million and net income of ¥24,000 million.

The distribution of profits to shareholders is one of the Group's top management issues. Our target is to achieve a dividend payout ratio of dividends to net income of over 30% as we aim to increase dividend payments through sustained improvement to our business performance. Kuraray plans a year-end dividend of ¥8 per share for the year ended March 31, 2010. When added to the interim dividend, this will yield a total dividend payment for the fiscal year of ¥16 per share and a dividend payout ratio of 34.1%. For the fiscal year ending March 31, 2011, on the premise that the targeted consolidated net income of ¥24,000 million is achieved, Kuraray plans to increase the per share dividend payment ¥8 for an annual dividend of ¥24 per share, in turn yielding a 34.8% dividend payout ratio.

To all of our shareholders, I ask for your continued understanding and generous support.

April 30,2010
Fumio Ito
Representative Director and President