Maruwa Co Ld - 3rd Quarter Results

Review of Operations

(1) Review of Operations

In this third quarter, the world economy has been suffering continuously with the expanding debt problem in Euro zone nations triggered by the situation in Greece, the record-breaking rise in the exchange rate of the yen due to concern over the financial situation in developed countries and the slump in stock prices. These concerns have slowed down growth in the overall world economy, including the economies in

emerging countries and China.

The Japanese economy, due to an easing in the mood of consumer self-restraint and an increase in energy-saving electrical appliance and digital terrestrial television consumption, has rapidly recovered from the decline in personal consumption which resulted from the devastating Tohoku Earthquake. However, the future of the domestic economy is still unclear, and the situation is worsened by high unemployment and by the recent slowdown in personal consumption of electronic appliances. The ineffectiveness of the government's intervention against the record-breaking strong yen also a factor in the current climate of uncertainty.

In this severe economic situation, the Maruwa Group saw an increase in the market for environment-related products, including ceramics for power modules, LED lightings and components for smart phones. We are very optimistic that this trend will continue.

As a result, our consolidated sales were 16,102 million yen. (This is up 11.3% compared to the same period last year)

With respect to profit, we had improvements due to a production profitability program, which we have been operating within the group for two years, and also resulting from the contribution of new LED lighting products. As a result, consolidated operating income was 2,473 million yen (this is up 10.8% compared to same period last year). Ordinary profit was 2,570 million yen (this is up 10.5% compared to same period last year) and quarter net income was 1,725 million yen (this is up 22.4% compared to same period last year).

Operating Results by Business Division

1. The Ceramic Components Division

The third quarter turnover was 14,843 million yen. This is a 9.1% increase over the same period last year.

The sales for the market related to environment have been very good. The ceramic products for HEV and components for smart phones in particular have grown well.

Operating income was 2,955 million yen. This is up 9.7% compared to the same period last year, and was due to improvement in cost reduction and manufacturing efficiency for existing products.

2. Lighting Equipment Division

The turnover during this third quarter was 1,259 million yen. This is a 45.5% increase over the same period last year.

Operating profit was 50 million yen, compared to a 32 million yen operation loss in the same period last year. This improvement is due to a consistent increase in inquiries and orders for LED lighting devices in the public utilities markets. MARUWA is continuing to press forward with the development and promotion of new LED lighting products.

(2)Financial Condition

Total assets as of the end of this third quarter were 39,153 million yen. This is a 16.4％ increase compared to the end of the precious fiscal year. This is due to flotation to improve equipment.

Total liabilities were 5,787 million yen. This is up 4.4% compared to the previous year-end. This is due to an increase in notes payable related to improvements in equipment.

Total net assets were 33,366 million yen. This is up 18.7% compared to the previous year-end. This is due to an increase of funds, capital surplus and retained earnings due to flotation.

As a result, capital ratio is 85.1%.

(3) Forecast for Operation

The forecast for operation, which was published on October 31, 2011, has been modified based on the latest economic situation.

Consolidated Statement of Income