Outline of Operations Results for The Year Ended March 31, 2012

Outline of operations results for the year ended March 31, 2012 In the year ended March 31, 2012, the economy in Western Europe, which was once on a recovery trend, slowed down due to the effects of financial crisis etc. However, German economy grew steadily, supported by strong exports due to the depreciation of the euro. The Russian economy continued to be in good condition thanks to rising crude oil prices. In the United States, the economy remained sluggish because the housing market was still weak, though consumer spending showed some signs of recovery. In Asia and Central and South America, robust capital investments and favorable exports kept the economy growing, but the growth pace slowed due to credit tightening in China and Brazil and the flooding in Thailand. In Japan, the economy didn’t attain the full-scale recovery because exports remained weak due to the yen’s unprecedented appreciation against the Euro and the U. S. dollar, though consumer spending gradually recovered after the Great East Japan Earthquake in March 2011. Under these circumstances, in development side, Makita continuously expanded its product lines, including those of power tools, rechargeable tools and gardening equipment through the development of smaller and lighter tools or tools with lower noise and vibration. In addition, we set up a development and experimental center for gardening equipment at Nisshin Office (Aichi) in October 2011 to upgrade and extend the product line-ups of engine-powered gardening equipment. In production side, we strengthened our quality control system to continuously produce high-quality brands, while improving a production system so that we could flexibly respond to a change in demand. In sales side, we improved the sales network in China and set up a subsidiary in Slovenia to strengthen its sales system in Balkan countries. Through these steps, we strove to maintain and improve our system of providing sales and after-sales services from immediate proximity to the customers, which had already been our forte. Our consolidated net sales for this year increased by 8.5% to 295, 711 million yen compared to the same period of the previous year. This was because of the rollout of attractive new products as well as the success in expanding sales by making the most of our sales and service structures that have always been our strong point, although the yen's appreciation resulted in a decline in our overseas sales. Operating income increased by 15.8% to 48, 516 million yen (operating income ratio: 16.4%). This was mainly because of a leap in capacity utilization at the plant as well as an increase in net sales. Meanwhile, because of an increase in non-operating expenses, such as foreign exchange losses of 2, 150 million yen due to a drastic appreciation of the yen and realized losses on securities of 652 million yen due to a fall in share prices, income before income taxes and net income attributable to Makita Corporation increased by 9.9% to 46, 963 million yen (income before income taxes ratio: 15.9%) and by 8.7% to 32, 497 million yen (net income attributable to Makita Corporation ratio: 11.0%), respectively. Net sales results by region were as follows: Net sales in Japan increased by 15.4% to 53, 175 million yen compared to the same period of the previous year, a record amount. This was because of the favorable sales of lithium-ion battery products, the best product line-ups in the industry, and increased demand from post-quake restoration and reconstruction efforts. Net sales in Europe increased by 6.3% to 123, 251 million yen compared to the same period of the previous year. This was due to steady sales in Russia, though demand in Western countries, such as Germany and the U. K., slowed down in the latter half of the current year. Net sales in North America increased by 1.0% to 37, 475 million yen compared to the same period of the previous year. This was primarily because our sales, mainly lithium-ion battery products, remained robust amid sluggish housing market, though our sales suffered a decline in value due to the yen’s appreciation. Net sales in Asia increased by 12.7% to 26, 013 million yen compared to the same period of the previous year. This was because demand steadily recovered in Southeast Asian countries, though China’s tight credit policy and Thailand’s flooding affected our sales. Sales situation in other regions are as follows. Net sales in Central and South America and Oceania increased by 15.2% to 23, 370 million yen and by 15.6% to 17, 780 million yen, respectively, compared to the same period of the previous year, because demand was strong in both regions. Net sales in the Middle East and Africa decreased by 0.5% to 14, 647 million yen, because economic activities stagnated due to political uncertainty. English Translation of "KESSAN TANSHIN" originally issued in Japanese 5. Outlook for the year ending March 31, 2013 In developed countries, competition among companies is expected to intensify further because recovery of demand will remain moderate. In emerging countries including Asia where construction demand is expected to expand continuously, markets with a strong orientation toward low-price products are likely to emerge. With trends in crude oil prices and the foreign exchange rates being unpredictable, Makita is expected to continue facing a challenging business environment. Based on these situations, Makita will strive to reinforce its R&D and product development activities to deliver more user-friendly, earth-conscious power tools and gardening equipment. It will also strengthen the technical development of compact engines. The global production organizations will be strengthened to respond to changes in demand conditions. Sales activities to professional users will be promoted. In addition, aggressive activities will be pursued to maintain and improve our No. 1 sales and after-sales service system in the industry. Makita will strive to maintain a solid financial position enabling it to implement these measures, which, we believe, will lead to enhancing customer satisfaction and raising Makita’s position in the industry, resulting, in turn, in the improvement of its corporate value. In projecting the operational results for the next year, we use the following assumptions: An increase in demand for electric power tools from post-quake restoration and reconstruction efforts will remain moderate in Japan. Demand for electric power tools is unlikely to increase in Europe and the United States. Emerging economies will be influenced by the tight-money policy. Labor costs will continue to rise in emerging countries. To cope with these assumed conditions, Makita will: Strengthen its R&D and product development capabilities with respect to environmentally friendly power tools and gardening equipment; Further expanding and rolling out each product line as a series; Implement production cost-saving measures, taking advantage of its global production organizations; and Strive to improve its marketing and brand power by fine-tuned response to customer needs and further improved after-sales service. Meanwhile, Makita saw its production surge to record level this year, because it aggressively built up inventory to cope with the recovery of demand. However, Makita expects its production to fall below this year’s level, sending capacity utilization at the plant lower in the next year, because business environment is likely to become tougher as mentioned above. Source: makita.biz