My name is Toshio Yoshida, and I was appointed President and Representative Director with the approval of the annual meeting of shareholders held on June 29. I would like to take this opportunity to respectfully ask our stakeholders for your continued support.

During the first half of the fiscal year under review, business conditions remained challenging, the result of a global economic downturn triggered by the financial crisis that began in the fall of 2008. Aided by government stimulus measures, however, the global economy has bottomed out and is beginning to stage a gradual recovery. The Japanese economy also showed signs of a recovery in certain quarters, primarily reflecting an improvement in exports, on the strength of growing demand mainly from China. However, given the strong uncertainty about the future, including a persistently high unemployment rate, weak capital spending, and chronic deflation, the management environment surrounding the Japan Vilene Group has remained difficult.

In this environment, the Japan Vilene Group took steps to bolster corporate value by actively addressing key issues. For instance, we revamped our business structure, developed new and more sophisticated applications based on new technologies, established an optimal production system, and made effective use of our management resources. We also conducted a comprehensive review of our earnings structure, mainly through the Management Reform Committee, which was established in February last year, and introduced emergency measures, including an exhaustive streamlining of operations and costs, a cutback in inventories, an improvement in production efficiency, and a strengthening of our financial situation, to ensure that we generate sustainable earnings in the future. We also took steps to bolster sales. The initiatives included identifying customer needs to secure orders, and accelerating the process of commercializing products.

As a result, orders increased in the second half of the fiscal year under review, aided by a partial recovery in the market environment. However, as this recovery was not sufficient to offset a decline in orders in the first half of the fiscal year, because of the impact from cutbacks in capital investments and inventory adjustment, consolidated net sales fell 8.8% year on year, to ¥45,837 million. Meanwhile, with an improvement in the cost-of-sales ratio thanks to the measures described above, consolidated ordinary income rose 3.5% from the previous year, to ¥1,972 million, while consolidated net income jumped 88.3%, to ¥1,265 million.

Taking into account the above operating results and the future outlook, we have decided to pay an ordinary dividend of ¥4 per share, based on our policies for determining surplus distribution. In addition, to commemorate the 50th anniversary of the founding of Japan Vilene on June 1, 1960 as Japan’s first manufacturer dedicated to the manufacturing of nonwoven products, we want to show our gratitude to our shareholders for their loyal support and pay a commemorative dividend of ¥2 per share, making the year-end dividend ¥6 in total.
As a result, the annual dividend will total ¥10 per share, including an interim dividend paid of ¥4 per share.

Coinciding with its 50^th anniversary, the Japan Vilene Group has established a new medium-term management vision, an . With this initiative, we are committed to creating new high functional products based on a combination of our superior raw materials technologies, extensive production processes, and processing methods. In general management, meanwhile, Japan Vilene will aim to become a highly profitable company that can cope with a difficult management environment by thoroughly streamlining its operations and costs, bolstering its production efficiency, and strengthening its financial situation on an ongoing basis.

At the same time, we will develop regulations that ensure sound and fair corporate activities, and continue to strengthen our systems for governance and compliance.

We hope that we can continue to count on our shareholders’ continued support and encouragement as we pursue these initiatives.

June 2010
Toshio Yoshida
President and Representative Director
Japan Vilene Company, Ltd.