Business Outline
HORIBA manufactures over 500 types of instruments; the development of which is supported by the parent company’s broad base of analytical and measurement technology, and the advanced optical measurement technology of HORIBA Jobin Yvon SAS (France). These products command leading shares in niche markets and are used in a wide range of applications, including R&D and production facilities of public sector and private sector organizations, as well as organizations that monitor environmental pollution.

The segment also invests in the development of basic technologies to provide new analytical and measurement technology to other business segments.

Achieving the Goals of the Mid-Long Term Management Plan
During the fiscal year ended December 31, 2006, the scientific instruments business benefited from product development targeting the requirements of new environmental regulations.

In particular, the X-ray fluorescence analyzer business demonstrated buoyant sales thanks to demand from worldwide electrical equipment manufacturers for analyzers meeting the requirements of the RoHS Directive regulating levels of harmful heavy metals. There was significant demand for general-purpose analyzers; in particular molecular spectrometers used for fluorescence spectroscopy and Raman spectroscopy, as well as elemental analysis instruments for sulfur content in oil analysis and atomic emission spectrometry. As a result, the scientific instruments business achieved a high level of net sales and improved profitability.

To maintain this momentum during the fiscal year ending December 31, 2007, we will promote the integrated management of the scientific instruments business as part of the “One Company” management initiative under the Mid-Long Term Management Plan. We are scheduled to launch new products designed to be future mainstays in particle-size distribution. These analyzers will launch with a full range of options and accessories and an exciting new sample preparation tool for electron microscopy users. We are also expecting increased orders for high-energy gratings and OEM spectrometers as those businesses grow.

In the process & environmental business, HORIBA has developed advanced analysis technologies and fostered many experts over the past 40-plus years. The process & environmental business has consistently responded to new and challenging market needs in response to environmental regulations enacted in Europe, the U.S. and Japan. These new technologies represent assets that are currently in demand in China and other emerging markets, where they are earning us high market shares. We will continue to expand our operations by providing advanced measurement technologies which integrate HORIBA’s core technologies with the continuous analysis technology it has developed for the environmental field. Our strength lies in our ability to provide high-quality products that address the increasing number of risk management-related needs, measure productivity and sustain quality control.

Results for the Fiscal Year Ended December 31, 2006 and Business Strategies
Thanks to substantial increases in private-sector capital expenditure for environmental regulation-related analytical and measurement equipment, the segment achieved high levels of net sales and operating income. By product, particularly strong domestic and Asian sales were recorded for X-ray analytical instruments targeting compliance with the European RoHS Directive regulating hazardous substances. In addition, demand for other analyzers increased, including U.S. demand for sulfur content in oil analyzers and Japanese demand for stack gas analyzers. Meanwhile, HORIBA Jobin Yvon SAS in France, with considerable expertise in nanotechnology measurement, leveraged its advanced technological capabilities to expand sales in related cutting edge scientific fields.

Outlook for the Fiscal Year Ending December 31, 2007
A cyclical downturn in the demand generated by European hazardous substance regulations is expected to lead to lower sales of related analytical products. In this context, the segment will take measures to put in place a framework capable of responding to demand from advanced technological fields as well as environmental regulation-related businesses, which offer good prospects for continued growth in the medium and long terms. One measure in this regard has been to improve the sales network in China and the U.S. during the fiscal period under review.

Note: For forecasts of net sales and operating income, etc., please refer to information publicly disclosed by HORIBA, such as earnings releases and revisions of earnings forecasts.

Product Applications
R&D, product quality testing, measurement of wastewater and emissions, environmental pollution monitoring, criminal forensics

Major Customers
manufacturers, national research institutions, universities, government agencies, electric power companies