Message to Investors

Shuzo Kaihori, President and Chief Executive Officer

The Yokogawa Group has positioned fiscal years 2009 and 2010 as a period of structural reform during which it will strengthen itself in preparation for the next growth stage. Specifically, we are pursuing an action plan to reduce fixed costs and review our business portfolio. Through these efforts, the Group will become able to respond more flexibly to rapid changes in its business environment.

In the fiscal year ended March 31, 2010 (fiscal year 2009), capital investment began to recover in response to increasing demand in newly industrialized nations. One factor driving this trend was the resumption of new plant construction in resource-rich countries. However, capital investment remained weak in Japan and the Western industrialized nations. As a result, the Group’s net sales were down significantly from fiscal year 2008. Nevertheless, the fixed cost reduction measures that we implemented throughout fiscal year 2009 lowered our break-even point and allowed us to once again post an operating income. Unfortunately, we recorded a net loss for the second consecutive year due to factors such as the extraordinary losses that were incurred as we reviewed our business portfolio and undertook structural reforms.

Fiscal year 2010 is the final year of these structural reforms that will make the Yokogawa Group stronger. Once these initiatives are completed, we will work steadily toward realizing a healthy and profitable operation. In these difficult times, we ask for the continued support and encouragement of our stakeholders.

June 2010