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## •Parking Systems 

Owing to a steady increase in condominium construction, which represents the majority of market demand, mechani- cal multi-level car-parking systems saw a demand increase of approximately 15% compared with the previous term. 

During fiscal 2001, Daikin strove to expand sales of its HIGH SPEED SERIES, which was introduced in fiscal 2000, 

as well as cultivate latent demand for the renovation and new installation of parking facilities. As a result, we successfully increased both net sales and market share substan- tially. 

## •Lubrication 

During fiscal 2001, Daikin integrated Daikin Lubrication Products & Engineering Co., Ltd. (DLP), business into the lubrication division of Nabuco, Ltd., and commenced oper- ations under this new configuration in April 2000. Strong results have been obtained and we succeeded in becoming the number one company in the domestic grease lubrication industry and securing a stable revenue base. 

## Outlook 

The domestic market for oil hydraulics has always been extremely sensitive to economic fluctuations, but the medi- um- to long-term outlook for the industry is particularly severe due to the globalization of master machinery makers and competition from electric and air pressure formats. The expansion into the Japanese market of other manufacturers further exacerbates future business prospects, and the JFPA (Japan Fluid Power Association) anticipates that overall demand for oil hydraulics equipment in fiscal 2002 will decline 5%, to ¥221.6 billion. 

Against this backdrop, Daikin will expand the scope of the business from merely power control to power motion control by fusing such other technologies as electric pres- sure powered formats with its traditional oil hydraulic tech- nologies and developing new hybrid products. We will also 

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embrace strategic alliances and partnerships and expand our business into the high growth potential markets of Asia. Through these initiatives, Daikin will remain a significant player in the market. 

Moreover, in May 2001, Daikin and Sauer Danforth, Inc., of the United States agreed to establish two joint ventures for manufacturing and sales in the mobile hydraulics indus- try in Japan with the objective of better serving both parties’ customers in Japan, China, and other parts of Asia by lever- aging each other’s strengths and unique features to expand their businesses and improve their operational frameworks. After working out details of the agreement, the joint ven- tures are scheduled to be established in October 1, 2001. Through these joint ventures and mutual cooperation, we will strive to achieve a top market share of 30% in the mobile hydraulics market of Japan and elsewhere in Asia. 

At the same time that demand is expected to stagnate in the medium term, market prices are also anticipated to become increasingly competitive. The oil hydraulic market represents a mere 15% of the overall market for multi-level car parking systems. As such, we are aware that the poten- tial for further business expansion with a lineup restricted only to oil hydraulic products is limited. Therefore, leverag- ing the industry’s top service network, we will develop our multi-level car parking systems service business into a new pillar of revenue and enter into partnerships with electric multi-level car parking systems. Through these and other initiatives, we will strive to expand from our current position as Japan’s number three player in the industry to the number two and eventually number one position. 

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