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News Release

Commencing Investigations into the Integration of Three Electric Component Companies
---Targeting sales of around 30 billion yen in 2016 as a comprehensive electric component manufacturer---

August 31, 2011

Furukawa Electric has commenced the preparation work for integrating its three wholly owned subsidiaries by around April 2013, namely Asahi Electric Works Ltd. (hereinafter "Asahi Electric"), Inoue Manufacturing Co., Ltd. (hereinafter "Inoue Manufacturing"), and Furukawa Power Components Inc. (hereinafter "Furukawa PC").

This is part of the measures geared toward the global expansion of the transmission infrastructure business mentioned in the medium-term management plan New Frontier 2012. The new company upholds the corporate philosophy of being a company that offers electric transmission and distribution system solutions, including those for new energy, thereby contributing to global socioeconomic development. Sales of around 30 billion yen are targeted for 2016.

1. Background and objectives

Since 2005, our Company has restructured VISCAS Corporation in relation to the super high-pressure cable business and Furukawa Electric Industrial Cable Co., Ltd. in relation to the industrial electric wire business for the structural reform of the energy segment. In the area of the electric component business, our Company made Furukawa PC a wholly owned subsidiary in 2007, with Inoue Manufacturing following in 2008, and Asahi Electric in 2010.

In relation to the electric energy businesses, technological development is foreseen to progress in the domestic market for advanced power transmission and distribution networks, of which a typical example is Smart Grid, for solar power, wind power and other natural energy, and for storage cells and other electrical energy storage systems. The markets related to these products are expected to expand. Looking overseas, demand for electric infrastructure development is likely to increase in China and other Asian countries, Brazil and Russia, which have witnessed rapid economic growth.

Under the circumstances, our Company is establishing an organization that allows us to serve as a comprehensive electric component manufacturer capable of covering the entire power supply network from the power stations to the ultimate users, by fully integrating the three component companies and strengthening our ties with cable manufacturing companies even further. The slogans are "Establishing and implementing technological development capabilities that precede the new energy age," and "Consolidating overseas business divisions and overseas bases," to dramatically improve our business value.

The integration aims to consolidate a highly profitable business structure by advancing the selection and concentration of the resources of the three companies, restructuring the domestic and overseas manufacturing bases, enhancing the efficiency of investments and resource usage, and other measures geared toward the stabilization of our business foundations. A further target is the creation of new products that respond to the increasingly diverse and sophisticated needs of our customers.

Outline of the three electric component companies

Company name Asahi Electric Inoue Manufacturing Furukawa Power Components
Scope of business Manufacture and sales of various products for power transmission lines, substations, distribution lines, underground lines, trolley lines, and measuring instruments Manufacture and sales of electric components, processed copper and aluminum products, and electric welding machines Manufacture and sales of wire connecting components and tools
Head office Aoba-ku, Yokohama-shi, Kanagawa Prefecture Nishi-ku, Yokohama-shi, Kanagawa Prefecture Yokosuka-shi, Kanagawa Prefecture
Representative Toshio Nakata Michio Okuno Shigeru Matsumoto
Capital 300 million yen 97.5 million yen 50 million yen
Sales in 2010 7.4 billion yen 6.7 billion yen 2.8 billion yen
Number of employees 255 218 74
Manufacturing bases Nagai, Nikko, Kumamoto, and Shanghai (China)*1 Yokohama, Ebina, Tianjin (China)*2,  and Thailand*3 Yokosuka

*1: Shanghai-Asahi Electric Works Ltd. *2: Tianjin Furukawa Power Component Co., Ltd. *3: Thai Inoue Manufacturing

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