To expand our lineup of municipal waste treatment systems, we are working toward commercialization of a Refuse Derived Fuel plant.

The Beetle series of mini excavators allows safe, quiet, and precise operation in the tight confines of urban worksites.

Along with providing high-speed painting with an extremely clean finish, painting robots in the KRE 450 series can carry loads of up to 30kg, making them suitable for jobs requiring a large spray gun.

Note: These figures include inter-segment sales.

In plant engineering, sales of engineering services for public works projects remained level with those recorded in the previous fiscal year because of a decline in earthquake reconstruction-related engineering sales. Nevertheless, total sales in plant engineering increased thanks to large overseas orders, including an order for a direct-reduction iron plant, as well as a rise in sales to chemical plants in Japan.
Although domestic sales of steel rolling equipment remained sluggish, total sales of industrial machinery increased slightly because of growth in exports of plastics, tire, and rubber processing machinery.
In construction machinery, robust housing starts against a background of low interest rates and rising demand in anticipation of the increase in the consumption tax supported growth in domestic sales of construction machinery. Higher overseas sales of construction machinery reflected brisk demand, primarily in Southeast Asia.
In our factory automation and robotics operations, we recorded an increase in sales due to a recovery in the welding robot market and the introduction of a new line of handling robots. As a result, sales in the Machinery Sector rose 12.3%, to 520.7 billion yen.
During the year under review, we recorded brisk overseas orders for engineering services, including those for direct-reduction iron plants in the United States, Venezuela, and Mexico, and high-pressure vessels in Taiwan. In Japan, although we received orders for municipal refuse treatment plants, large-scale oxygen plants, and nuclear power-related equipment and facilities, total domestic orders declined slightly owing to fewer orders for engineering services for public works projects that resulted from a pause in demand for earthquake reconstruction. In industrial machinery, despite an increase in export orders for such items as tire and rubber processing machinery, a decline in orders, mainly in Japan, for compressors, crushers, and steel rolling equipment led to a decrease in total orders for industrial machinery. In construction machinery, higher demand and the introduction of new models in the domestic market, along with robust demand overseas, mainly in Southeast Asia, supported an increase in unit sales of hydraulic excavators and cranes.
We concentrated our R&D in areas that are expected to grow, particularly in the area of environmental protection. As part of these efforts, we focused on commercializing next-generation technologies for municipal refuse treatment, including the test operation of a fluidized bed incinerator and a Refuse Derived Fuel (RDF) demonstration plant. In the industrial waste treatment field, we entered the commercialization phase for an aluminum dross treatment process and also began development of a direct melting technology for recycling automobile shredder dust.
In the area of new ironmaking processes, we began operational research using a demonstration plant for the development of technologies for the FASTMET process, a new coal-based direct-reduction process. We also began the development of a new direct-reduction process for making molten iron. In chemicals, we conducted bench-scale testing to determine the viability of a process for manufacturing 2, 6 DMN, an intermediate material for PEN plastic.
New products developed and introduced during the fiscal year included the NIULEX heat-exchanger system for ethylene facilities; a new open-rack LNG vaporizer; the Emeraude series of oil-free screw compressors; a series of air-cooled screw refrigeration units; and the Beetle series of mini excavators with a small turning radius.
We are directing our capital investments toward improving productivity and adding new equipment at our industrial machinery and construction machinery plants. Overseas, construction that began in 1995 to expand production at a facility for manufacturing direct-reduced iron in Venezuela was completed on schedule, and operations have commenced. In construction machinery, we began work toincrease and strengthen our manufacturing and marketing bases in China, where demand is expected to be strong.
Also in our overseas operations, our first Venezuelan project to manufacture and market direct-reduced iron produced more than 900,000 tons of hot briquetted iron for the fourth consecutive year and recorded favorable operating results. To meet growing demand, we began constructing a plant for a second project in Venezuela to manufacture and market direct-reduced iron. In Thailand, a joint venture established in the previous year tomanufacture and market hydraulic excavators, inaugurated full-scale operations during fiscal 1996. Also, an affiliate established in fiscal 1994 in China to manufacture and market hydraulic excavators increased its paid-in-capital for the purpose of increasing production capacity.
In fiscal 1997, we will strive to maximize sales in our plant engineering operations by strengthening our efforts in environmental and direct-reduced iron-related industries.
A difficult environment is anticipated for industrial machinery due to intensifying price competition in domestic and overseas markets. We will endeavor to strengthen our price competitiveness by progressing with thorough measures to reduce costs in our existing products while focusing on new products and fields as we strive to increase orders for industrial machinery.
Domestic demand for construction machinery is expected to decline from the previous fiscal year due to drops in public spending and housing construction. Nevertheless, we aim to maintain sales volume for construction machinery in the domestic market and strive to expand sales volume in overseas markets, mainly in Southeast Asia, where continued brisk demand is anticipated.
We are also actively involved in the land development business, concentrating on the development of company owned land. Of particular note is our participation in the New City Center in Eastern Kobe Plan, a major project related to the restoration of the area damaged by the Great Hanshin Earthquake. This project entails the development of well-planned, multifunctionalcommunities that combine residential, commercial, business, and research facilities. As part of this project, we are involved in the construction of the IHD Center Building, which will house the WHO Centre for HealthDevelopment in Kobe, scheduled for completion in spring 1998.
At the "O's Town" development project, located on the site of a former plant in western Kobe, we completed foundation work in August 1996 and began advance sales of the condominiums.
In the first phase of sales held during the fiscal year, all 635 condominiums were sold, and we are planning to sell 300 further units in the second phase. In addition, we are constructing a large-scale shopping center that we aim to open in the autumn.