1. Business Results
As a result of the Company's reorganization of business portfolios and reforms of the earnings structure by focusing on core businesses, net sales (total trading transactions) amounted &yen2,307.0 billion during the six months ended September 30, 2002, a decrease of 14.7% (&yen397.8 billion) compared with the same period in the previous fiscal year.

     Gross trading profit declined 16.4% (&yen21.9 billion) to &yen111.2 billion, mainly from the transfer of LNG and chemicals businesses to affiliates under the equity method in accordance with our alliance strategy. With a reduction in selling, general and administrative (SG&A) expenses of &yen15.0 billion, operating income amounted &yen19.8 billion after a decline of 25.8% (&yen6.9 billion).

     Recurring profits decreased 36.5% (&yen5.1 billion) to &yen8.8 billion, owing to the decline in operating income and dividend income, despite an improvement of &yen1.8 billion in net interest expense and &yen1.8 billion in equity in gains of unconsolidated subsidiaries and affiliates.

     The Company recorded extraordinary gains of &yen9.9 billion, including gains on transfer associated with integrating its chemicals businesses. On the other hand, extraordinary losses of &yen12.8 billion were posted, mainly due to loss on the valuation of investment securities held by subsidiaries, which resulted in bolstering the Company's financial position.

     As a result of the above, income before income taxes was &yen5.9 billion. After income taxes and minority interests in consolidated subsidiaries of &yen4.4 billion, net income amounted to &yen1.5 billion for the interim period under review.

2. Outlook for the Fiscal Year Ending March 31, 2003
The Company forecasts a 17.7% (&yen964.5 billion) decrease in consolidated net sales to &yen4,500.0 billion, due to the spin-off of LNG, steel products and chemicals businesses and the application of the equity method to consolidated subsidiaries along with the reorganization of business portfolios.

     Gross trading profit is also expected to decline 16.5% (&yen43.8 billion) to &yen222.0 billion from the effect of the reorganization of business portfolios.

     SG&A expenses are anticipated to significantly improve 16.6% (&yen35.8 billion) to &yen180.5 billion owing to such measures as reforming the pension plan, streamlining costs on a consolidated basis and reorganizing business portfolios. Operating income is forecast to decrease 16.2% (&yen8.0 billion) to &yen41.5 billion. 

     While an improvement is expected in profits of affiliates under the equity method, other expenses are forecast to increase 19.6% (&yen3.2 billion) to &yen19.5 billion following a decrease of dividends from overseas companies.

     In aggregate, recurring profit is estimated to decline 33.7% (&yen11.2 billion) to &yen22.0 billion, while net income is predicted to rise &yen5.3 billion to &yen6.5 billion.

     These projections are based on the premise that the ¥/$ exchange rate will be &yen120 to the dollar and that crude oil prices will average US$24.00/bbl (Dubai) in the second half of the year.

The above forecast is based on rational conclusions drawn from information available to management at the time of reporting. However, actual results may vary depending on external factors such as economic conditions of the markets in which the Company operates, exchange rate fluctuations, etc. Should any important change of events occur, it will be notified by a timely disclosure.

3. Financial Position
Consolidated Balance Sheet
Consolidated total assets as of September 30, 2002 declined &yen294.1 billion to &yen2,663.5 billion as a result of our continued asset reduction under Medium-Term Management Plan 2005.

     Total shareholders' equity fell &yen21.5 billion to &yen85.2 billion from an increase in unrealized losses on available-for-sale securities stemming from the stagnant stock market and an increase in foreign currency translation adjustment caused by yen appreciation.

     Consequently, total shareholders' equity ratio worsened 0.4 percentage point to 3.2% from the previous fiscal-year end.

Consolidated Cash Flows
Cash and cash equivalents (hereafter referred to as "cash") declined &yen126.2 billion to &yen147.6 billion through measures to streamline assets and use the funds raised to reduce interest-bearing debt in line with the Medium-Term Management Plan 2005.