Summary of Results of Operations on a Consolidated Basis for the First Three Quarters of Fiscal 2003 (fiscal year ending March 2004)

February 6, 2004

Note: The accounting methods used in this report in relation to the Company's revenues are unchanged from the previous year.

1. Business Performance for First Three Quarters (April 1 -- December 31) of Fiscal 2003 (term ending March 31, 2004)

(a) Revenues
Revenues for the first three quarters (April 1 to December 31, 2003) of fiscal 2003 came to \600,150 million. Kanematsu began issuing quarterly business performance reports from fiscal 2003, the term under review, and thus no direct year-on-year comparison is possible. For reference purposes, however, we provide the full-term figure for fiscal 2002, which was \838,975 million.

Notes:
1. The figures for the first three quarters have not been audited by a certified public accountant.
2. The above figures have been rounded down to the nearest million.

Background information on Company revenues
During the reporting period, the U.S. economy staged a sharp recovery thanks partly to the stimulus of a major tax cut and the lowering of interest rates. In Japan, corporate earnings improved and capital investment increased -- particularly in the information technology (IT) sector -- against the background of expanding exports, mostly to other East Asian countries. These factors helped support a continuation of the Japanese economy's gradual recovery.
Amid these circumstances, Kanematsu's iron and steel business, as well as the information technology business, posted good results in the three quarters under review, while overall, business performance was approximately as projected at the start of the term. The following table gives a breakdown of business performance by segment.

IT
In the field of electronic components and materials, trading in all categories of integrated circuits and orders received for semiconductor manufacturing equipment continued to be favorable, thanks to a full-scale recovery in the semiconductor market. In addition, trading in components for digital consumer appliances such as DVD players, as well as trading in optical communications components for domestic communications carriers also posted growth. Finally, in the mobile communications and multimedia segment, sales of cellular phones maintained their brisk trend amid vigorous replacement demand.

Foodstuffs
In the livestock business, the effects of the avian flu epidemic and the enforcement of restrictions by the Japanese government on pork imports to protect domestic pork producers, created a difficult business environment. However, we were able to secure stable supplies by diversifying our areas of supply, and revenues were consequently in line with the initial projections. In the foodstuffs and beverages field, consumption of wine was weak, but trading in processed food and fruit juices was in line with the initial forecasts. In the livestock feed and dairy produce business, sales of feed containing corn and ground fish declined, and the Company won fewer tenders for the supply of wheat and rice, owing to increasingly stiff competition.

Life Science & Energy
In the life science business, revenue from the sale of specialized, high-performance chemical products declined due to the yen's high exchange rate combined with high prices for raw materials and our inability to pass on these cost increases to user prices. Trading in materials for health foods, on the other hand, and exports of pharmaceuticals, both recorded favorable results. In the energy business, owing to the reorganization effected in the previous term, the business performance of the LPG segment worsened. In the petrochemicals business, however, revenue from the sale of petrochemical products was on a par with the previous year, in spite of lower demand for heating due to an unusually mild winter. This is attributable to rises in end-user prices in line with an upward movement in the crude oil price.

Iron, Steel and Industrial Plan
Prices of iron and steel products were at a high level due to a sharp growth in demand from China, among other factors. This had a negative impact on imports of raw materials for steelmaking, such as coking coal. Meanwhile, exports of surface-treated steel plates to the Middle East, and steel pipes and other products to the United States posted growth. As a result, business as a whole was satisfactory.
In the plant business, the export of plants to China and Iran maintained its brisk trend, while a recovery began in orders for machine tools and industrial machinery. In electric power generation projects, the order backlog increased during the period, but sales will only be registered from fiscal 2004, and thus revenues for the period declined somewhat on a year-before comparison.

Textiles
Sales of heavy outerwear suffered as a result of the mild winter, but efforts put into the planning and development of textiles with special properties paid off with a major increase in sales of knitted wear as well as stretch materials and other textiles with unique features.

(b) Occurrence of factors having a substantial impact on the financial position and business performance of the Kanematsu Group

2. Business Performance Forecasts for Fiscal 2003 (April 1 2003 to March 31, 2004) (consolidated basis)

Background information on business performance forecasts

The domestic economy is on a leisurely recovery path, but the Company's business is affected by a number of unquantifiable factors, including the influence of the yen's strength on the foreign exchange market, and the effects of BSE and avian influenza. Consequently, is remains unclear whether the recovery is sustainable or not.
Nonetheless, business performance for the first three quarters of fiscal 2003 was roughly as projected in the initial forecasts, and we see no necessity to revise out forecasts for the fiscal 2003 full term, announced at the time of the settlement of accounts for fiscal 2002, on May 16, 2003.

For readers' reference: Announcements made on May 16, 2003 Forecasts (\ millions):

Note: The above forecasts are based on information available to the Company's management at the time of writing, and incorporate reasonable assumptions of the effects of unquantifiable factors on future business performance. Consequently, actual business results may differ substantially from the forecasts shown here, as a result of changes in economic and other circumstances from here onward.