When our old Medium-term Business Plan was drafted the dollar was traded at 90 yen, now that rate is 77 yen to the dollar. The same has happened with other currencies around the globe with the euro dropping from 132 yen to 103 yen, the baht from 2.65 yen to 2.50 yen, and the renminbi from 13.0 yen to 12.2 yen. While foreign exchange rates have a significant impact on our business performance, the flip side is potential M&A opportunities over the coming years. Many have said that the strong yen has doomed Japan but in the global perspective the outlook may not be so gloomy. I believe we can leverage the strength of the yen to rapidly strengthen the foundation of our business.
Things have changed dramatically since we first penned our old plan. We now expect a slow recovery of our motor businesses; higher rare-earth prices, a stronger yen, and rising labor costs. All of that come on top of a lower annual growth rate in the HDD market where we have gone from a projected two-digit annual growth percentage to where it is now, just a little more than flat.
These headwinds which we never saw coming two years ago must now be incorporated into any course we set for the future. The next slide shows our new Medium-term Business Plan targets that have been formulated in light of these new realities.
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