Business Results for Nine Months (April-December, 2018) of FY2018 Telephone conference

Transcription

1 1 Business Results for Nine Months (April-December, 218) of FY218 Telephone conference January 31, 219 Presented by Takeshi Horikoshi Takuya Imayoshi Executive Officer and CFO Executive Officer and General Manager of Business Coordination Department

2 Contents 2 Ⅰ. Business Results for Three and Nine Months ended December 31, 218 <PP3-14> PP4-6: PP7-8: PP9-11: P12: P13: P14: Highlights, Segment Sales and Profits for the Third Quarter(Oct.- Dec., 218) Highlights, Segment Sales and Profits for Nine Months (Apr.- Dec., 218) Construction, Mining & Utility Equipment: Results for Nine Months (Apr.- Dec., 218), * s Business Results for Three and Nine Months Retail Finance: Assets and Revenues for Nine Months (Apr.- Dec., 218) Industrial Machinery & Others: Results for Nine Months (Apr.- Dec., 218) Consolidated Balance Sheets Ⅱ. Outlook of FY218 Business Results <PP15-25> PP16: PP17-22: PP23-24: P25: Projection for FY218 ending March 31, 219: Outline and Segment Sales and Profit Construction, Mining & Utility Equipment: Demand and Outlook for Seven Major Products (Global and By Region) Construction, Mining & Utility Equipment: Mining Equipment Construction, Mining & Utility Equipment: Parts Appendix <PP26-34> PP27-31: PP32-34: Quarterly Results Book-to-Bill Ratio [Orders Received / Sales (6 Months)] * stands for Komatsu Mining Corp.(former Joy Global Inc.)

3 3 Ⅰ. Business Results for Three and Nine Months ended December 31, 218 Note: Reclassification in the statement of income Since the fiscal year ending March 31, 219, Komatsu has adopted a new pension accounting standard of US GAAP. Therefore, net periodic postretirement benefit costs, separated from other personal expenses, are presented in nonoperating income (expenses), (whereas they were conventionally presented in segment profits). Accordingly, the corresponding amounts for FY217 are retrospectively reclassified as shown in the table below. * Improvement in the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost in accordance with ASU FY217 profits reclassified in accordance with the new accounting standard 217 Apr.-Jun. 217 Jul.-Sep. 217 Oct.-Dec. 218 Jan.-Mar. FY217 Komatsu Conventional (.8) (.8) (.8) (.9) (3.3) Construction, mining & utility equipment (.7) (.7) (.7) (.8) (2.9) Retail finance..... Industrial machinery & others. (.). (.1) (.1) Segement profit (.7) (.7) (.7) (.9) (3.) Operation income (.7) (.7) (.7) (.9) (3.) Other income(expenses) Income before income taxes

4 Highlights of Business Results for the Third Quarter (Oct.- Dec., 218) 4 Consolidated net sales increased by 8.3% from the corresponding period a year ago, to JPY7.5 billion. Operating income advanced by 27.6% to JPY95.5 billion. Operating income ratio improved by 2. points to 13.6%. Net income attributable to Komatsu Ltd. increased by 1.3% to JPY58.8 billion. Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Oct.-Dec., 217 Oct.-Dec., 218 Changes 113./USD 133.2/EUR 17./RMB Komatsu Conventional * /USD 129.6/EUR 16.4/RMB Komatsu Conventional *1 Increase (Decrease) % Change Net sales % Segment profit * * % Other operating income( expenses) (11.5) (11.7).1 (1.6) (1.5) (.) Operating income * * % Profit ratio 11.6% 12.6% 4.7% 13.6% 14.5% 8.1% +2.pts. - Other income (expenses) (3.6) (1.) (6.4) - Income before income taxes % Net income attributable to Komatsu Ltd % Notes: 1) Figures represent those from which s business results are excluded. 2) s segment and operating income include temporary expenses in the table on the right. Oct.-Dec.,217 Oct.-Dec.,218 Depreciation after PPA * (3.6) (1.8) Integration expenses etc. (.4) (1.) Total (4.1) (2.8) Note: PPA stands for Purchase Price Allocation. It is an accounting process of valuating and allocating acquired assets and liabilities to fair prices.

5 Segment Sales and Profits for the Third Quarter(Oct.- Dec., 218) 5 Construction, Mining & Utility Equipment: Sales advanced by 8.5% from the corresponding period a year ago, to JPY645.3 billion. Segment profit expanded by 11.5% to JPY88.6 billion. Segment profit ratio improved by.3 points to 13.7%. Retail Finance: Revenues increased by 13.5% to JPY16.7 billion. Segment profit advanced by 16.3% to JPY3.5 billion. Industrial Machinery & Others: Sales advanced by 8.% to JPY45.7 billion. Segment profit improved by 19.4% to JPY5.1 billion. Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Oct.-Dec.,217 % : Profit ratio [ ]: Sales after elimination of inter-segment transactions Oct.-Dec.,218 Changes Komatsu Conventional Komatsu Conventional Increase (Decrease) % Change Net sales % Construction, mining & utility equipment Retail finance Industrial machinery & others [591.7] 14.7 [13.] 42.3 [41.9] 59.1 [56.4] 14.7 [13.] 42.3 [41.9] 85.3 [85.3] [64.3] 16.7 [15.1] 45.7 [45.] [546.3] 16.7 [15.1] 45.7 [45.] 94. [94.] [+48.5] +1.9 [+2.] +3.3 [+3.1] +8.5% [+8.2%] +13.5% [+15.6%] +8.% [+7.4%] Elimination (4.7) (4.7) - (7.1) (7.1) - (2.4) - Segment profit (loss) % % % % Construction, mining & utility equipment Retail finance Industrial machinery & others 13.4% 13.4% 2.6% 1.2% % 2.6% 1.2% % 4.5% % 13.7% 21.1% 11.3% % 21.1% 11.3% % % +16.3% +19.4% Corporate & elimination (.4) (.4) - (.1) (.1) Review of three business segments Construction, Mining & Utility Equipment: Both sales and segment profit increased, mainly supported by expanded sales in Asia, CIS and Japan as well as price hikes. Retail Finance: Both sales and segment profit increased, due mainly to increased assets in North America. Industrial Machinery & Others Both sales and segment profit improved, mainly supported by increased sales of machine tools to the automobile manufacturing industry as well as increased sales of Excimer laser-related businesses reflecting buoyant conditions of the semiconductor market.

6 Construction, Mining & Utility Equipment : Sales by Region (To Outside Customers) for the Third Quarter(Oct.- Dec., 218) 6 Sales to outside customers increased by 8.2% from the corresponding period a year ago, to JPY64.3 billion. While sales declined in China, they expanded sharply, especially in Asia, CIS and Japan. The ratio of sales in Strategic Markets amounted to 54% of total sales. Oct.-Dec., Oct.-Dec., [+16.8%] [+4.3%] [+11.4%] Japan Oct.-Dec.,218 vs. Oct.-Dec.,217 North America Europe Latin America CIS China Asia Oceania Middle East Komatsu Conventional Oct.-Dec.,217(a) Komatsu Conventional Oct.-Dec.,218(b) Change (b-a) (6.6) (.7) Traditional Markets [+1.5%] [+38.6%] [(15.1)%] [+14.8%] [+4.9%] Strategic Markets Region where sales increased, when foreign exchange effects were excluded. [(7.8)%] Plus Minus [+3.3%] Africa [+8.2%] Total % 2% 9% Africa Middle East Oceania Asia 13% 7% China 4% CIS Latin America 14% Europe 7% North America 26% Japan 13% 8% 5% 1% Strategic Markets 54% 8% Traditional Markets 46% 64.3 Africa Middle East Oceania Asia 14% 6% China 6% CIS Latin America 14% Europe 7% North America 25% Japan 14% Oct.-Dec., 217 Oct.-Dec., 218 Strategic Markets 54% Traditional Markets 46%

7 Highlights for Nine-Months (Apr.- Dec., 218) 7 Consolidated net sales increased by 11.8% from the corresponding period a year ago, to JPY2,18.6 billion. Operating income expanded by 59.% to JPY295.8 billion. Operating income ratio improved by 4.4 points to 14.7%. Net income attributable to Komatsu Ltd. advanced by 18.8% to JPY184.1 billion. Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Apr.-Dec.,217 Apr.-Dec.,218 Changes 111.7/USD 128.2/EUR 16.6/RMB Komatsu Conventional *1 111./USD 129.8/EUR 16.6/RMB Komatsu Conventional *1 Increase (Decrease) % Change Net sales 1,85.8 1, ,18.6 1, % Segment profit (loss) *2 (17.6) * % Other operating income( expenses) (12.6) (12.7). (.4) (.4) Operating income (loss) *2 (17.5) * % Profit ratio (loss ratio) 1.3% 13.% (7.4)% 14.7% 15.1% 11.9% +4.4pts. - Other income (expenses) 29.3 (17.8) (47.1) - Income before income taxes % Net income attributable to Komatsu Ltd % Notes: 1) Figures represent those from which s business results are excluded, 2) s segment and operating income(loss) include temporary expenses in the table on the right. Apr.-Dec.,217 Apr.-Dec.,218 Depreciation after PPA * (36.7) (6.3) Integration expenses etc. (4.1) (2.) Total (4.8) (8.3) Note: PPA stands for Purchase Price Allocation. It is an accounting process of valuating and allocating acquired assets and liabilities to fair prices.

8 Segment Sales and Profits for Nine Months (Apr.- Dec., 218) 8 Construction, Mining & Utility Equipment: Sales advanced by 11.3% from the corresponding period a year ago, to JPY1,845.8 billion. Segment profit expanded by 49.9% to JPY272.5 billion. Segment profit ratio improved by 3.8 points to 14.8%. Retail Finance: Revenues increased by.4% to JPY46.1 billion. Segment profit expanded by 46.6% to JPY13.1 billion. Industrial Machinery & Others: Sales advanced by 17.5% to JPY142.7 billion. Segment profit improved by 38.8% to JPY12.6 billion. Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Apr.-Dec.,217 Apr.-Dec.,218 Changes Komatsu Komatsu Increase % Conventional Conventional (Decrease) Change Net sales 1,85.8 1, ,18.6 1, % Construction, mining & utility equipment Retail finance Industrial machinery & others 1,658.9 [1,648.6] 45.9 [36.7] [12.4] 1,422.6 [1,412.3] 45.9 [36.7] [12.4] [236.3] - - 1,845.8 [1,835.5] 46.1 [41.7] [141.2] 1,57.9 [1,56.6] 46.1 [41.7] [141.2] [274.9] [+186.9] +.1 [+4.9] [+2.8] +11.3% [+11.3%] +.4% [+13.6%] +17.5% [+17.3%] Elimination (2.6) (2.6) - (16.2) (16.2) Segment profit (loss) 11.% % (7.5)% (17.6) 14.7% % % % Construction, mining & utility equipment Retail finance Industrial machinery & others 11.% 19.5% 7.5% % 19.5% 7.5% (7.5)% (17.6) - - % : Profit(loss) ratio [ ]: Sales after elimination of inter-segment transactions Corporate & elimination (1.1) (1.1) - (2.) (2.) - (.8) - Review of three business segments Construction, Mining & Utility Equipment: Sales increased, supported mainly by advanced sales in North America, Asia, and Oceania. Segment profit also increased as a whole, reflecting increased volume of sales and reduced temporary expenses incurred by. Retail Finance: Revenues remained about flat, because sales of used equipment were recorded for the corresponding period a year ago as a result of the cancellation of a leasing contract in Chile. Segment profit increased, mainly due to a reversal of allowances for bad debts in China recorded for FY216. Industrial Machinery & Others Both sales and segment profit improved, supported by increased sales of machine tools to the automobile manufacturing industry and increased sales of Excimer laserrelated businesses, reflecting buoyant conditions of the semiconductor market. 14.8% 28.4% 8.9% % 28.4% 8.9% % % +46.6% +38.8%

9 Construction, Mining & Utility Equipment : Sales by Region (To Outside Customers) for Nine Months (Apr.- Dec., 218) Sales to outside customers advanced by 11.3% from the corresponding period a year ago, to JPY1,835.5 billion. Sales improved in all regions except Japan and the Middle East. Sales expanded sharply, especially in Asia, North America and Oceania. The ratio of sales in Strategic Markets increased to 55% of total sales. Apr.-Dec.,218 1,835.5 Apr.-Dec.,217 1,648.6 Komatsu Conventional Japan North America Europe Latin America CIS China Asia Oceania Middle East Africa Total , Apr.-Dec.,217(a) ,648.6 Komatsu Conventional [(4.3)%] , Apr.-Dec.,218(b) ,835.5 Change (b-a) (1.) (3.8) Traditional Markets Apr.-Dec.,218 vs. Apr.-Dec.,217 [+28.3%] [+4.2%] [+5.5%] [+17.8%] [+12.1%] [+26.7%] [+2.%] Strategic Markets Plus Minus Region where sales increased, when foreign exchange effects were excluded. [(14.1)%] [+8.%] [+11.3%] 1,9 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, % 2% 8% 1,648.6 Africa Middle East Oceania Asia 13% 7% China 5% CIS Latin America 14% Europe 8% North America 24% Japan 14% Strategic Markets 54% 9% 5% 1% 9% Traditional Markets 46% 1,835.5 Africa Middle East Oceania Asia 14% 6% China 6% CIS Latin America 13% Europe 8% North America 24% Japan 12% Apr.-Dec., 217 Apr.-Dec., 218 Strategic Markets 55% Traditional Markets 45% 9

10 Construction, Mining & Utility Equipment : Causes of Difference in Sales and Segment Profit for Nine Months (Apr.- Dec., 218) 1 Sales increased by JPY186.9 billion from the corresponding period a year ago, mainly supported by increased volume of sales and price hikes. Segment profit advanced by JPY9.7 billion due to increased volume of sales and declined temporary expenses incurred by. Segment profit ratio improved by 3.8 points to 14.8%. Billions of yen 2, 1,8 1,6 1,4 1,658.9 Sales Apr.-Dec., 217 vs. Apr.-Dec., 218 Volume Komatsu Conventional Selling price Foreign exchange rate (19.) billion yen Volume +4.4 FX rate (1.8) New additions to consolidation , Billions of yen Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Volume, Selling product mix, price etc Segment profit Apr.-Dec., 217 vs. Apr.-Dec., 218 Komatsu Conventional Foreign Fixed costs exchange (1.7) rate (4.5) +9.7 billion yen Volume Temporary expenses New additions to consolidation ,2 1, Apr.-Dec., 217 Positive factor Negative factor Apr.-Dec., 218 Apr.-Dec., 217 Positive factor Negative factor Apr.-Dec., /USD 128.2/EUR 16.6/RMB 111./USD 129.8/EUR 16.6/RMB 11.% Segment profit ratio 14.8%

11 Construction, Mining & Utility Equipment s Business Results for Three and Nine Months 11 Sales for nine months advanced by 16.3% from the corresponding period a year ago, to JPY274.9 billion. Operating income for nine months improved to JPY41. billion, excluding temporary expenses. When the temporary expenses of JPY8.3 billion are included, operating income amounted to JPY32.6 billion. Oct.-Dec., /USD Oct.-Dec., /USD Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Changes Apr.-Dec., Apr.-Dec., Changes Increase % Increase % (Decrease) Change 111.7/USD 111./USD (Decrease) Change Net sales % % Equipment % % Parts % % Service etc % % Operating income < excluding Temporary expenses > 9.5% % % 9.8% % % Temporary expenses (negative figure) (4.1) (2.8) (4.8) (8.3) Depreciation after PPA (3.6) (1.8) (36.7) (6.3) *1 *2 Integration expenses etc. (.4) (1.) (.5) - (4.1) (2.) Operating income (loss) < including Temporary expenses > 4.7% % (7.4)% (17.5) 11.9% Notes: 1) PPA stands for Purchase Price Allocation. It is an accounting process of valuating and allocating acquired assets and liabilities to fair prices. 2) Including JPY(25.8) billion for inventories after PPA. Millions of USD 4, 3, 2, 1, Sales & Operating income ratio 9.8% 2, % 2, ,119 Apr.-Dec., 217 Apr.-Dec., % 1.%.% -1.% -2.% -3.% Equipment Parts Service etc. Operating income ratio(excluding Temporary expense) 5% Sales by segments Surface 5% Apr.-Dec.,217 Underground 51% 49% Apr.-Dec.,218 Sales by regions (To Outside Customers) Apr.-Dec.,218 Asia 2% China 4% CIS 3% Africa 9% Oceania 13% Latin America 2% Europe 4% North America 45%

12 Retail Finance: Assets, Revenues and Segment Profit for Nine Months (Apr.- Dec., 218) 12 Assets increased by JPY68.5 billion from the previous fiscal year-end, mainly due to increased contracts centering on North America. While assets increased in North America, revenues remained about flat, because sales of used equipment were recorded for the corresponding period a year ago as a result of the cancellation of a leasing contract in Chile. Segment profit improved, mainly reflecting a reversal of allowances for bad debts in China as well as increased contracts in North America. * FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Assets Mar.31, 218 vs. Dec.31, Revenues Apr.-Dec., 217 vs. Apr.-Dec., 218 Sales Segment profit North America North America Others Others Oceania Oceania China China Europe Europe Japan Japan Mar.31, 218 Dec.31, /USD 17.7/USD 131./EUR 122.7/EUR 17./RMB 15.7/RMB Apr.-Dec., /USD 128.2/EUR 16.6/RMB Apr.-Dec., /USD 129.8/EUR 16.6/RMB 218/3E 218/12E Changes Interest-bearing debt Interest-bearing debt, net Net D/E ratio pts.

13 Industrial Machinery & Others: Sales and Segment Profit for Nine Months (Apr.- Dec., 218) 13 Sales increased by 17.5% from the corresponding period a year ago, to JPY142.7 billion, mainly supported by increased sales of machine tools to the automobile manufacturing industry and increased sales of Excimer laser-related business reflecting buoyant conditions of the semiconductor market. Segment profit ratio was 8.9% Sales Apr.-Dec., 217 vs. Apr.-Dec., Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Segment profit Apr.-Dec., 217 vs. Apr.-Dec., 218 :Segment profit ratio 7.5% % 12.6 (%) Apr.-Dec., 217 Apr.-Dec., 218 Apr.-Dec., 217 Apr.-Dec., Breakdown of sales Komatsu Industries Corp., etc. [total of press and sheet-metal machines] Apr.-Dec., 217 Apr.-Dec., 218 Changes Increase (Decrease) % Change % Komatsu NTC Ltd % Gigaphoton Inc % Others % Total %

14 Consolidated Balance Sheets 14 Total assets grew by JPY136.7 billion from the previous fiscal year-end, reflecting increased inventories. Komatsu Ltd. shareholders equity ratio decreased by.5 points to 48.9%. :Net D/E ratio Mar. 31, 218 Dec. 31, /USD 131./EUR 17./RMB 17.7/USD 122.7/EUR 15.7/RMB Increase (Decrease) Cash & deposits (incl. time deposits) [a] Accounts receivable (incl. long-term trade receivables) 1,155. 1, Inventories Tangible fixed assets Other assets Total assets 3, , Accounts payable (47.9) Interest-bearing debt [b] Other liabilities (27.4) Total liabilities 1, , [Shareholders equity ratio] (49.4%) (48.9%) ((.5)pts.) Komatsu Ltd. shareholders equity 1, , Non-controlling interests Liabilities & Equity 3, , Interest-bearing debt, net [b-a] Net D/E ratio (excl. the retail finance business).8.13

15 Ⅱ. Outlook of FY218 Business Results 15

16 Outline of Projection for FY Consolidated sales and profits for nine months show generally expected progress in line with the projection announced in October last year; therefore we have not changed our projection of full-year results for FY218. (See below for the projection of October 218.) Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) FY217 Results (A) 111.2/USD 129.6/EUR 16.8/RMB FY218 Projection (B) (Oct.218) 17.4/USD 126.4/EUR 16.3/RMB Komatsu Conventional *1 FY218 Projection (C) (Initial) Komatsu Conventional 1./USD 123./EUR 15.8/RMB *1 Increase (Decrease) Changes (B-A) % Change Net sales 2,51.1 2,662. 2, ,53. 2, % Segment profit % Other operating income (expenses) (31.3) (3.) (3.) - (6.) (6.) Operating income % Profit ratio 1.7% 14.3% 14.6% 12.4% 13.5% 14.3% 8.1% +3.6pts. - Other income (expenses) 23.3 (19.) (19.) (42.3) - Income before income taxes % Net income attributable to Komatsu Ltd % ROE 12.1% 14.1% 13.4% +2.pts. Cash dividends per share 84yen 12yen 96yen +18yen Consolidated payout ratio 4.3% 4.1% 4.1% Note 1) Profits represent those which s business results are excluded.

17 Komatsu (Conventional) Construction, Mining & Utility Equipment: Actual and Projected Demand for 7 Major Products 17 In the third quarter of FY218, demand increased presumably by 2% from the corresponding period a year ago. While demand decreased in China, it continued to grow in North America and Europe. Annual demand for 7 major products Quarterly demand for 7 major products Units 6, 5, 4, 3, 2, +13% +15% -2% Japan Europe Others +45% Index :FY7= % 97 +5% -7% N.America China Y-o-Y growth rate FY17 : +24% FY18 : +5% +1% (Projection of Oct. 218) FY18 : +5% +1% (Initial Projection) 9 +3% 93 +4% -9% -14% % Growth rate 5% 25% % -25% Units 15, 12, 9, 6, -9% -19% -16% Japan Europe Others -8% -8% -18% -% -11% N.America China Y-o-Y growth rate : +2% Apr.-Dec : +9% +23% +26% +26%+26% +18% +4% +7% +18% +2% Growth rate 12% 9% 6% 3% % -3% -6% -9% 1, -5% 3, -12% -15% FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 (As of Oct.218) (Initial) Source: Estimated by Komatsu Projection -75% FY14/ FY15/1Q FY16/1Q FY17/1Q FY18/1Q -18%

18 Komatsu (Conventional) Construction, Mining & Utility Equipment : Demand in Major Markets (1) Japan 18 In the third quarter of FY218, demand increased presumably by 12% from the corresponding period a year ago. Demand grew, reflecting increased demand in the rental industry mainly against the backdrop of recovery work from natural disasters as well as ending rebound of pre-buy demand in anticipation of the new emission controls regulations enforced in September 217. Demand for new equipment (7 major products) and construction investment Construction investment Trillion of yen FY17 : +5% FY18 : -1% -5% (Projection of Oct. 218) FY18 : -5% +/-% (Initial Projection) Exports of used equipment Demand for new equipment Private-sector non-residential Private-sector residential Government construction FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 Demand for new equipment / Export of used equipment (Units) 8, 6, 4, 2, (As of Oct.218) (Initial) Projection 2, 4, 6, 8, 1, [Sources]Construction investment by the Ministry of Land, Infrastructure, Transport & Tourism, and Research Institute of Construction and Economy Demand for 7 major products and No. of exported used equipment estimated by Komatsu Y-o-Y growth rate -1% Units 1% 75% 5% 25% 12, 8, 4, % -25% -5% -75% FY14/1Q FY14/ 14 Index :FY7/=1 FY15/1Q Quarterly demand for 7 major products FY15/1Q Demand (units) Y-o-Y change (%) Rental companies Regular customers FY16/1Q FY16/1Q : +12% Apr.-Dec : -13% Quarterly demand for hydraulic excavators (Rental & Regular uses) FY17/1Q FY17/1Q FY18/1Q FY18/1Q Units 16, 12, 8, 4, -4, -8, -12, -16, Y-o-Y growth rate Rental +3% Regular +8%

19 Komatsu (Conventional) Construction, Mining & Utility Equipment : Demand in Major Markets (2) North America 19 In the third quarter of FY218, demand increased presumably by 6% from the corresponding period a year ago. In the United States, demand remained steady centering on civil engineering and energy-related sectors. In Canada, demand was also firm in both residential and non-residential sectors. Demand for 7 major products (Units) 8, Demand for 7 major products and US housing starts FY17 : +15% FY18 : +1% +2% (Projection of Oct. 218) FY18 : +5% +1% (Initial Projection) Housing starts Housing starts in ten thousands Y-o-Y growth rate 6% 4% 2% % -2% -4% -6% Index Quarterly demand for 7 major products Demand(unites) :FY7/=1 93 Y-o-Y Change(%) 114 : +6% Apr.-Dec : +17% 121 Units 3, 2, 1, -1, -2, -3, 6, FY14/1Q FY15/1Q FY16/1Q FY17/1Q FY18/1Q 4, 2, FY5 FY7 FY9 FY11 FY13 FY15 FY17 FY18 (As of Oct.218) (Initial) Projection [Source]: Demand for 7 major products estimated by Komatsu USA Canada 1% 8% 6% 4% 2% % FY7 FY8 Breakdown of demand by segment (Unit basis) FY9 FY1 FY11 FY12 Others Construction Road Mining & energy Rental -Regular FY13 FY14 FY15 FY16 FY17 FY17/Apr-Dec FY18/Apr-Dec Rental-distributor (DORF) Y-o-Y growth rate Rental +34% Mining & energy +35% Road Construction Others +11%

20 Komatsu (Conventional) Construction, Mining & Utility Equipment : Demand in Major Markets (3) Europe 2 In the third quarter of FY218, demand increased presumably by 14% from the corresponding period a year ago. Demand remained firm in the major markets of Germany, the U.K. and France, and it advanced in eastern Europe. Units 8, 7, Annual demand for 7 major products FY17 : +7% FY18 : +3% +8% (Projection of Oct. 218) FY18 : +3% +8% (Initial Projection) Y-o-Y growth rate 4% 3% 2% Quarterly demand for 7 major products Demand(unites) Y-o-Y change(%) Units 16, 12, 8, 1% 4, 6, 5, % -1% -2% Index :FY7/=1 : +14% Apr.-Dec : +11% (4,) (8,) 4, FY14/1Q FY15/1Q FY16/1Q FY17/1Q FY18/1Q 3, Units Region demand for 7 major products (Excl. 6t class) 2, 1, 7, 6, 5, Southern Eastern Other Western Countries Northern The UK., France, and Germany 35, 3, 25, 4, 2, FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 (As of Oct.218) (Initial) Projection 3, 2, 1, 15, 1, 5, [Source]: Demand for 7 major products estimated by Komatsu FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY17 (Apr.-Nov.) FY18 (Apr.-Nov.)

21 Komatsu (Conventional) Construction, Mining & Utility Equipment : Demand in Major Markets (4) China 21 In the third quarter of FY218, demand decreased presumably by 8% from the corresponding period a year ago. While the Chinese government has announced a policy to expand infrastructure, uncertainty of the Chinese market remains for the future. Units 12, 1, 8, 6, Annual demand for 7 major products (Foreign makers) FY17 : +8% FY18 : +1% +2% (Projection of Oct. 218) FY18 : +2% +3% (Initial Projection) Y-o-Y growth rate 2% 15% 1% 5% Quarterly demand for 7 major products (Foreign makers) Index :FY7/=1 64 Demand (units) 39 Y-o-Y growth rate Units 25, 15, 5, 4, 2, % -5% -1% : -8% Apr.-Dec : +19% -5, -15, FY14/1Q FY15/1Q FY16/1Q FY17/1Q FY18/1Q (As of Oct.218) (Initial) Projection8 Hours KOMTRAX in China : Average operating hours per month -25% 83% 6% 14% 7% 3% 6% Operating hours (left scale) Y-o-Y (right scale) 2% % 2% -2% 8% 46% -49% -3% -2% % -6% -3% -12% -4% 9% -14% -14% 8% 6% 4% 2% % -2% -4% -6% -8% [Source]: Demand for 7 major products and hydraulic excavators estimated by Komatsu Units 15, 1, 5, Monthly demand for hydraulic excavators : All model FY214 FY215 FY216 FY217 FY218 <Chinese New Year> : Feb. 19, 215 : Feb. 8, 216 : Jan. 28, 217 : Feb : Feb (month)

22 Komatsu (Conventional) Construction, Mining & Utility Equipment : Demand in Major Markets (5) Southeast Asia 22 In the third quarter of FY218, demand presumably remained flat from the corresponding period a year ago. While demand continued to increase in Indonesia, the largest market of the region, the rate of growth has slowed down. Units 4, 3, Annual demand for 7 major products Indonesia Others Malaysia Thailand FY17 : +28% FY18 : +8% +13% (Projection of Oct. 218) FY18 : +8% +13% (Initial Projection) Y-o-Y growth rate 12% 8% 4% % -4% -8% 123 Quarterly demand for 7 major products Indonesia Others Malaysia Thailand Y-o-Y change(%) 17 Index :FY7/= : +% Apr.-Dec : +14% Units 9, 6, 3, : -3, -6, FY18/1Q FY17/1Q FY16/1Q FY15/1Q FY14/1Q 2, 1, Units 4, 3, Forestry Agriculture Construction Mining Indonesia: Demand for construction & mining equipment by industrial sector : +1% Apr.-Dec : +24% 2, FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 (As of Oct.218) (Initial) Projection [Source]: Demand for 7 major products estimated by Komatsu 1, FY14/ FY15/1Q FY16/1Q FY17/1Q FY18/1Q

23 Construction, Mining & Utility Equipment : Actual and Projected Demand for Mining Equipment 23 In the third quarter of FY218, global demand for mining equipment expanded presumably by 26% from the corresponding period year ago. Demand has been growing, especially in North America, Latin America, CIS and Oceania. Annual demand for mining equipment Quarterly demand for mining equipment Dump trucks: 75 tons (HD785) and larger Bulldozers: 525HP (D375) and larger Excavators: 2 tons (PC2) and larger Units 1, 8, 6, 4, 2, FY17 : +64% FY18 : +2% +3% (Projection of Oct. 218) FY18 : +1% +2% (Initial Projection) +39% +51% -5% -51% -25% -15% Wheel loaders (mechanical driven): 81HP (WA8) and larger Motor graders: 28HP (GD825) and larger -3% +64% Y-o-Y change 1% 5% % -5% -1% -15% -3% -35% Middle East & Africa Oceania Asia -2% Japan&China -25% Europe&CIS Latin America N. America Units 2, 1,5 1, 5-26% : +26% Apr.-Dec : +4% -15% -2% -24% -12% -7% -2% -33% +96% +7% +17% +5% +49% +43% +12% +56% 1% 5% +26% % Y-o-Y change -5% -1% -15% Asia Middle East & Africa Oceania Japan&China -2% Europe&CIS Latin America -25% N. America Y-o-Y change -4% FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 (As of Oct.218)(Initial) Note: Demand estimated by Komatsu Projection FY14/ FY15/1Q FY16/1Q FY17/1Q FY18/1Q -3% Y-o-Y change

24 Construction, Mining & Utility Equipment : Sales of Mining Equipment 24 For the third quarter of FY218, sales increased by 1% from the corresponding period a year ago, to JPY277.9 billion. On the Komatsu-conventional basis (excl. ), sales increased also by 1% to JPY183.9 billion. On the Komatsu-conventional basis, sales advanced especially in Latin Americas, Indonesia, and CIS. Billions 1,6 of yen 1,4 1,2 1, Annual sales of mining equipment (incl. parts and service) % 554. N. America Latin America Europe &CIS Japan & China Asia Oceania Middle East & Africa Y-o-Y change (Conventional) Y-o-Y change (including ) +33% % -18% -1% -3% -1% % +41% -3% +5% -4% % 1, FY1FY11FY12FY13FY14FY15FY16FY17FY18FY18 (As of Oct.218) (Initial) Projection incl conventional FY16FY17FY18FY18 (As of Oct.218) (Initial) Projection Y-o-Y change 1% 5% % -5% -1% Parts () -15% Equipment (conventional) -2% -25% -3% -35% Equipment () Service, etc. () Parts (conventional) Service, etc. (conventional) Billions of yen 4 Quarterly sales of mining equipment (incl. parts and service) +115% +145% +132% 35 +6% +8% +53% +4% +2% +23% +26% -4% +1% 3-7% -18% +2% +23% +14% +1% -13% -12% -15% -18% -4% +12% FY14/ FY15/1Q Oceania Japan & China Latin America Y-o-Y change(including ) FY16/1Q FY17/1Q Middle East & Africa Asia Europe & CIS N. America Y-o-Y change(conventional) FY18/1Q incl FY17/ conventional FY18/1Q Y-o-Y change 15% 5% -5% Equipment Service, etc. Parts () Parts () Equipment (conventional) Service, etc. () (conventional) (conventional) -15% -25% -35% -45%

25 Construction, Mining & Utility Equipment : Sales of Parts 25 For the third quarter of FY218, sales of parts increased by 6% from the corresponding period a year ago, to JPY155.1 billion. On the Komatsu-conventional basis (excl. ), sales increased by 5% to JPY122.5 billion. Sales increased from the corresponding period a year ago, as we steadily captured aftermarket demand. Annual sales of parts Quarterly sales of parts Billions of yen Mining equipment Y-o-Y(includign ) Constrution equipment Y-o-Y(Conventional Komatsu) +52% Conventional +18% +13% +14% +6% +3% +5% +22% +2% -5% % +1% % % % % incl Y-o-Y change (%) 5% -2% Billions of yen % +37% 4% +23% +24% +11% +11% +15% +14% 2% +7% +11% +9% +1% +6% +14% +13% -7% +7% % +5% Conventional % -11% -7% % % % % % % Mining equipment Y-o-Y(Conventional Komatsu) % Construction equipment Y-o-Y(including ) +66% +56% incl Y-o-Y change (%) 6% -14% -16% FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 (As of Oct.218) (Initial) Projection -25% FY14/ FY15/1Q FY16/1Q FY17/1Q FY18/1Q -18%

26 Appendix 26

27 <Appendix> Quarterly Sales and Operating Income Elimination Construction, Mining & Utility Equipment(Komatsu conventional) Retail Finance Industrial Machinery & Others Quarterly sales (Since FY215) FY15/1Q FY16/1Q FY17/1Q FY18/1Q Exchange rates 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ 18/1Q 18/ 18/ 18/ /USD /EUR /RMB Quarterly operating income (Since FY215) Operating profit () Operating profit (Komatsu conventional) Operating profit ratio (including ) Operating profit ratio (Komatsu conventional) 11.1% 11.% 11.6% 13.4% 12.9% 12.6% 13.1% 11.6% 11.1% 7.7% 8.4% 11.6% 1.% 1.% 9.2% 11.9% Conventional 15.2% 15.6% 14.5% incl. 14.9% 15.5% 13.6% FY15/1Q FY16/1Q FY17/1Q FY18/1Q Note:FY217 profits are reclassified and restated. (Refer to page 3 for more information.) * Specific figures are -JPY.7 billion each for 1Q, and and -JPY.9 billion for.

28 <Appendix> Construction, Mining & Utility Equipment: Quarterly Sales and Segment Profit Quarterly Sales Komatsu conventional Exchange rates /USD /EUR /RMB FY15/1Q FY16/1Q FY17/1Q FY18/1Q 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ 18/1Q 18/ 18/ 18/ Quarterly segment profit Segment profit () Segment profit (Komatsu conventional) Segment profit ratio (including ) Segment profit ratio (Komatsu conventional) Percentage of sales in Strategic Markets 54% 48% 47% 5% 45% 47% 51% 53% 55% 52% 54% 56% 56% 55% 54% Conventional % % 15.3% 15.9% 14.7% incl % 13.8% 13.3% % 13.4% 14.7% 14.9% 15.8% 13.7% 1.8% 1.7% 9.9% 1.8% 1.3% 7.6% 8.8% 9.2% 1.% FY15/1Q FY16/1Q FY17/1Q FY18/1Q (5) 1% 8% 6% 4% 2% % Breakdown of sales(%) Note: FY217 profits are reclassified and restated. (Refer to page 3 for more information.) Parts, etc Mining equipment Construction equipment(stragegic Markets) Construction equipment(traditional Markets) 53% 55% 55% 48% 52% 52% 53% 45% 57% 55% 53% 51% 53% 54% 52% 1% 9% 9% 8% 1% 8% 1% 15% 13% 13% 14% 9% 15% 15% 15% 19% 12% 12% 16% 13% 12% 16% 16% 13% 12% 12% 17% 16% 11% 11% 22% 23% 23% 29% 23% 25% 22% 25% 18% 21% 19% 19% 19% 18% 21% FY15/1Q FY16/1Q FY17/1Q FY18/1Q

29 <Appendix> Construction, Mining & Utility Equipment: Quarterly Sales by Region (To Outside Customers) Including starting from FY17/1Q Africa Middle East Oceania Asia China CIS Latin America Europe North America Exchange rates /USD /EUR /RMB FY15/1Q FY16/1Q FY17/1Q FY18/1Q 15/1Q 15/ 15/ 15/ /1Q 16/ 16/ 16/ /1Q 17/ 17/ 17/ /1Q 18/ 18/ 18/ Japan

30 <Appendix> Retail Finance: Quarterly Sales and Segment Profit 3 Quarterly sales FY15/1Q FY16/1Q FY17/1Q FY18/1Q Exchange rates 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ 18/1Q 18/ 18/ 18/ /USD /EUR /RMB % 28.% 24.% 19.3% Segment profit Segment profit ratio 15.9% Quarterly segment profit 2.1% 2.2% *1 *1 *1 *1 18.9% 18.9% FY15/1Q FY16/1Q FY17/1Q FY18/1Q % 28.% 4. *2 *2 *2 *2 38.5% % % % *1 Including a loss on allowance recorded for bad debt in China (FY16/1Q: -JPY1. billion, : -JPY.5 billion, : -JPY.2 billion, : -JPY4.9 billion) *2 FY217 profits are reclassified and restated. (Refer to page 3 for more information.)

31 <Appendix> Industrial Machinery & Others: Quarterly Sales and Segment Profit 31 1 Quarterly sales Exchange rates /USD /EUR /RMB FY15/1Q FY16/1Q FY17/1Q FY18/1Q 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ 18/1Q 18/ 18/ 18/ Quarterly segment profit Segment profit Segment profit ratio % 7.6% 8.3% % % 5.3% 5.7% % % 6.% % % 7.4% 8.% % FY15/1Q FY16/1Q FY17/1Q FY18/1Q Note:FY217 profits are reclassified and restated. (Refer to page 3 for more information.)

32 <Appendix> Book-to-Bill Ratio for Mining Equipment (6 Months) 32 Komatsu America (Mining eqpt) 73E, 83E, 86E 93E, 96E, 98E 2% 15% 1% 5% Orders received/sales Index Avg. orders in value for 6 months/avg. factory shipment in value for 6 months) % Komatsu Germany (Mining eqpt) PC3, PC4 PC55, PC7 PC8 25% 2% 15% 1% 5% % Komatsu Ltd. (Mining eqpt) HD785, HD15 PC2,PC3 PC4 WA8 up D375A up GD825A up 2% 15% 1% 5% %

33 <Appendix> Book-to-Bill Ratio for Mining Equipment (6 Months) 33 (Surface) Rope Shovel Blasthole Drills Dragline,etc 25% 2% 15% 1% 5% % Orders received/sales Index Avg. orders in value for 6 months/avg. factory shipment in value for 6 months) (Underground) Continuous Miner Sheerer Load Haul Dump Machine Jumbo Drills,etc 25% 2% 15% 1% 5% %

34 <Appendix> Book-to-Bill Ratio for Industrial Machinery (6 Months) 34 2% 15% Avg. orders in value for 6 months/avg. factory shipment in value for 6 months) Orders received/sales Index Komatsu Industries 1% 5% % 2% 15% Komatsu NTC (Excl. wire saws) 1% 5% %

35 Komatsu Industries Corp. and Komatsu NTC Ltd. exhibited at FABTECH218 and JIMTOF218, respectively. Komatsu Industries Corp. introduced its cutting-edge medium-sized Servo press and exhibited its 3D fiber laser cutting machine at FABTECH218, North America s largest trade fair for metal forming and fabricating machines, held in Atlanta, United States in November 218. Komatsu NTC Ltd. exhibited its leading-edge machine tools at JIMTOF218 (29 th Japan International Machine Tool Fair) held at Tokyo Big Sight in November TLH51 3D fiber laser cutting machine exhibited at FABTECH218 PX356 profile grinding machine exhibited at JIMTOF218 Cautionary Statement The announcement set forth herein contains forward-looking statements which reflect management's current views with respect to certain future events, including expected financial position, operating results, and business strategies. These statements can be identified by the use of terms such as "will," "believes," "should," "projects" and similar terms and expressions that identify future events or expectations. Actual results may differ materially from those projected, and the events and results of such forward-looking assumptions cannot be assured. Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are not limited to, unanticipated changes in demand for the Company's principal products, owing to changes in the economic conditions in the Company s principal markets; changes in exchange rates or the impact of increased competition; unanticipated cost or delays encountered in achieving the Company's objectives with respect to globalized product sourcing and new Information Technology tools; uncertainties as to the results of the Company's research and development efforts and its ability to access and protect certain intellectual property rights; and, the impact of regulatory changes and accounting principles and practices. Business Coordination Department, KOMATSU LTD. TEL: FAX: