1 Business Results for FY216 (April 1, 216 - March 31, 217) Tetsuji Ohashi Mikio Fujitsuka Yasuhiro Inagaki April 27, 217 Komatsu Ltd. Participants President and CEO Executive Vice President and CFO Senior Executive Officer General Manager, Business Coordination Department
2 1)On April 5, 217 (local time: Eastern Standard Time, UTC-5), Komatsu Ltd. closed the acquisition of Joy Global Inc., and Joy Global changed its trade name to Komatsu Mining Corp. (hereafter KMC ) on April 19 (local time: Eastern Standard Time, UTC-5). 2)Accordingly, KMC (former Joy Global Inc.) s business results are not included in Komatsu s business results for FY216. 3)In our presentation today, the outlook of business results for FY217 will be divided into the following three sections. (1) Projection for Komatsu and KMC-combined business results (2) Projection for Komatsu s business results in the conventional manner (3) Projection for KMC s non-consolidated business results
Contents 3 PP5-7 PP8-9 P1 P11 P12 1. Business Results for FY216: PP5-12 Highlights: Segment Sales and Profits for FY216 Construction, Mining & Utility Equipment: Results for FY216 Retail Finance Business: Assets, Revenues and Segment Profit for FY216 Industrial Machinery & Others: Results for FY216 Consolidated Balance Sheets 2. Projection for FY217 Business Results, Progress towards Mid-Range Management Targets Projection for KMC s Business Result & Sales: PP14-33 PP14-15 PP16-17 P18 P19 PP2-25 PP26-27 P28 P29 P3-33 Projection for FY217 Results[Highlights, Segment Sales and Profit ] Construction and Mining Equipment: Projection for Segment Sales and Profit Retail Finance: Outlook of Assets, Revenues Industrial Machinery & Others: Projection for Segment Sales and Profit Construction and Mining Equipment: Actual and Projected Demand for Seven Major Products (Global and By Region) Construction and Mining Equipment: Mining Equipment Construction and Mining Equipment: Parts Projection for Capital Expenditures, Depreciation, R&D Expenses and Fixed Costs Progress towards Mid-Range Management Targets Projection for KMC s Business Result & Sales Appendix: PP35-43 PP35-38 PP39-4 PP42-43 Quarterly Results Book-to-Bill Ratio [Orders Received / Sales (6 Months)] Highlights: Segment Sales and Profit for the Forth Quarter of FY216 (January March 217)
1. Business Results for FY216 4
Highlights of FY216 Business Results 5 Consolidated net sales declined by 2.8% from FY215, to JPY1,82.9 billion. Operating income dropped by 16.5% to JPY174. billion. Operating income ratio was 9.7%, down 1.5 percentage points. Net income attributable to Komatsu Ltd. dropped by 17.5% to JPY113.3 billion. FY215 results 12.8/USD 132.4/EUR 19./RMB FY216 (Projection) 15./USD 119./EUR 16.2/RMB FY216 results 18.6/USD 119.3/EUR 16.2/RMB Increase (decrease) Changes % Change Net sales 1,854.9 1,685. 1,82.9 (51.9) (2.8)% Segment profit 22. 155. 176.5 (25.4) (12.6)% Other operating income (expenses) 6.5 (5.) (2.4) (9.) - Operating income 28.5 15. 174. (34.4) (16.5)% Profit ratio 11.2% 8.9% 9.7% (1.5)pts. - Other income (expenses) (3.6) (5.) (7.6) (3.9) - Net income before income taxes 24.8 145. 166.4 (38.4) (18.7)% Net income * 137.4 92. 113.3 (24.) (17.5)% ROE 9.% 6.2% 7.3% (1.7)pts. - Net D/E ratio.23 -.18 (.5)pts. - Cash dividends per share 58yen 58yen 58yen +/- yen Consolidated payout ratio 39.8% 59.4% 48.2% * Upon adoption of ASC 81, "Net income" is equivalent to "Net income attributable to Komatsu Ltd."
Quarterly Sales and Operating Income 6 7 6 5 4 3 2 1 455.1 469.9 464.3 4.3 59.2 45.3 14.7 12.3 15.9 411.9 47.3 417.5 564.1 64.2 22.9 496.2 46.2 Quarterly sales (Since FY213) 482.3 494. 65.6 43.3 59. 53.5 12.9 13.6 15.2 11.7 411.8 416.7 433.8 467.3 53.6 65.7 44.7 56. 13.8 13.5 13.4 13.1 392.3 38.5 417.4 411.6 Industrial Machinery & Others Retail Finance Construction, Mining & Utility Equipment Elimination 34.7 44.2 11.6 11.8 345.1 353.4 379. -11.9-8.9-14.4-19.3-1.2-5.2-6.2-4.5-4.8-3.6-6.5-6.1-2.5-2.4-3.3-5.3 Exchange FY13/1Q FY14/1Q FY15/1Q FY16/1Q rates 13/1Q 13/ 13/ 13/ 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ /USD 97.3 98.6 99.7 12.7 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 /EUR 126.4 129.9 135.1 139.9 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 /RMB 15.8 16.1 16.3 16.9 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 542. 446.1 446.3 478. 484.4 389.2 46.8 43.5 42.2 12.6 576.2 69.7 12.9 498.8 12 1 8 6 4 11.5% 12.% 12.2% 52.4 Operating profit Operating profit ratio 56.5 56.6 Quarterly operating income(since FY213) 13.3% 13.8% 12.9% 11.4% 11.1% 11.1% 11.% 11.6% 11.1% 74.8 63.4 62.1 56.2 6.1 49.7 49.3 55.6 53.9 7.7% 29.7 8.4% 34.3 1.% 42.8 11.6% 67. 2 FY13/1Q FY14/1Q FY15/1Q FY16/1Q
Segment Sales and Profit for FY216 7 Construction, Mining & Utility Equipment: Sales declined by 1.6% from FY215, to JPY1,576.5 billion. Segment profit dropped by 4.3% to JPY161.6 billion. Segment profit ratio was 1.3%, down.2 percentage points. Retail Finance: Revenues declined by 9.% to JPY49. billion. Segment profit dropped by 66.6% to JPY4.4 billion. Industrial Machinery & Others: Sales declined by 13.2% to JPY 191. billion. Segment profit dropped by 35.7% to JPY12.4 billion. FY215 results FY216 (Projection) FY216 results Increase (decrease) Changes % Change Net sales 1,854.9 1,685. 1,82.9 (51.9) (2.8)% Construction, mining & utility equipment Retail finance Industrial machinery & others [1,587.5] 1,62. [5.8] 53.9 [216.5] 22.1 [1,434.] 1,445. [4.] 43. [211.] 212. [1,566.3] 1,576.5 [46.7] 49. [189.9] 191. [(21.2)] (25.4) [(4.1)] (4.8) [(26.6)] (29.1) [(1.3%)] (1.6)% [(8.1%)] (9.)% [(12.3%)] (13.2)% Elimination (21.1) (15.) (13.7) +7.4 - Segment profit 1.9% 22. 9.2% 155. 9.8% 176.5 (25.4) (12.6)% Construction, mining & utility equipment Retail finance Industrial machinery & others 1.5% 169. 8.9% 24.7% 13.3 25.6% 19.3 8.8% 8.5% % : Profit ratio [ ]: Sales after elimination of inter-segment transactions 6.5% Corporate & elimination.3 (3.) (2.) (2.3) - Review of three business segments Construction, Mining & Utility Equipment While sales declined in some regions, such as North and the Middle East, where demand was sluggish, they were more than offset by increased sales in China and Indonesia. However both sales and segment profit declined, mainly affected by the Japanese yen s appreciation. When the foreign exchange effects are removed, sales increased. Retail Finance [Independent operating segment starting in FY216] Both revenues and segment profit, declined from FY215 as mainly affected by the Japanese yen s appreciation and reduced assets in China, Oceania and some other regions. Industrial Machinery & Others Both revenues and segment profit declined from FY215, due to reduced sales of presses and machine tools to the automobile manufacturing industry and the adverse effects of former Komatsu House which was excluded from consolidated accounting*. * Komatsu sold the shares, equivalent to 85% of total shares outstanding, of Komatsu House to Nissei Build Industries Co., Ltd. on April 28, 216. 129. 11. 18. 1.3% 9.1% 161.6 4.4 12.4 (7.3) (8.8) (6.9) (4.3)% (66.6)% (35.7)%
Construction, Mining & Utility Equipment: Sales by Region for FY216 (To Outside Customers) 8 Sales to outside customers declined by 1.3% from FY215, to JPY1,566.3 billion. Except for CIS, China and Asia, sales declined in other regions. Sales increased in Strategic Markets, such as China, which pushed the ratio of sales in Strategic Markets to 5%. However, sales were steady in many regions, when the foreign exchange effects are removed. FY215 1,587.5 (6.1) [(2.)%] FY216 1,566.3 Billions of yen Japan Plus Minus YoY Comparison (31.8) [(8.6)%] (3.9) [(2.9)%] (12.) [(5.6)%] North Europe Latin +22.7 [+47.6%] +27.7 [+39.8%] +17. [+9.%] (1.3) [(1.2)%] CIS China Asia Oceania Middle East (22.8) [(39.)%] (1.6) [(12.9)%] Africa (21.2) [(1.3)%] FY215 37.6 37.2 139.5 215. 47.7 69.6 189.5 16.9 58.6 82.4 1,587.5 FY216 31.5 338.4 135.5 22.9 7.5 97.3 26.6 15.6 35.8 71.8 1,566.3 * * * * * * * Traditional Markets Strategic Markets * Region of Plus when the foreign exchange effects are removed. Total 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 9 8 7 6 5 4 3 2 1 1,587.5 1,566.3 Africa 5% Middle 4% East Oceania 7% Asia 12% China 4% CIS 3% Latin 14% Europe 9% North 23% Japan 19% FY215 Strategic Markets 49% Traditional Markets 51% Africa 5% Middle 2% East Oceania 7% Asia 13% China 6% CIS 4% Latin 13% Europe 9% North 22% Japan 19% FY216 Strategic Markets 5% Traditional Markets 5%
Construction, Mining & Utility Equipment: Causes of Difference in Sales and Segment Profit for FY216 9 Sales declined by JPY25.4 billion from FY215, as affected by the Japanese yen s appreciation. Segment profit declined by JPY7.3 billion. Segment profit ratio degenerated to 1.3%, down.2 percentage points. Billions of yen 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 1,62. FY215 *1 Sales FY215 vs. FY216 Volume, etc. +11.3 Selling price +1.5 (25.4) billion yen Positive factors Negative factor Foreign exchange rate (128.4) 1,576.5 FY216 Billions of yen 25 2 15 1 5 169. FY215 *2 Volume, product mix, etc. +17.7 Segment profit FY215 vs. FY216 Fixed costs +3.5 Selling price +1.5 (7.3) billion yen Positive factors Negative factor Foreign exchange rate (3.) 161.6 FY216 12.8/USD 132.4/EUR 19./RMB *1: Incl. new additions to consolidation 18.6/USD 119.3/EUR 16.2/RMB 1.5% Segment profit ratio *2: Incl. new additions to consolidation, region mix 1.3%
Retail Finance Business: Assets, Revenues and Segment Profit for FY216 1 Assets grew by JPY2. billion from March 31, 216, due to increased receivables in North, Europe, Thailand and some other regions. Revenues declined due mainly to the effects of foreign exchange rates. Segment profit declined from FY215, due mainly to an additional allowance recorded for bad debt in China. 8 7 6 5 4 3 2 1 Assets Mar 31, 216 vs. Mar 31, 217 651.5 North Others Oceania China Europe Japan 112.7/USD 127.7/EUR 17.4/RMB 671.5 North Others Oceania China Europe Japan Mar 31, 216 Mar 31, 217 112.2/USD 119.8/EUR 16.3/RMB 216/3E 217/3E Changes Interest-bearing debt 483.5 56. +22.4 7 6 5 4 3 2 1 53.9 FY215 12.8/USD 132.4/EUR 19./RMB Revenues FY215 vs. FY216 13.3 Sales 49. FY216 18.6/USD 119.3/EUR 16.2/RMB Segment profit 4.4 FY215 FY216 Changes ROA 2.%.7% (1.3)% Interest-bearing debt, net 476.6 51.2 +24.5 Net D/E ratio 3.4 3.65 +.25pts.
Industrial Machinery & Others: Sales and Segment for FY216 11 Sales declined by 13.2% from FY215, to JPY191. billion, due to reduced sales of presses and machine tools to the automobile manufacturing industry as well as the adverse effects of excluding former Komatsu House from consolidated accounting. Segment profit ratio was 6.5%. Billions of yen 25 2 15 1 5 Sales Komatsu House *1 221.5 22.1 191. FY214 FY215 FY216 Billions of yen 3 25 2 15 1 5 Segment profit :Segment profit ratio 7.3% 8.8% 6.5% 16.2 19.3 12.4 FY214 FY215 FY216 (%) 1 5 Breakdown of sales Komatsu Industries Corp., etc. [total of press and sheet-metal machines] Komatsu NTC Ltd. [represented by wire saws] FY214 FY215 FY216 Increase (decrease) Changes % change 64. 58. 56.6 (1.4) (2.5)% 73.6 [7.8] 71. [6.9] 55.2 [1.7] (15.7) [+3.7] (22.2)% [+53.1%] Gigaphoton 29.2 34. 32. (2.) (6.)% Komatsu House *1 16.3 16.1 - (16.1) - Others 38.2 4.7 47. +6.2 +15.4% Total 221.5 22.1 191. (29.1) (13.2)% *1: Komatsu sold the shares, equivalent to 85% of total shares outstanding, of Komatsu House to Nissei Build Industries Co., Ltd. on April 28, 216.
Consolidated Balance Sheets 12 Total assets grew by JPY41.8 billion from the previous fiscal year-end, due to increased accounts receivable. Komatsu Ltd. shareholders equity ratio was 59.4%, up1.4 percentage points from the previous fiscal year-end. Mar. 31, 216 Mar. 31, 217 112.7/USD 127.7/EUR 17.4/RMB 112.2/USD 119.8/EUR 16.3/RMB Increase (decrease) Cash & deposits (incl. time deposits) [a] 18.4 122.1 +13.7 Accounts receivable (incl. long-term trade receivables) 875.3 933.2 +57.8 Inventories 539.6 533.8 (5.7) Tangible fixed assets 697.7 679. (18.7) Other assets 393.5 388.1 (5.3) Total assets 2,614.6 2,656.4 +41.8 Accounts payable 25.4 24.1 +34.7 Interest-bearing debt [b] 457.5 48.7 (48.8) Other liabilities 363.9 359.1 (4.7) Total liabilities 1,26.8 1,7.9 (18.9) [Shareholders equity ratio] [58.%] [59.4%] [ +1.4pts. ] Komatsu Ltd. shareholders equity 1,517.4 1,576.6 +59.2 Non-controlling interests 7.3 71.8 +1.4 Liabilities & Equity 2,614.6 2,656.4 +41.8 Interest-bearing debt, net [b-a] 349. 286.5 (62.5) Net D/E ratio.23.18
13 2. Projection for FY217 Business Results From next page, the outlook of business results for FY217 will be divided into the following three sections. (1) Projection for Komatsu and KMC-combined business results P14 (2) Projection for Komatsu s business results in the conventional manner P15 P16 P17 P18 P19 PP2-25 PP26-27 P28 P29 P3 Outline of Projection for FY217 Projection for Segment Sales and Profit for FY217 Construction, Mining & Utility Equipment: Projection for Sales (To Outside Customers) Construction, Mining & Utility Equipment: Causes of Difference in Projected Sales & Segment Profit Retail Finance Business: Assets, Revenues and Segment Profit Industrial Machinery & Others: Sales and Segment Profit Construction and Mining Equipment: Actual and Projected Demand for 7 Major Products & Demand in Major Markets Construction and Mining Equipment: Actual and Projected Demand & Sales of Mining Equipment Construction and Mining Equipment: Sales of Parts Actual and Projected Capital Expenditures, Depreciation, R&D Expenses and Fixed Costs Business Results and Progress towards Mid-Range Management Targets (3) Projection for KMC s business results P31 P32 Projection for KMC s Business Results & Sales Temporary Expenses Related to the Merger of KMC ( former Joy Global Inc.)
Outline of Projection for FY217 14 Consolidated net sales will increase by 18.4% from FY216, to JPY2,135. billion. KMC s Sales is projected as JPY 256. billion. Operating income will decline by 1.4% to JPY156. billion. Operating income ratio will be 7.3%, down 2.4 points. Net income will drop by 18.9% to JPY92. billion. Projected consolidated business results FY216 Results 18.6/USD 119.3/EUR 16.2/RMB FY217 Projection 15./USD 115./EUR 15./RMB Komatsu (conventional) KMC Increase (decrease) Y-O-Y Change % Net sales 1,82.9 2,135. *1 1,88. 256. +332. +18.4% Segment profit (loss) 176.5 164. 23. *2 (39.) (12.5) (7.1)% Other operating income (expenses) (2.4) (8.) (8.) - (5.5) - Operating income (loss) 174. 156. 195. *2 (39.) (18.) (1.4)% Profit ratio (loss ratio) 9.7% 7.3% 1.4% (15.2)% (2.4)pts. - Other income (expenses) (7.6) (15.) (7.3) - Income before income taxes 166.4 141. (25.4) (15.3)% Net income *3 113.3 92. (21.3) (18.9)% ROE 7.3% 5.9% (1.4)pts. Cash dividends per share 58yen 58yen +/- yen Consolidated payout ratio 48.2% 59.5% *1Including internal sales from Komatsu to KMC (JPY 1. billion ). *2KMC's segment loss and operating loss include the effects of temporary expenses shown on the right. (Reference: P32 Temporary Expenses Related to the Merger of KMC(former Joy Global Inc.)) *3 Upon adoption of ASC 81, Net income is equivalent to Net income attributable to Komatsu Ltd. PPA (Purchase Price Allocation) Increased depreciation after PPA (provision) (39.) Start-up cost etc. (9.) Total (48.)
Projection for Segment Sales and Profit of FY217 Construction, Mining & Utility Equipment: Both Sales and Segment Profit will increase. Retail Finance: Revenues will decline, while segment profit will increase. Industrial Machinery & Others: Both Sales and segment profit will increase. Komatsu (Conventional) 15 FY216 % [ ]: Sales after elimination of inter-segment transactions : Profit ratio FY217 (Projection) Increase(decrease) Changes % Change Net sales 1,82.9 1,88. +77. +4.3% Construction, mining & utility equipment Retail finance Industrial machinery & others [1,566.3] 1,576.5 [46.7] 49. [189.9] 191. [1,636.] 1,646. [45.] 48. [199.] 2. [+69.6] +69.4 [(1.7)] (1.) [+9.] +8.9 Elimination (13.7) (14.) (.2) - [+4.4%] +4.4% [(3.7)%] (2.2)% [+4.8%] +4.7% Segment profit 9.8% 176.5 1.8% 23. +26.4 +15.% Construction, mining & utility equipment 1.3% 161.6 1.8% 178. +16.3 Retail finance 9.1% 4.4 21.9% 1.5 +6. Industrial machinery & others 6.5% 12.4 8.3% 16.5 +4. Corporate & elimination (2.) (2.) +. - +1.1% +135.8% +32.4% Conditions of three business segments: Construction, Mining & Utility Equipment Although we anticipate the effects of the Japanese yen s appreciation, we are going to work to expand sales against the background of projected recovery of demand. We project that both sales and segment profit will increase from FY216, supported by an increase in sales in Asia and of mining equipment.. Retail Finance While revenues will decline from FY216, as affected by the Japanese yen s appreciation, segment profit should increase because of no more adverse effects of allowance for bad debt in China. Industrial Machinery & Others We project both sales and segment profit will improve from FY216, supported by increased sales by Komatsu NTC and Komatsu Industries.
Komatsu (Conventional) Construction, Mining & Utility Equipment: Projection for Sales (To Outside Customers) for FY217 16 Sales to outside customers will increase in all regions except for North. Accordingly, sales should grow by 4.4% from the previous fiscal year, to JPY1,636. billion. When the foreign exchange effects are removed, Sales volume should increased in all regions. The percentage of sales in Strategic Markets should grow from 5% in FY216 to 52% in FY217. FY217 (Projection) 1,636. FY216 1,566.3 Billions of yen +12.5 [+4.1%] Japan (4.4) [(1.3)%] +9.5 [+7.%] +1. [+.5%] North Europe Latin +3.5 [+4.9%] +2.6 [+2.7%] +4.2 [+11.6%] +5.3 +3.4 [+5.%] [+14.7%] CIS China Asia Oceania Middle East +5.1 [+7.2%] Africa +69.6 [+4.4%] FY216 31.5 338.4 135.5 22.9 7.5 97.3 26.6 15.6 35.8 71.8 1,566.3 FY217 (Projection) Plus Minus YoY Comparison Total 314. 334. 145. 24. 74. 1. 237. 111. 4. 77. 1,636. Traditional Markets Strategic Markets 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 9 8 7 6 5 4 3 2 1 1,566.3 Africa 5% Middle 2% East Oceania 7% Asia 13% China 6% CIS 4% Latin 13% Europe 9% North 22% Japan 19% FY216 Strategic Markets 5% Traditional Markets 5% 1,636. Africa 5% Middle 2% East Oceania 7% China CIS Asia 15% Latin 12% Europe 9% North 2% Japan 19% 6% 5% FY217 (Projection) Strategic Markets 52% Traditional Markets 48%
Komatsu (Conventional) Construction, Mining & Utility Equipment: Causes of Difference in Projected Sales & Segment Profit 17 Sales should increase by JPY69.5 billion, and segment profit will advance by JPY16.4 billion from FY216. Segment profit ratio will translate into 1.8%, up.6 percentage points. Billions of yen 1,8 1,6 1,576.5 Sales FY216 vs. FY217(Projection) Foreign exchange rate (5.5) Volume, etc. +14.7 New additions to consolidation +9.4 Selling price +6. 1,646. Billions of yen 25 2 161.6 Segment profit FY216 vs. FY217(Projection) New Volume, additions to product consolidation mix, etc. +.2 +32.6 Selling price +6. 178. 1,4 1,2 1, +69.5 billion yen Positive factors Negative factor 15 1 5 Foreign exchange rate (21.5) Fixed costs (.9) +16.4 billion yen Positive factors Negative factor 8 FY216 18.6/USD 119.3/EUR 16.2/RMB FY217 (Projection) 15./USD 115./EUR 15./RMB FY216 1.3% Segment profit ratio FY217 (Projection) 1.8%
Komatsu (Conventional) Retail Finance Business: Assets, Revenues and Segment Profit for FY217 While total assets should increase, supported by an increase in new contracts mainly in North, we project that they will decline from March 31, 217, as affected by the Japanese yen s appreciation. With respect to revenues, we expect an increase, because there will be no more effects of added allowance for bad debt in China in FY216. 18 8 7 Assets Mar 31, 217 vs. Mar 31, 218(Projection) 671.5 663.1 7 6 Revenues FY216 vs. FY217(Projection) Sales Segment profit 6 5 49. 48. 5 4 3 2 1 North Others Oceania China Europe Japan 112.2/USD 119.8/EUR 16.3/RMB North Others Oceania China Europe Japan Mar 31, 217 Mar 31, 218 (Projection) 15./USD 115./EUR 15./RMB 4 3 2 1 FY216 18.6/USD 119.3/EUR 16.2/RMB 4.4 FY217 1.5 (Projection) 15./USD 115./EUR 15./RMB 217/3E 218/3E Changes (Projection) Interest-bearing debt 56. 56.8 +.8 Interest-bearing debt, net 51.2 53.4 +2.2 Net D/E ratio 3.65 3.69 +.4pts. FY216 FY217 (Projection) Changes ROA.7% 1.6% +1.%
Industrial Machinery & Others: Sales and Segment for FY217 Komatsu (Conventional) 19 Sales should increase by 4.7% from FY216, to JPY2. billion. Segment profit should also increase by JPY4. billion to JPY16.5 billion. Billions of yen 25 2 15 1 5 Sales Komatsu House *1 22.1 191. 2. FY215 FY216 FY217 (Projection) Billions of yen 3 25 2 15 1 5 8.8% 19.3 Segment profit 6.5% 12.4 :Segment profit ratio 8.3% 16.5 FY215 FY216 FY217 (Projection) (%) 1 5 Breakdown of sales Komatsu Industries Corp., etc. [total of press and sheet-metal machines] Komatsu NTC Ltd. [represented by wire saws] FY215 FY216 FY217 (Projection) Increase (decrease) Changes % change 58. 56.6 59. +2.3 +4.1% 71. [6.9] 55.2 [1.7] 72.1 [1.6] +16.9 [(.1)] +3.7% [(.9)%] Gigaphoton 34. 32. 36.1 +4.1 +12.8% Komatsu House * 16.1 - - - - Others 4.7 47. 32.8 (14.4) (3.5)% Total 22.1 191. 2. +8.9 +4.7% *: Komatsu sold the shares, equivalent to 85% of total shares outstanding, of Komatsu House to Nissei Build Industries Co., Ltd. on April 28, 216.
Komatsu (Conventional) Construction and Mining Equipment: Actual and Projected Demand for 7 Major Products 2 In FY216, while demand declined in North, the Middle East and some other regions, global demand will have increased by 3%, supported by upturning demand mainly in China and Indonesia. In FY217, we expect demand should continue to grow in China and Indonesia, especially in the first half period; however, we assume that global demand will increase by +/-% to +5% year-on-year. Units 6, 5, 4, 3, 2, Index +13%+15% Annual demand for 7 major products Japan Europe Others :FY7=1 1 8-2%-2% 64 92 97 + +5% 9-7% N. China Y-O-Y growth rate -9% -14% Growth rate 6% FY16:+3% FY17:+/-% +5% (Projection) 93 84 + 72 74 +4% 4% 2% % -2% 15, 12, 9, 6, Units Quarterly demand for 7 major products Japan Europe Others N. China Y-O-Y growth rate : +19% +19% -1% -2% -15% +2% +8% +7% -1% -5% -4% -11% -2% +2% -3% -9%-19% -16%-18% -8%-8% Growth rate 12% 9% 6% 3% % -3% 1, -4% 3, -6% FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Projection Note: Estimated by Komatsu FY16/ FY16/ FY16/ FY16/1Q FY15/ FY15/ FY15/ FY15/1Q FY14/ FY14/ FY14/ FY14/1Q FY13/ FY13/ FY13/ FY13/1Q FY12/ FY12/ FY12/ FY12/1Q
Komatsu (Conventional) Construction and Mining Equipment: Demand in Major Markets (1) Japan 21 In FY216, demand declined by 9% from FY215. We are continuing to weather the effects of new emission controls related demand centering on the rental industry, which ran its course of demand..we can expect to see the same pre-buy demand in the first half of FY217, but we project that full-year demand will increase by +/-% to +5% from FY216, affected declining demand in reaction to pre-buys in the second half. Demand for new equipment (7 major products) and construction investment Quarterly demand for 7 major products Construction investment Trillion of yen 1 9 8 7 6 5 Exports of used equipment FY16:-9% FY17:+/-% +5% (Projection) Demand for new equipment Demand for new equipment/ Export of used equipment (Units) 8 6 4 2 Y-O-Y growth rate 1% 75% 5% 25% % -25% -5% -75% -1% Index FY12/1Q 14 :FY7/=1 FY13/1Q Demand (units) Y-o-Y change (%) 156 FY14/1Q 1 FY15/1Q 83 84 : +.4% FY16/1Q Units 16 12 8 4 4 Quarterly demand for hydraulic excavators (Rental & regular uses) 3 2 1 FY98 FY99 FY Private-sector residential Private-sector non-residential Government construction FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Projection Units 12, 8, 4, Rental companies Regular customers Y-O-Y growth rate Rental +88% Regular +2% [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 FY12/1Q FY13/1Q FY14/1Q FY15/1Q FY16/1Q
Komatsu (Conventional) Construction and Mining Equipment: Demand in Major Markets (2) North 22 In FY216, North n demand declined by 11% from FY215. In the United States, while demand for construction equipment continued to grow steadily among general customers, demand was slack in the rental industry. In Canada, while demand remained slack, especially in the energy sector, we saw some signs of recovery. In FY217, we expect an increase in infrastructure development investment in the U.S. from the second half period. Accordingly, we assume that North n demand will increase by +/-% to +5% from FY216. Demand for 7 major products and US housing starts Quarterly demand for 7 major products Demand for 7 major products (Units) 8, 6, FY16:-11% FY17:+/-% +5%( Projection) Housing starts Housing starts in ten thousands 25 2 15 1 5 Y-O-Y growth rate 6% 4% 2% % -2% -4% -6% Index Demand (units) Y-o-Y change (%) 98 16 113 12 :FY7/=1 : -5% 97 Units 3, 2, 1, FY16/1Q FY15/1Q FY14/1Q FY13/1Q FY12/1Q 4, 2, FY4FY5FY6FY7FY8FY9FY1FY11FY12FY13FY14FY15FY16FY17 Projection USA Canada 1% 8% 6% 4% 2% % FY7 Breakdown of demand by segment (Unit basis) FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 Rental-distributor (DORF) Rental -Regular Mining & energy Road Construction Others Y-O-Y growth rate Rental -24% Mining & energy -6% Others -7% [Source]: Demand for 7 major products estimated by Komatsu
Komatsu (Conventional) Construction and Mining Equipment: Demand in Major Markets (3) Europe 23 In FY216, we believe that European demand will have increased by +7% from FY215. In addition to a major market of Germany, demand increased steadily in northern and southern Europe. In FY217, demand should remain steady and grow by +/-% to +5% from FY216. Units 8, 7, Annual demand for 7 major products FY16:+7% FY17:+/-% +5%(Projection) Y-O-Y growth rate 6% 4% Quarterly demand for 7 major products Demand (units) Y-o-Y change (%) 53 54 57 44 6 Units 15, 1, 2% 5, 6, % 5, -2% Index :FY7/=1 : +5% -4% (, ) 4, FY12/1Q FY13/1Q FY14/1Q FY15/1Q FY16/1Q 3, Units 7, 2, 6, 1, 5, 4, 3, FY7FY8FY9FY1FY11FY12FY13FY14FY15FY16FY17 2, Projection 1, [Source]: Demand for 7 major products estimated by Komatsu Region demand for 7 major products (Excl. 6t class) Southern Eastern Other Western Countries Northern The UK., France, and Germany FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 35, 3, 25, 2, 15, 1, 5, FY15 FY16 (Apr.-Feb.) (Apr.-Feb.)
Units In FY216, demand advanced by 48% from FY215. Demand for construction equipment was driven by progress of infrastructure development nationwide. With respect to full-year demand in FY217, although we expect that demand should remain sound until around autumn in FY217, we anticipate the rate of growth will slow down in the second half period, resulting in an increase of +/-5% to +1% in FY217. Annual demand for 7 major products (Foreign makers) Quarterly demand for 7 major products (Foreign makers) 12, 1, 8, Construction and Mining Equipment: Demand in Major Markets (4) China FY16:+48% FY17:+5% +1% (Projection) Y-O-Y growth rate 15% 1% 5% 8 Demand (units) 86 Komatsu (Conventional) 38 Y-O-Y growth rate 4 Units 76 3, 2, 1, 24 6, % 4, 2, 1 5 19% -22% -29% -13% -16%-15% -8%-1% -8%-8% -1% 29% 12% 17% 3% 1% 6% 1% 6%1% 9% -7% -2% -14% -25% 6% 8% 6% 4% 2% % -2% -4% -6% -8% -5% -1% FY3FY4FY5FY6FY7FY8FY9FY1FY11FY12FY13FY14FY15FY16FY17 Projection Units KOMTRAX in China : Average operating hours per month 15, Hours 83% 2 Operating hours (left scale) Y-o-Y (right scale) 1, 15 5, FY12/1Q Index :FY7/=1 FY13/1Q 4 5 6 7 8 9 1 11 12 1 2 3 (month) [Source]: Demand for 7 major products and hydraulic excavators estimated by Komatsu FY14/1Q FY212 FY213 FY214 FY215 FY216 FY15/1Q FY16/1Q Monthly demand for hydraulic excavators : Total of 6-ton and larger models) <Chinese New Year> : Feb. 1, 213 : Jan. 31, 214 : Feb. 19, 215 : Feb. 8, 216 : Jan. 28, 217 :Feb. 16. 218 : +9%
Komatsu (Conventional) Construction and Mining Equipment: Demand in Major Markets (5) Southeast Asia 25 In FY216, Southeast Asian demand advanced by 13% from FY215, supported by strong growth of demand in the second half period. In addition to expanded demand in Indonesia, the largest market of the region, demand advanced similarly in Malaysia. In FY217, demand should continue to grow in Indonesia until the second half period, when it will start slowing down. Accordingly, we project that overall demand will increase by +/-% to +5% from FY216. Units 4, 3, Indonesia Others Malaysia Thailand Annual demand for 7 major products FY16:+13% FY17:+/-% +5% (Projection) Y-O-Y growth rate 16% 12% 8% 4% 167 Quarterly demand for 7 major products Indonesia Others Malaysia Thailand Y-o-Y change (%) 132 117 97 128 Units 12, 9, 6, 3, % -4% Index : FY7/=1 : +32% -8% 2, 1, FY4FY5FY6FY7FY8FY9FY1FY11FY12FY13FY14FY15FY16FY17 [Source]: Demand for 7 major products estimated by Komatsu Projection 7 6 5 4 3 2 1 Units FY12/1Q FY1/1Q FY13/1Q FY14/1Q Indonesia: Demand for construction & mining equipment by industrial sector FY11/1Q FY12/1Q FY13/1Q FY15/1Q : +62% FY16: +33% FY14/1Q FY15/1Q FY16/1Q FY16/1Q Forestry Agriculture Construction Mining
Komatsu (Conventional) Construction and Mining Equipment: Actual and Projected Demand for Mining Equipment 26 In FY216, we estimate that global demand will have decreased by 3% from FY215. In FY217, we anticipate an increase of demand in Indonesia and some other countries, resulting in annual growth of +1% to +2% in the entire region. Annual demand for mining equipment Dump trucks: 75 tons (HD785) and larger Bulldozers: 525HP (D375) and larger Wheel loaders: 81HP (WA8) and larger Motor graders: 28HP (GD825) and larger Excavators: 2 tons (PC2) and larger Units Quarterly demand for mining equipment Y-o-Y change Units 1, 8, 6, FY16:-3% FY17:+1% +2% (Projection) 6% 15% -34% 39% 51% -5% -3% -25% -15% -51% Y-o-Y change 1% 5% % -5% -1% Middle East & Africa Oceania Asia Japan&Chin a 3, 2,5 2, -45% -26% -54% -24% -33% -55% -49% 1,5 : +7% +18% -2% +7% -12% -1% % -22%-15% -2% -33% 1% 5% -5% Middle East & Africa Oceania Asia Japan&Chi na Europe&CI S Latin Europe&CIS N. 4, Latin 1, Y-o-Y change 2, N. 5 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Y-o-Y ange Projection Note: Demand estimated by Komatsu FY13/1Q FY14/1Q FY15/1Q FY16/1Q
Komatsu (Conventional) Construction and Mining Equipment: Sales of Mining Equipment 27 For FY216, sales decreased by 3% from FY215, to JPY433.6 billion, mainly due to the effects of the Japanese yen's appreciation. For FY217, we anticipate sales of JPY475.6 billion, up 1% from FY216, supported by growing demand, especially in Indonesia, and increasing sales of parts. Annual sales of mining equipment (incl. parts and service) Quarterly sales of mining equipment (incl. parts and service) 8 6 4 2 +22% +18% 356.5 422. -14% 361.5 +15% 417. +33% 554. +11% 614.5-18% -1% -1% -3% +1% 56.3 499.3 447.3 475.6 433.6 FY7FY8FY9FY1FY11FY12FY13FY14FY15FY16FY17 projection 26.8 178.2 14.6 144.6 96.3 91.7 86.6 81.3 196.1 214.9 22.4 216.2 FY14FY15FY16FY17 Y-o-Y change 5% % -5% projection Equipment Service, etc Parts 25 2 15 1 5-4% -17% -27% -23% 129.6 119.2 17.2 Middle East & Africa Oceania Asia China Europe & CIS Latin N. Y-o-Y change -% -7% 15.5 +2% -4% -13% -15% -7%-12% -18% 128.8 13.8 12.9 118.7-18% +26% -4% 135.8 115.9 11.1 113.7 18.9 17.5 98.3 9.7 FY16/1Q FY15/1Q FY14/1Q FY13/1Q Y-o-Y change 5% 5.4 33.6 37.5 34.4 34.4 35. 33.2 26.6 23.5 23.2 25.1 22.1 22.9 19.4 18.3 23.8 54.9 56.9 5.4 45.8 45.7 5.7 52.7 6.2 FY16/1Q FY15/1Q % -5% Equipment Service, etc. Parts
Komatsu (Conventional) Construction and Mining Equipment: Sales of Parts 28 For FY216, sales of parts decreased by 5% from FY215 For FY217, we anticipate sales will increase by 5% from FY216, to JPY397. billion 1 Annual sales of parts Billions of yen KMC Construction equipment Billions Construction equipment Mining equipment 6 Mining equipment Y-o-Y change Y-o-Y change (%) of yen Y-o-Y change Y-o-Y change (%) 14 2% +18% +19% +18% +13% +14% +5% +11% +14% +15% 2% +8% +11%+12% 5 +6% +5% +2% +1% +3% 12 +7% % -3% +1% -5% -7% -7% % -1% 12.9 12.1 19.5-14%-11% 4 387.2 397.5 1. 397. 1 98.8 11.3-2% 94.4 92.4 91.6 92.8 95.3 378.8 93.8 363.7 88.8 88.1 319.5 317. 3 28. 265. 191.1 182.6 176.5 18.8 49.8 47.2 46.1 44.4 87.8 87.8 49.3 8 44.9 45.2 259.5 176.3 44.2 41.8 45.1 45.7 46.4 49.2 42.1 42. 238. 43. 159. 148. 6 2 154.5 152. 141.5 12. 4 53.1 52.7 56.9 5.4 45.7 5.7 6.2 54.9 45.8 15. 113. 118. 138.5 158. 171.5 187.4 196.1 214.9 22.4 216.2 2 49.2 44.6 46.3 47.3 45.8 46.4 5.8 Quarterly sales of parts FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Projection FY13/1Q FY14/1Q FY15/1Q FY16/1Q
Komatsu (Conventional) Actual and Projected Capital Expenditures, Depreciation, R&D Expenses and Fixed Costs 29 Capital investment : We plan to promote production reforms by applying IoT, consolidation of sales bases in Japan, and information systems with an eye to reforming the ways of working. R&D expenses: We will continue to focus investment in measures to meet new emission controls, development of application and region-specific models, and development of next-generation products based on innovation. Fixed costs: While securing funds to invest for future growth, we will continue to promote structural reforms. All in all, we will continue to curtail them. Billions 1of yen Investment in production and other facilities* and depreciation *Excl. investment in rental assets Billions of yen 1 R&D Expenses 3.8% 3.9% 3.8% Billions of yen 5 Fixed costs 8 6 4 56.8 6.2 52.6 52.7 5.5 49.2 71.5 8 7.7 58. 7.5 8.9 1.8 1.5 5.3 51. 6 4 4 3 2 2 5.5 47.2 52.7 2 61.8 59.6 61. 1 FY215 FY216 FY217 Projection FY215 FY216 FY217 Projection FY215 FY216 FY217 Projection Industrial Machinery & Others Construction, Mining & Utility Equipment and Retail Finance Depreciation Industiral Machinery & Others Construction, Mining & Utility Equipment % of sales
For the first year of the current mid-range management plan, we have essentially achieved the mid-range targets except for consolidated ROE and ROA of the retail finance business. FOREX (JPY/USD) Sales Bn JPY [Targets] 15 12 9 6 3, 2,5 2, 1,5 1, 5-5 Retail finance business Business Results and Progress towards Mid-Range Management Targets 126 121 113 114 117 114 121 18 11 11 19 93 1 Net sales (left scale) 85 85 79 Operting income (right scale) 1.1% 12.9% 14.8% 12.1% 12.9% 11.2% 12.3% 12.2% 11.2% 9.7% 7.1% 7.5% 4.7% 2.3% 2.6% 1,893.3 2,243. 2,21.7 1,843.1 1,981.7 1,884.9 1,953.6 1,978.6 1,854.9-1.3% 1,612.1 1,82.9 1,356. 1,431.5 1,35.8 1,27.2 1,127.3 332.8 244.7 222.9 256.3 163.4 211.6 24.4 242. 28.5 (13.2) 23.9 29.8 95.8 151.9 174. 67. ROA: 2.% or above ROA.7% 5. or under for net debt-to-equity ratio net D/E ratio 3.65 Operating Income Bn JPY FY216 (1 st year of Target Mid-Range Management Plan) Index Result Growth Aim at a growth rate above the industry s average. Growth rate of Sales (2.8)% Profitability Aim at an Industry s top-level operating income ratio. Operating Income Ratio 9.7% Efficiency Aim at 1%-level ROE. ROE 7.3% Shareholder return Keep a fair balance between investment for growth and shareholder return (incl. stock buyback), while placing main priority on investment. Set the goal of a consolidated payout ratio of 4% or higher, and maintain the policy of not decreasing dividends as long as the ratio does not surpass 6%. Komatsu (Conventional) 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 consolidated payout ratio Financial position Aim at industry s top-level financial position. net D/E ratio.18 9 75 6 45 3 15-15 48.2% 3
Projection for KMCʼs Business Result & Sales In FY217, net sales will decline by 3.8% from FY216, to JPY256.. billion. Operating income will be JPY9. billion excluding temporary expenses. When the temporary expenses are included, operating loss should be JPY39. billion. KMC 31 FY216 Results (Reference) 18.6/USD FY217 Projection 15./USD Increase (decrease) Changes % Change Net sales 266.2 256. (1.2) (3.8)% Equipment 5.6 52.5 +1.9 +3.8% Parts & Service 215.6 23.5 (12.1) (5.6)% Operating income (loss) <excluding Temporary Expenses> 5.1% 13.4 3.3% 9. (4.4) (32.8)% Temporary Expenses - (48.) (48.) - PPA step up depreciation (provisional amount) - (39.) (39.) - Start up cost etc. - (9.) (9.) - Operating income (loss) <excluding Temporary Expenses> 1.2% 3.3 (15.2)% (39.) (42.3) - Millions of USD 8, 6, 4, 2, Annual Sales & Operating Income Ratio Parts&Service Equipment 21.5% 21.8% 19.4% Operating income ratio 15.1% 4,44 5,661 1.3% 5.1% 5.1% 5,13 3.2% 3.3% 3.3% 1,785 2,71 3,778 2,254 3,172 1,187 816 2,371 2,452 2,44 266.2 256. 515 466 5 5.6 2,619 2,951 2,758 2,591 52.5 2,356 1,856 1,986 1,94 215.6 23.5 FY11 FY12 FY13 FY14 FY15 FY16 FY16 FY17 FY16 FY17 (Projection) (Projection) *1 *2 *1: November to October (former Joy Global Inc.ʼs fiscal year) *2: April to March (The figures are rearranged for Komatsu's fiscal year ) FY216 Result (after rearrangement) 81% 52% Sales(by product) 19% Sales(by Segment) 48% Equipment Parts & Service Surface Underground
Temporary Expenses Related to the Merger of KMC (Joy Global Inc.) KMC 32 In relation to the acquisition of Komatsu Mining Corp., we will need to conduct a fair value measurement of current assets and fixed assets pursuant to the applicable accounting standards. (Purchase Price Allocation: PPA) As specific effects will be determined after completion of accounting audit around in March 218, all figures shown on this page are provisional. In addition, we anticipate about JPY9. billion for startup cost. We are developing mid-range plans concerning synergy creation and the merger. Accordingly, we might incur separate expenses for them. Fig. 1: KMC's balance sheet before the acquisition Increased assets after PPA Assets Liability Assets Liability other 2,2 other 2,2 othan othan Assets Good Will Good Will 3,5 3,15 3,15 Equity Equity 1,3 1,3 Good Will Purchase 35 Good Will Amount (Millions of USD) 1,5 2,85 Note)the amount is provisional Excess Increased payment Increase of Assets assets other to Equity 1,95 than Good Will 1,55 after PPA 1,25 Deffered Tax Liability 4 Table 1: Temporary expenses related to the merger FY217(Projection) Millions of USD Billions of JPY Description Inventories after fair value measurement included in cost of sales, Increased depeciation after PPA (provisional) 37 39 depreciation and amortization of intangible fixed assets, etc. Start-up cost etc. 87 System integration expenses, structural reform expenses planned by KMC 9 before combination, etc. Total 457 48 Table 2: Projection fo increased depreciation and amortization (provisional) after PPA by fiscal year Millions of USD Depreciation and amortization period FY217 18 19 2 21 22 23 31 Total 1.Inventories 5 months 24 24 2.Tangible fixed assets 6 years 15 15 15 15 15 15 9 3.Intangible fixed assets 14 months - 15years 115 6 53 53 53 53 53/year x 9 86 Total 37 75 68 68 68 68 53/year x 9 1,19 * *The difference from USD1,25 million for increased assets above is mainly attributable to increased land value (non-depreciable). Note: As of April 27, 217, we have not completed all processes of PPA. Accordingly, all figures shown here are estimated by Komatsu.
Progress Made in Focused Efforts and Task in FY217 and Onward 33 Focused efforts Progress Specific efforts 1. Growth strategies based on innovation 2. Growth strategies of existing businesses 3. Reforms designed to reinforce the business foundation Achievements Tasks ahead Achievements Tasks ahead Achievements Tasks ahead Broaden the range of intelligent Machine Control models. Applied SMARTCONSTRUCTION. (over 2,8 jobsites, cumulative in Japan) Reinforced the SMARTCONSTRUCTION business (IoT Center est, etc.) Introduced the concept of Innovative Autonomous Haulage Vehicle* 1 at MINExpo INTERNATIONAL 216 (together with the concept car) To further strengthen and expand the SMARTCONSTRUCTION business. EUV light source* 2 and new products to be developed by Gigaphoton. Developed and introduced models complaint with the latest emission controls. Increased sales of parts by means of M&A. Opened Asia Development Center and Asia Training & Demonstration Center. Broadened the model range of forest machinery. To facilitate integration with KMC (former Joy Global Inc.) To continue strengthening involvement in the aggregate and cement sector. To further strengthen and expand the value chain, including rental, used equipment and retail finance businesses. Made steady efforts for cost improvement. Reformed the global spare parts operation. To further promote cost improvement efforts. To promote human resource development and diversity on a global scale. *1: Innovative Autonomous Haulage Vehicle is a super-large dump truck without the operator cab under full swing development for future market introduction. *2 : EUV stands for Extreme Ultraviolet, and EUV light source is one of the next-generation semiconductor manufacturing technologies.
Appendix 34
Starting in FY216, we separate the retail finance business as an independent operating segment, whereas it was included in the construction, mining and utility equipment business up through FY215. Accordingly, the quarterly figures below were reclassified and restated in agreement with the figure for the first quarter of FY216. /USD /EUR /RMB 12 1 8 6 4 2 61% 48.9 49.3 11.9% Quarterly Sales 57% 56% 58% 6% 55.8 75.6 53.2 55.1 51. 12.1% 13.4% 15.2% 12.9% 13.2% 11.8% Segment profit Segment profit ratio Percentage of sales in Strategic Markets 55% 53% 51% 54% 48% 47% 45% 5% 47% 51.6 42.4 4.7 41.4 44.3 26.3 31.2 11.% 1.8% 1.7% 9.9% 1.8% 7.6% 8.8% 51% 53% 65.1 38.9 1.3% 13.1% FY13/1Q FY14/1Q FY15/1Q FY16/1Q Breakdown of sales(%) Parts, etc Mining equipment Construction equipment(stragegic Markets) Construction equipment(traditional Markets) 1% 8% 6% 4% 2% % <Appendix> Komatsu (Conventional) Construction, Mining & Utility Equipment: Quarterly Sales and Segment Profit 6 496.2 498.8 5 411.9 47.3 417.5 411.8 416.7 433.8 467.3 392.3 38.5 417.4 411.6 345.1 353.4 379. 4 3 2 1 Exchange FY13/1Q FY14/1Q FY15/1Q FY16/1Q rates 13/1Q 13/ 13/ 13/ 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 97.3 98.6 99.7 12.7 126.4 129.9 135.1 139.9 15.8 16.1 16.3 16.9 Quarterly segment profit 12.5 12.8 114.1 119.2 14.9 137.7 142.8 136.9 16.4 16.6 18.5 19. 121.3 122.6 121.2 118. 133. 136.2 132.3 128. 19.6 19.5 19. 17.9 47% 47% 49% 42% 48% 49% 51% 48% 53% 55% 55% 48% 52% 52% 53% 45% 15% 13% 9% 16% 13% 12% 12% 11% 1% 9% 8% 23% 2% 21% 22% 22% 18% 16% 17% 15% 13% 13% 19.8 12.9 16.9 114.7 124.3 114.6 116.7 121.4 16.9 15.4 15.7 16.7 9% 1% 8% 9% 14% 15% 15% 15% 15% 19% 21% 2% 17% 21% 21% 24% 22% 23% 23% 29% 23% 25% 22% 25% FY13/1Q FY14/1Q FY15/1Q FY16/1Q 1% 19% 35
Starting in FY216, we separate the retail finance business as an independent operating segment, whereas it was included in the construction, mining and utility equipment business up through FY215. Accordingly, the quarterly figures below were reclassified and restated in agreement with the figure for the first quarter of FY216. Komatsu (Conventional) <Appendix> Construction, Mining & Utility Equipment: Quarterly Sales by Region (To Outside Customers) 36 5 4 3 2 1 494.4 481.2 464.2 24.8 3.8 12.5 19.1 29.1 413.5 429.4 31.5 42.4 33.3 44.1 18.8 28.3 388.9 412.1 48.4 41.9 41.1 29.3 24.9 24.3 28.1 25. 29.3 11.3 378. 17.5 2.8 376.6 75.5 13.6 13.6 9. 14.8 14.6 58.1 31.5 23.7 12.7 15.7 2.3 351.8 3.4 56.3 26.9 34.1 26.2 343.4 16.5 17.2 45.1 38. 14. 6.9 34.7 51.3 25.6 39.4 43. 28.1 47.9 47.8 21.6 42.4 15 4 14 9 7.1 25.8 48. 9.1 24.1 43.5 11.9 24. 47.5 54.9 22.6 52.6 16.4 21.4 5.5 22. 37.6 16.6 46.5 25.2 14.3 13.1 11.2 4.3 29.2 4.2 16.1 13.6 7.3 39.3 56.8 17.2 33.4 18.6 13 1 21.7 73.8 11.5 11.7 58.2 5. 17.3 18.7 68.5 14.7 18.2 18.5 14.3 61.2 64.6 64.7 48.3 15.6 4.4 58.4 3.7 38.4 46 51 43.9 57.1 35.9 6.1 49. 32.2 26.1 27.4 33.7 32.7 29.5 26.2 37.5 35.8 29.6 39.3 65.4 58.5 69.5 76.6 1.7 15.1 16.2 12.6 68.6 82.9 79.8 8.2 75.8 6.6 56.8 75.6 65.8 83. 95. 95.9 85.2 92.3 85.2 65.3 67.5 8. 81.2 78.8 77.7 79.1 84.9 59.6 FY13/1Q FY14/1Q FY15/1Q FY16/1Q Africa Middle East Oceania Asia China CIS Latin Europe North Japan Exchange 13/1Q 13/ 13/ 13/ 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ /USD 97.3 98.6 99.7 12.7 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 /EUR 126.4 129.9 135.1 139.9 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 /RMB 15.8 16.1 16.3 16.9 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7
<Appendix> Retail Finance: Quarterly Sales and Segment Profit Komatsu (Conventional) 37 25 22.9 Quarterly sales 2 15 14.7 12.3 15.9 15.2 11.7 12.9 13.6 13.8 13.5 13.4 13.1 11.8 11.6 12.6 12.9 1 5 FY13/1Q FY14/1Q FY15/1Q FY16/1Q Exchange rates 13/1Q 13/ 13/ 13/ 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ /USD 97.3 98.6 99.7 12.7 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 /EUR 126.4 129.9 135.1 139.9 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 /RMB 15.8 16.1 16.3 16.9 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 15 28.6% 24.7% 1 21.4% 5 3.6 3.5 3.4 1.1% 2.3 Quarterly segment profit 28.% 28.8% 29.2% Segment profit 24.2% 27.3% 28.% 24.% 19.3% 15.9% 4.2 3.3 3.7 3.2 3.7 3.7 3.2 *1 2.5 1.8 Segment profit ratio 2.1% 2.2% *1 *1 2.3 2.5-5 FY13/1Q FY14/1Q FY15/1Q FY16/1Q *1-2.3 *1 Including a loss of JPY6.6 bn on allowance recorded for bad debt in China (FY16/1Q: JPY-1. bn, : JPY -.5bn bn, : JPY-.2:bn,:JPY-4.9bn) -17.8%
<Appendix> Industrial Machinery & Others: Quarterly Sales and Segment Profit Komatsu (Conventional) 38 1 Quarterly sales 75 5 4.3 59.2 45.3 64.2 43.3 59. 53.5 65.6 44.7 56. 53.6 65.7 34.7 44.2 42.2 69.7 25 Exchange rates /USD /EUR /RMB FY13/1Q FY14/1Q FY15/1Q FY16/1Q 13/1Q 13/ 13/ 13/ 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 97.3 98.6 99.7 12.7 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 126.4 129.9 135.1 139.9 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 15.8 16.1 16.3 16.9 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 Quarterly segment profit 15 Segment profit Segment profit ratio 11.3% 6.7% 7.3% 7.9% 7.2% 7.% 7.3% 7.6% 8.3% 8.6% 1 4.9% 7.3 5.3% 5.7% *1 2.% 6. 1.4% 4.6 4.5 5 3.9 3.8 4.2 4.4 *1 3.1 3.2 1.7 2.3 2.3.8-8.1%.9 FY13/1Q FY14/1Q FY15/1Q FY16/1Q -5-3.6 *1 Including a loss of JPY1.8 bn on Komatsu NTC s wire saw inventories (FY13/: JPY-7.6 bn, and FY13/: JPY-3.2 bn)
<Appendix> Book-to-Bill Ratio for Mining Equipment (6 Months) Komatsu (Conventional) Komatsu (Mining eqpt) 73E, 83E, 86E, 93E, 96E, 98E 2% 15% 1% 5% Avg. orders received in value for 6 months/avg. units shipped in value for 6 months) Orders received/sales Index 39 % 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% %
<Appendix> Book-to-Bill Ratio for Industrial Machinery (6 Months) Komatsu (Conventional) Avg. orders received in value for 6 months/avg. units shipped in value for 6 months) 4 Komatsu Industries 2% Orders received/sales Index 15% 1% 5% Komatsu NTC (Excl. wire saws) % 14/3 14/6 14/9 14/12 15/3 15/6 15/9 15/12 16/3 16/6 16/9 16/12 17/3 2% 15% 1% 5% % 14/3 14/6 14/9 14/12 15/3 15/6 15/9 15/12 16/3 16/6 16/9 16/12 17/3
Komatsu (Conventional) <Appendix> Highlights of Results for the Fourth Quarter (January March 217) of FY216 Consolidates net sales increased by 19.% from the corresponding period a year ago, to JPY576.2 billion. Operating income increased by 24.4% to JPY67. billion. Operating income ratio was 11.6%, up.5 percentage points. Net income increased by 33.7% to JPY45. billion. 41 Jan.-Mar.,216 118./USD 128./EUR 17.9/RMB Jan.-Mar.,217 114.7/USD 121.4/EUR 16.7/RMB Increase (decrease) Changes % Change Net sales 484.4 576.2 +91.8 +19.% Segment profit 55. 68.7 +13.6 +24.8% Other operating income (expenses) (1.1) (1.6) (.5) - Operating income 53.9 67. +13.1 +24.4% Profit ratio 11.1% 11.6% +.5pts. - Other income (expenses) (2.1) (3.8) (1.6) - Net income before income taxes 51.7 63.2 +11.4 +22.2% Net income * 33.6 45. +11.3 +33.7% * Upon adoption of ASC 81, Net income is equivalent to Net income attributable to Komatsu Ltd.
Komatsu (Conventional) <Appendix> Segment Sales and Profit for the Fourth Quarter (January March 217) of FY216 42 Construction, Mining & Utility Equipment: Sales increased by 21.2% from the corresponding period a year ago, to JPY498.8 billion. Segment profit increased by 46.9% to JPY65.1 billion. Segment profit ratio was 13.1%, an increase of 2.3 percentage points. Retail Finance: Sales decreased by 1.6% to JPY12.9 billion. Segment profit declined to JPY-2.3 billion. Industrial Machinery & Others: Sales increased by 6.2% to JPY69.7 billion. Segment profit dropped 18.6% to JPY6. billion. % : Profit ratio [ ]: Sales after elimination of inter-segment transactions Jan.-Mar.,216 Jan.-Mar.,217 Increase(decrease) Changes % Change Net sales 484.4 576.2 +91.8 +19.% Construction, mining & utility equipment Retail finance Industrial machinery & others [48.4] 411.6 [12.3] 13.1 [63.6] 65.7 [494.4] 498.8 [12.3] 12.9 [69.4] 69.7 [+86.] +87.1 [+.] (.2) [+5.7] +4. [+21.1%] +21.2% [+.5%] (1.6)% [+9.1%] +6.2% Elimination (6.1) (5.3) +.7 - Segment profit (loss) 11.4% 55. 11.9% 68.7 +13.6 +24.8% Construction, mining & utility equipment Retail finance Industrial machinery & others 1.8% 19.3% 11.3% 44.3 2.5 7.3 13.1% (17.8)% 8.6% 65.1 (2.3) 6. +2.8 (4.8) (1.3) - Corporate & elimination.8. (.9) - +46.9% (18.6)%
Sales to outside customers by region increased by 21.1% from the corresponding period a year ago, to JPY494.4 billion. Except for North and Middle East, sales increased in other regions. Sharply affected by an increase in Asian sales, the ratio of Strategic Market increased to 53%. Jan.-Mar., 217 494.4 Jan.-Mar., +6.1 216 [+7.8%] 48.4 (3.5) [(3.4)%] <Appendix> Construction, Mining & Utility Equipment: Sales (To Outside Customers) for the Fourth Quarter (January March, 217) by Region Plus Minus +1.7 +6.8 [+94.9%] +5.5 [+13.7%] [+14.3%] YoY Comparison +5.3 +33. [+2.4%] [+78.%] +18. [+84.%] (.1) [(1.1)%] +4. [+19.2%] +86. [+21.1%] 5 45 4 35 3 25 2 Komatsu (Conventional) 48.4 Africa 5% Middle 3% East Oceania 7% Asia 1% China 5% CIS 3% Latin 12% Europe 1% Strategic Markets 45% 494.4 Africa 5% Middle East 3% Oceania 6% China Asia 15% 8% CIS 4% Latin 12% Europe 9% 43 Strategic Markets 53% Billions of yen Jan.-Mar., 216 Jan.-Mar., 217 Japan North Europe Latin CIS China Asia Oceania Middle East Africa Total 78.8 16.2 38.4 5. 11.2 21.4 42.4 26.2 12.7 2.8 48.4 84.9 12.6 43.9 56.8 22. 39.4 75.5 31.5 12.5 24.8 494.4 * * * Traditional Markets * * * * * * Strategic Markets * Region of Plus when the foreign exchange effects are removed. 15 1 5 North 26% Japan 19% Traditional Markets 55% North 21% Japan 17% Jan.-Mar., 216 Jan.-Mar., 217 Traditional Markets 47%
Komatsu exhibited 25 of its latest models at the CONEXPO-CON/AGG 217, an international trade fair of construction equipment held in Las Vegas, USA. Komatsu also gave demonstrations of SMARTCONSTRUCTION in an outside space, attracting keen attention from many visitors. 44
45 After receiving necessary regulatory clearances under competition laws in the relevant countries, we completed the acquisition of Joy Global Inc. of the United States on April 5, 217 (local time: Eastern Standard Time, UTC-5). The two companies are implementing specific plans of integration designed to generate synergy with strengths of the two and become an indispensable partner of our customers. 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: +81-3-5561-2687 FAX: +81-3-3582-8332 http://www.komatsu.com/