1 Business Results for the First 3-Month (April-June, 217) of FY 217 Telephone conference July 28, 217 Komatsu Ltd. Participants Mikio Fujitsuka Yasuhiro Inagaki Executive Vice President and CFO Senior Executive Officer and General Manager of Business Coordination Department
Contents 2 Ⅰ. Business Results for the First 3-Month (April-June, 217) of FY217 <P4-1> PP4-5 PP6-7 P8 P9 P1 Highlights: Segment Sales and Profits for the First 3-Month of FY217 Construction, Mining & Utility Equipment: Results for the First 3-Month of FY217 Retail Finance Business: Assets, Revenues and Segment Profit for the First 3-Month of FY217 Industrial Machinery & Others: Business Results for the First 3-Month of FY217 Consolidated Balance Sheets Ⅱ. Outlook of FY217 Business Results <PP12-21> PP12-17 PP18-19 P2 P21 Construction and Mining Equipment: Demand and Outlook for Seven Major Products (Global and By Region) Construction and Mining Equipment: Mining Equipment Construction and Mining Equipment: Parts Business Result of KMC * Appendix <PP23-3> PP23-27 PP28-3 Quarterly Results Book-to-Bill Ratio [Orders Received / Sales (6 Months)] * KMC: Komatsu Mining Corp.
3 I. Business Results for the First 3-Month (April-June, 217) of FY217 Note On April 5, 217, we completed the acquisition of Joy Global Inc. On April 19, Joy Global Inc. changed its trade name to Komatsu Mining Corp. (hereafter KMC ). From the first 3-month period of FY217, our consolidated business results include those of KMC as a consolidated subsidiary.
Highlights of the First 3-Month (April-June,217) of FY217 4 Consolidated net sales increased by 44.2% from the corresponding period a year ago, to JPY561.2 billion. Operating income advanced by 75.9% to JPY52.4 billion. Return on sales increased by 1.6 points to 9.3%. Net income attributable to Komatsu Ltd. improved by 133.5% to JPY36.3 billion. Apr.-Jun.,216 Apr.-Jun.,217 Changes 19.8/USD 124.3/EUR 16.9/RMB 111.2/USD 121.6/EUR 16.3/RMB Komatsu conventional *1 KMC Increase (decrease) Change % Net sales 389.2 561.2 487.2 73.9 +171.9 +44.2% Segment profit (loss) 29. 52.9 65.9 *2 (12.9) +23.9 +82.8% Other operating income (expenses).7 (.5) (.5) - (1.3) - Operating income (loss) 29.7 52.4 65.3 *2 (12.9) +22.6 +75.9% Profit ratio (loss ratio) 7.7% 9.3% 13.4% (17.5)% +1.6pts. - Other income (expenses) (5.5) (4.3) +1.2 - Income before income taxes 24.2 48. +23.8 +98.7% Net income *3 15.5 36.3 +2.8 +133.5% Notes 1) Figures represent those which KMC s business results are excluded 2) KMC s segment and operating losses include temporary expenses in the table on the right. 3) Upon adoption of ASC 81, Net income is equivalent to Net income attributable to Komatsu Ltd. * Depreciation after PPA (16.6) Start-up expenses, etc. (2.6) Total (19.3) Note: PPA stands for Purchase Price Allocation. It is an accounting process of valuating and allocating acquired assets and liabilities to fair prices.
Segment Sales and Profits for the First 3-Month (April-June,217) of FY217 5 Construction, Mining & Utility Equipment: Sales advanced by 49.2% from the corresponding period a year ago, to JPY515. billion. Segment profit expanded by 81.8% to JPY47.9 billion. Segment profit ratio improved by 1.7 points to 9.3%. Retail Finance: Revenues advanced by 48.% to JPY17.5 billion. Segment profit expanded by 76.4% to JPY3.3 billion. Industrial Machinery & Others: Sales increased by 11.2% to JPY38.6 billion. Segment profit improved by 38.9% to JPY2.3 billion. Apr.-Jun.,216 Apr.-Jun.,217 % : Profit ratio [ ]: Sales after elimination of inter-segment transactions Komatsu conventional KMC Increase (decrease) Changes % Change Net sales 389.2 561.2 487.2 73.9 +171.9 +44.2% Construction, mining & utility equipment Retail finance Industrial machinery & others [343.4] 345.1 [11.3] 11.8 [34.5] 34.7 [51.9] 515. [11.9] 17.5 [38.2] 38.6 [437.] 441. [11.9] 17.5 [38.2] 38.6 [73.9] 73.9 - - [+167.5] +169.8 [+.6] +5.6 [+3.7] +3.8 [+48.8%] +49.2% [+6.%] +48.% [+1.8%] +11.2% Elimination 7.5% (2.5) 9.4% (1.) 13.5% (1.) - (7.5) - Segment profit 7.6% 29. 9.3% 52.9 13.8% 65.9 (17.5)% (12.9) +23.9 +82.8% Construction, mining & utility 15.9% 18.9% 18.9% 26.3 47.9 6.9 (17.5)% (12.9) +21.5 +81.8% equipment 4.9% Retail finance 1.8 6.1% 3.3 6.1% 3.3 - +1.4 +76.4% Industrial machinery & others 1.7 2.3 2.3 - +.6 +38.9% Corporate & elimination (.9) (.6) (.6) - +.2 - Review of three business segments Construction, Mining & Utility Equipment Sales advanced, supported by expanded sales in China and Indonesia with recovering demand and effects of the new addition of KMC to consolidated accounting. While KMC recorded operating loss, impacted by its temporary expenses, Komatsu (excluding KMC) expanded profit. As a result, segment profit increased as a whole from the corresponding period a year ago Retail Finance: Revenues increased, mainly supported by expanded revenues in Chile. Segment profit also increased, reflecting no more allowance for doubtful accounts in China. Industrial Machinery & Others Both sales and segment profit increased, supported by expanded sales of Komatsu Industries Corporation and Komatsu NTC Ltd.
Construction, Mining & Utility Equipment : Sales by Region (To Outside Customers) for the First 3-Month (April-June,217) of FY217 6 Sales to outside customers advanced by 48.8% from the corresponding period a year ago, to JPY51.9 billion. When KMC s sales are excluded, sales increased by 27.2% to JPY437. billion. Excluding those of KMC, sales improved in all regions except for the Middle East. Sales expanded sharply, especially in China and CIS. The ratio of sales in Strategic Markets increased to 56% of total sales. (The ratio of Strategic Market was 55%, when KMC s sales were included.) Apr.-Jun.,217 437. (Conventional) Apr.-Jun.,216 343.4 YoY Comparison (Conventional) Japan Plus Minus North America Europe Latin America CIS China Asia Oceania Middle East Africa Apr.-Jun.,216 59.6 75.6 35.8 49. 15.6 18.7 4.2 24. 9.1 15.4 343.4 Komatsu 15 69.1 84.7 38.5 56.7 26.8 34.3 63.3 34.8 7.4 21. 437. Conventional Increase (decrease) +9.5 +9.1 +2.7 +7.6 +11.2 +15.6 +23.1 +1.8 (1.7) +5.5 +93.5 1 KMC - 31.2 4.4 15.5.8 3.9.7 1.2-6.8 73.9 Apr.-Jun.,217 69.1 116. 43. 72.2 27.6 38.3 64.1 45.1 7.4 27.8 51.9 Traditional Markets +7.6 +2.7 +15.7% +9.1 +7.6% +12.1% +9.5 +15.9% +11.2 +71.8% +15.6 +83.5% +23.1 +57.4% +1.8 +44.9% Strategic Markets (1.7) (19.5)% +5.5 +35.9% +93.5 [+27.2%] Total 55 5 45 4 35 3 25 2 5 343.4 Africa 5% Middle East 3% Oceania 7% Asia 12% China 5% CIS 5% Latin America 14% urope 1% Strategic Markets 5% North Traditional America Markets 22% 5% 437. Africa 5% Middle East 2% Oceania Asia 14% China 8% CIS 6% Latin America 13% Europe 9% 8% North America 19% Africa 5% Middle East 1% Oceania 9% China 7% CIS Asia Latin America 14% Europe 8% North America Japan Japan Japan 17% 16% 14% Apr.-Jun., 216 Apr.-Jun., 217 (Conventional) Strategic Markets 56% Traditional Markets 44% 51.9 13% 23% 5% Apr.-Jun., 217 (including KMC) Strategic Markets 55% Traditional Markets 45%
Construction, Mining & Utility Equipment : Causes of Difference in Sales and Segment Profit for the First 3-Month (April-June,217) 7 Sales increased by JPY169.8 billion from the corresponding period a year ago, supported by increased volume of sales, the positive factor of foreign exchange rates and effects of the new addition of KMC to consolidated accounting. Although segment profit was adversely affected by temporary expenses of KMC, as a whole, it increased by JPY21.5 billion. Segment profit ratio improved by 1.7 points to 9.3%. Billions of yen 55 5 45 Sales Apr.-Jun., 216 vs. Apr.-Jun., 217 Positive factors Negative factor Volume +85.6 Selling price +1.7 Foreign exchange rate +6.3 *1 New additions to consolidation +76.2 515. Billions of yen 8 6 Segment profit Apr.-Jun., 216 vs. Apr.-Jun., 217 Volume, product mix, etc. +34.7 Positive factors Negative factor Fixed costs (1.1) Selling price +1.7 Foreign exchange rate (1.) *2 New additions to consolidation (12.8) 47.9 4 35 345.1 4 2 26.3 +169.8 billion yen +21.5 billion yen 3 Apr.-Jun., 216 19.8/USD 124.3/EUR 16.9/RMB Apr.-Jun., 217 111.2/USD 121.6/EUR 16.3/RMB Apr.-Jun., 216 7.6% Segment profit ratio Apr.-Jun., 217 9.3% *1: Including JPY73.9 billion resulting from the new addition of KMC to consolidated accounting *2: Including JPY(12.9) billion resulting from the new addition of KMC to consolidated accounting.
Retail Finance Business: Assets, Revenues and Segment Profit for the First 3-Month (April-June,217) of FY217 8 Assets in the retail finance business increased, mainly due to increased contracts centering on North America. Segment profit increased, mainly supported by no more adverse effects of additional allowance for doubtful accounts recorded in China for the corresponding period a year ago. Assets Mar 31, 217 vs. June 3, 217 Revenues Apr.-Jun., 216 vs. Apr.-Jun., 217 8 7 6 5 4 671.5 North America 681.6 North America 2 15 1 Sales Segment profit 11.8 17.5 3 2 1 Others Oceania China Europe Japan 112.2/USD 119.8/EUR 16.3/RMB Others Oceania China Europe Japan Mar 31, 217 June 3, 217 112./USD 128./EUR 16.5/RMB 217/3E 217/6E Changes 5 19.8/USD 124.3/EUR 16.9/RMB 1.8 Apr.-Jun., 216 111.2/USD 121.6/EUR 16.3/RMB 3.3 Apr.-Jun., 217 Interest-bearing debt 56. 515.7 +9.7 Interest-bearing debt, net 51.2 511.8 +1.5 Net D/E ratio 3.65 3.64 (.1)pts.
Industrial Machinery & Others: Sales and Segment Profit for the First 3-Month (April-June,217) of FY217 9 Sales increased by 11.2% from the corresponding period a year ago, to JPY38.6 billion, supported by expanded sales recorded by Komatsu Industries Corp. and Komatsu NTC Ltd. Segment profit ratio was 6.1%. Billions of yen 6 4 2 Sales Komatsu House*1 44.7 34.7 38.6 Billions of yen 4 2 7.3% 3.2 Segment profit :Segment profit ratio 4.9% 6.1% 2.3 1.7 (%) 1 5 Apr.-Jun., 215 Apr.-Jun., 216 Apr.-Jun., 217 Breakdown of sales Komatsu Industries Corp., etc. [total of press and sheet-metal machines] Komatsu NTC Ltd. [represented by wire saws] Apr.-Jun., 215 Apr.-Jun., 216 Apr.-Jun., 217 Apr.-Jun., 215 Apr.-Jun., 216 Apr.-Jun., 217 Increase (decrease) Changes % change 12.8 7.7 9. +1.3 +17.4% 14. [1.1] 12.6 [5.5] 14.5 [.7] +1.8 [(4.7)] +15.% [(86.5)%] Gigaphoton 8.3 8.5 8.3 (.1) (2.3)% Komatsu House *1 3.7 - - - - Others 5.8 5.8 6.7 +.8 +14.5% Total 44.7 34.7 38.6 +3.8 +11.2% *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 1 Total assets grew by JPY599. billion from the previous fiscal year-end, affected by the new addition of KMC to consolidated accounting and increased inventories. Interest-bearing debt increased by JPY442.5 billion to JPY851.3 billion. Komatsu shareholders equity ratio declined by 1.3 points to 49.1%. Mar. 31, 217 June 3, 217 112.2/USD 112./USD 119.8/EUR 128./EUR 16.3/RMB 16.5/RMB Increase (decrease) Cash & deposits (incl. time deposits) [a] 122.1 152.7 +3.6 Accounts receivable (incl. long-term trade receivables) 933.2 994. +6.8 Inventories 533.8 687. +153.1 Tangible fixed assets 679. 76.4 +81.4 Other assets 388.1 661.1 +272.9 Total assets 2,656.4 3,255.5 +599. Accounts payable 24.1 279.4 +39.3 Interest-bearing debt [b] 48.7 851.3 +442.5 Other liabilities 359.1 45.9 +91.7 Total liabilities 1,7.9 1,581.6 +573.7 [Shareholders equity ratio] [59.4%] [49.1%] [ (1.3)pts. ] Komatsu Ltd. shareholders equity 1,576.6 1,599.6 +23. Non-controlling interests 71.8 74.1 +2.3 June 3, 217 Affect of new additions of KMC to consolidation 16.2 77.1 11.1 85.9 285. 574.4 31.2 14.4 119.8 255.4 Liabilities & Equity 2,656.4 3,255.5 +599. Interest-bearing debt, net [b-a] 286.5 698.5 +411.9 Net D/E ratio.18.44
11 II. Outlook of FY217 Business Results
Conventional: w/o KMC Construction and Mining Equipment: Demand and Outlook for 7 Major Products 12 Demand should have increased 25% in the first 3-month period of FY217 from the corresponding period a year ago. Demand is strong in China and by Indonesia and for mining equipment. We are keeping our projection of full-year demand as a whole for FY217 projected at the start of the current fiscal year. Units 6, 5, 4, 3, 2, Index Annual demand for 7 major products +16% +13% +15% Japan Europe Others :FY7=1 1 8 64-2% -2% 92 +45% N.America China Y-O-Y growth rate +5% -7% +3% -9% -14% +4% Growth rate 6% 4% FY16:+4% FY17:+/-% +5% (initial projection) 97 9 93 84 72 74 2% % -2% 15, 12, 9, 6, Units Quarterly demand for 7 major products Japan Europe Others +7% +2%+8% -3% -5% -4% 9% 1Q: +25% -19% -16% -18% -11% N.America China Y-O-Y growth rate Growth rate +27% +25% +2% -8% -8% -2% 12% 9% 6% 3% % -3% 1, -4% 3, -6% FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 initial projection Note: Estimated by Komatsu FY13/1Q FY13/ FY13/ FY13/ FY14/1Q FY14/ FY14/ FY14/ FY15/1Q FY15/ FY15/ FY15/ FY16/1Q FY16/ FY16/ FY16/ FY17/1Q
Conventional: w/o KMC Construction and Mining Equipment: Demand in Major Markets (1) Japan 13 Demand should have advanced by 38% in the first 3-month period of FY217 from the corresponding period a year ago. Demand for new equipment increased, centering on the rental industry, driven by pre-buy demand triggered by Japanese emission controls (effective September 217) which continued from the preceding 3-month period of FY216. 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:-4% FY17:+/-% +5% (initial 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% 97 Index FY13/1Q 82 :FY7/1Q=1 FY14/1Q Demand (units) Y-o-Y change (%) 74 FY15/1Q 57 FY16/1Q 1Q: +38% 78 FY17/1Q Units 16, 12, 8, 4, 4 3 2 1 FY98 FY99 FY Private-sector residential Private-sector non-residential Government construction FY1 FY2 FY3 FY4 FY5 FY6 FY7 initial projection [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 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Quarterly demand for hydraulic excavators (Rental & regular uses) Units 12, 8, 4, FY13/1Q FY14/1Q FY15/1Q Rental companies Regular customers FY16/1Q FY17/1Q Y-O-Y growth rate Rental +139% Regular +9%
Conventional: w/o KMC Construction and Mining Equipment: Demand in Major Markets (2) North America 14 In the first 3-month period of FY217, North American demand increased by 9% from the corresponding period a year ago. In the United States, demand for construction equipment continued to grow among general customers, and that in the rental industry, which had been sluggish, also grew. In Canada, demand remained slack, centering on the energy sector. However, demand is set for recovery. 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%( initial projection) Housing starts Housing starts in ten thousands 25 2 15 1 5 Y-O-Y growth rate 6% 4% 2% % -2% -4% -6% 8 Index :FY7/1Q=1 Demand (units) Y-o-Y change (%) 92 88 77 1Q: +9% 85 Units 3, 2, 1, FY17/1Q FY16/1Q FY15/1Q FY14/1Q FY13/1Q 4, 2, FY15 FY14 FY13 FY12 FY11 FY1 FY9 FY8 FY7 FY6 FY5 FY4 [Source]: Demand for 7 major products estimated by Komatsu FY16 FY17 initial projection USA Canada 1% 8% 6% 4% 2% % FY7 Breakdown of demand by segment (Unit basis) FY8 Rental-distributor (DORF) FY9 FY1 FY11 Rental -Regular FY12 FY13 FY14 FY15 FY16 FY16/1Q FY17/1Q Rental +21% Mining & energy +4% Others +4% Mining & energy Road Construction Others Y-O-Y growth rate
Conventional: w/o KMC Construction and Mining Equipment: Demand in Major Markets (3) Europe 15 In the first 3-month period of FY217, European demand should have increased by 6% from the corresponding period a year ago. In addition to a major market of Germany, demand remained steady in northern Europe. Units 8, 7, Annual demand for 7 major products FY16:+11% FY17:+/-% +5%(initial projection) Y-O-Y growth rate 6% 4% 55 Quarterly demand for 7 major products Demand (units) Y-o-Y change (%) 69 6 62 72 Units 15, 1, 2% 5, 6, % 5, -2% -4% Index :FY7/1Q=1 1Q: +6% 4, FY13/1Q FY14/1Q FY15/1Q FY16/1Q FY17/1Q 3, 2, 1, FY16 FY15 FY14 FY13 FY12 FY11 FY1 FY9 FY8 FY7 [Source]: Demand for 7 major products estimated by Komatsu FY17 initial projection Units 5, 4, 3, 2, 1, Region demand for 7 major products (Excl. 6t class) Southern Eastern Other Western Countries Northern The UK., France, and Germany FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 8, 7, 6, 5, 4, 3, 2, 1, FY16 (Apr.-May.) FY17 (Apr.-May.)
Conventional: w/o KMC Construction and Mining Equipment: Demand in Major Markets (4) China 16 In the first 3-month period of FY217, Chinese demand expanded by 135% from the corresponding period a year ago. Demand for construction equipment expanded, driven by continuing progress of infrastructure development since FY216. Units 12, 1, Annual demand for 7 major products (Foreign makers) 8, FY16:+55% FY17:+5% +1% (initial projection) Y-O-Y growth rate 15% 1% 5% Quarterly demand for 7 major products (Foreign makers) 112 Demand (units) 88 45 Y-O-Y growth rate 38 Units 89 3, 2, 1, 6, % 4, 2, Hours 2 15 1 5 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY1 KOMTRAX in China : Average operating hours per month Operating hours (left scale) Y-o-Y (right scale) 29% 14% 6% 1% 6% 1%12%-2% 17%9% 7% 3% -13% -8% -16%-15% -1%-8% -8%-1% -7% -14% 3% 1% 6% -25% FY11 FY12 FY13 FY14 83% FY15 FY16 FY17 8% 6% 4% 2% % -2% -4% -6% -8% -5% -1% FY13/1Q initial projection Units 15, 1, 5, Index :FY7/1Q=1 FY14/1Q 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 FY213 FY214 FY215 FY216 FY217 FY15/1Q FY16/1Q Monthly demand for hydraulic excavators : Total of 6-ton and larger models) <Chinese New Year> : Jan. 31, 214 : Feb. 19, 215 : Feb. 8, 216 : Jan. 28, 217 :Feb. 16. 218 1Q: +135% FY17/1Q
Conventional: w/o KMC Construction and Mining Equipment: Demand in Major Markets (5) Southeast Asia 17 In the first 3-month period of FY217, South Asian demand should have advanced by 27% from the corresponding period a year ago. In Indonesia, the largest market of the region, demand expanded, especially for mining equipment. Demand is slowing down in Thailand. Units 4, 3, Indonesia Others Malaysia Thailand Annual demand for 7 major products FY16:+25% FY17:+/-% +5% (initial projection) Y-O-Y growth rate 16% 12% 8% 4% % 25 Quarterly demand for 7 major products Indonesia Others Malaysia Thailand Y-o-Y change (%) 151 127 122 155 Units 9, 6, 3, -4% Index : FY7/1Q=1 1Q : +27% -8% 2, FY13/1Q FY14/1Q FY15/1Q FY16/1Q FY17/1Q 1, Units 6 5 4 3 2 Indonesia: Demand for construction & mining equipment by industrial sector Forestry Agriculture Construction Mining 1Q : +62% FY15 FY14 FY13 FY12 FY11 FY1 FY9 FY8 FY7 FY6 FY5 FY4 [Source]: Demand for 7 major products estimated by Komatsu FY16 FY17 initial projection 1 FY12/1Q FY13/1Q FY14/1Q FY15/1Q FY16/1Q FY17/1Q
Conventional: w/o KMC Construction and Mining Equipment: Actual and Projected Demand for Mining Equipment 18 In the first 3-month period of FY217, global demand will have expanded by 85% from the corresponding period a year ago. Demand continued to advance, centering on Indonesia. We are keeping our projection of full-year demand as a whole for FY217 projected at the start of the current fiscal year. 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 1, 8, 6, 4, Units FY16:-3% FY17:+1% +2% (initial 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&China Europe&CIS Latin America N. America 2, 1Q: +85*% +85% 1% 5% +18% 1,5-2% -15% -12% +12% % -22% -33% -7% -49% -26% -2% -24% -33% -5% -54% -45% 1, -55% Middle East & Africa Oceania Asia Japan&China Europe&CIS Latin America N. America Y-o-Y change 5 Y-o-Y change 2, FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 initial projection Note: Demand estimated by Komatsu FY13/1Q FY14/1Q FY15/1Q FY16/1Q FY17/1Q
Construction and Mining Equipment: Sales of Mining Equipment 19 For the first 3-month period of FY217, sales of mining equipment advanced by 115% from the corresponding period a year ago, to JPY211.2 billion. When KMC s sales are excluded, sales increased by 4% to JPY137.2 billion. When KMC s sales are excluded, sales of equipment and parts as well as service revenues advanced against the backdrop of growing demand centering on Indonesia. 1, 8 6 4 2 Annual sales of mining equipment (incl. parts and service) 356.5 18% 422. FY7-14% 361.5 FY8 FY9 33% 15% 417. 554. FY1 FY11 11% 614.5 FY12-18% 56.3 FY13-1% -3% -1% 499.3 447.3 433.6 FY14 FY15 FY16 69% 1% 731.6 475.6 FY17 26.8 178.2 144.6 14.6 96.3 91.7 86.6 81.3 196.1 FY14 initial projection 214.9 FY15 Y-o-Y change 22.4 FY16 52.5 23.5 216.2 FY17 5% Equipment (KMC) Equipment (conventional) Service, etc Parts (conventional) (conventional) initial projection Parts, Service, etc (KMC) 25 2 15 1 5 % -7% 2% 12.9 128.8 118.7 Quarterly sales of mining equipment (incl. parts and service) FY14/1Q KMC Middle East & Africa Oceania Asia Japan & China Europe &CIS Latin America N. America Y-o-Y change(conventional) Y-o-Y change(including KMC) -13% 13.8-4% -7% -12% -18% -15% -4% -18% 115.9 113.7 11.1 17.5 18.9 98.3 9.7 FY15/1Q FY16/1Q 26% 135.8 211.2 137.2 FY17/1Q 115% 4% 14.1 59.9 5.4 47.4 34.4 33.2 31. 26.6 25.1 23.8 19.418.3 6.2 45.7 5.7 58.8 45.8 FY16/1Q Y-o-Y change FY17/1Q Parts, Equipment Service, etc (KMC) (KMC) Equipment Service, etc (conventional) (conventional) Parts (conventional)
Construction and Mining Equipment: Sales of Parts Conventional: w/o KMC 2 When sales made by KMC are excluded, sales of parts advanced 23% to JPY18.2 billion for the first 3-month period of 217 from the corresponding period a year ago. Sales advanced as a result of capturing demand for aftermarket products. Billions of yen 6 5 4 3 2 1 259.5 +2% 154.5 152. 12. Construction equipment Y-o-Y change -1% Annual sales of parts 141.5 +18% +13% +1% 363.7 319.5 317. 28. 265. 176.3 238. 159. 148. 15. 113. 118. 138.5 158. 171.5 187.4 196.1 Mining equipment Billions Construction equipment Mining equipment Y-o-Y change (%) of yen Y-o-Y change Y-o-Y change (%) 16 4% +14% +6% +3% 387.2 397.5 378.8 191.1 182.6 176.5-5% +5% 397. 18.8 214.9 22.4 216.2 2% % -2% 14 12 1 8 6 4 2-3% 91.5 92.8 45.7 46.4 45.8 5% 1. 12.9 12.1 98.8 11.3 49.2 46.4 5.8 Quarterly sales of parts 14% 11% 11% 49.8 47.2 53.1 54.9 52.7 7% 1% -7% 95.3 46.1 44.4 44.9 42.1 56.9 5.4-7% -14% -11% 87.8 87.8 93.8 45.7 42. 45.8 43. 5.7 15% 19.5 18.2 49.3 23% 49.4 6.2 58.8 2% % FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 initial projection FY14/1Q FY15/1Q FY16/1Q FY17/1Q
Business Results of KMC KMC 21 Sales increased by 12.9% from the corresponding period a year ago, to JPY73.9 billion. Excluding temporary expenses, operating income was JPY6.3 billion. When the temporary expenses of JPY19.3 billion are included, KMC recorded an operating loss of JPY12.9 billion. Apr.-Jun.,216 (Reference) 19.8/USD Apr.-Jun.,217 111.2/USD Changes (Reference) Increase (decrease) % Change Net sales 65.5 73.9 +8.4 +12.9% Equipment 15. 14.1 (.9) (6.4)% Parts & Service etc. 5.4 59.9 +9.4 +18.8% Operating income (loss) <excluding Temporary Expenses> 3.5% 2.3 8.6% 6.3 +4. +175.8% Temporary Expenses (negative figure) (4.1) (19.3) (15.2) - PPA depreciation *2 - *3 (16.6) (16.6) - Start up cost etc. (4.1) (2.6) +1.4 - Operating income (loss) <including Temporary Expenses> (2.7)% (1.7) (17.5)% (12.9) (11.1) - * 1: Figures for the corresponding period a year ago (April - June 216) are rearranged for Komatsu s fiscal year for your reference. * 2: PPA stands for Purchase Price Allocation. It is an accounting process of valuating and allocating acquired assets and liabilities to fair prices. * 3: Including JPY(12.9) billion for inventories after PPA. *1 Annual Sales & Operating Income Ratio Sales by segments *4 FY171Q Sales by regions 2, 1,5 1, 5 Millions of USD 8.6% 3.5% 596 665 137 126 459 538 16/1Q17/1Q Billions of JPY 8.6% 3.5% 65.5 73.9 15. 14.1 5.4 59.9 16/1Q17/1Q Equipment Parts&Service etc. Operating income ratio(excluding temporary expense) Surface Underground 45% 51% 49% 55% 16/1Q 17/1Q Asia 1% China 6% CIS 1% Oceania 14% Africa 9% 73.9 Latin America 21% Europe 6% North America 42% * 4: No sales in Japan and the Middle East
Appendix 22
<Appendix> Quarterly Sales and Operating Income 23 7 6 5 4 3 2 1 542. 46.2 482.3 494. 65.6 43.3 59. 53.5 15.2 12.9 13.6 11.7 411.8 416.7 433.8 467.3 Quarterly sales (since FY214) 446.1 446.3 44.7 56. 13.8 13.5 478. 484.4 53.6 65.7 13.4 13.1 392.3 38.5 417.4 411.6 389.2 46.8 43.5 34.7 44.2 42.2 11.8 11.6 12.6 345.1 353.4 379. -1.2-5.2-6.2-4.5-4.8-3.6-6.5-6.1-2.5-2.4-3.3-5.3-1. KMC Industrial Machinery & Others Retail Finance Construction, Mining & Utility Equipment(Komatsu conventional) Elimination 576.2 561.2 Exchange FY14/1Q FY15/1Q FY16/1Q FY17/1Q rates 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ /USD 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 111.2 /EUR 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 121.6 /RMB 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 16.3 69.7 12.9 498.8 73.9 38.6 17.5 441. 15 1 5 13.8% 12.9% 63.4 62.1 Quarterly operating income(since FY214) 11.4% 11.1% 11.1% 11.% 11.6% 11.1% 1.% 56.2 6.1 55.6 53.9 7.7% 8.4% 49.7 49.3 42.8 29.7 34.3 11.6% 67 13.4% 9.3% 52.4 Operating profit(kmc) Operating profit(komatsu conventional) Operating profit ratio(including KMC) Operating profit ratio(komatsu conventional) FY14/1Q FY15/1Q FY16/1Q FY17/1Q
<Appendix> Construction, Mining & Utility Equipment: Quarterly Sales and Segment Profit 24 6 5 4 3 2 1 Quarterly Sales 411.8 416.7 433.8 467.3 392.3 38.5 417.4 411.6 345.1 353.4 379. 498.8 515. KMC Komatsu conventional Exchange FY14/1Q FY15/1Q FY16/1Q FY17/1Q rates 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ /USD /EUR /RMB 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 19.8 12.9 16.9 114.7 124.3 114.6 116.7 121.4 16.9 15.4 15.7 16.7 111.2 121.6 16.3 1 Quarterly segment profit 6% 55% 53% 51% 54% 48% 47% 45% 5% 47% 51% 53% 55% Segment profit (KMC) Segment profit (Komatsu conventional) Segment profit ratio (including KMC) 5 53.2 55.1 51. 51.6 42.4 4.7 41.4 44.3 26.3 31.2 12.9% 13.2% 11.8% 11.% 1.8% 1.7% 9.9% 1.8% 7.6% 8 8% 1.3% 13.1% 9.3% FY14/1Q FY15/1Q FY16/1Q FY17/1Q Breakdown of sales(%) (Komatsu conventional) Parts, etc Mining equipment Construction equipment(stragegic Markets) Construction equipment(traditional Markets) 1% *1 8% *1 Komatsu conventional 48% 49% 51% 48% 53% 55% 55% 48% 52% 52% 53% 45% 49% 6% 13% 12% 12% 11% 9% 1% 4% 1% 9% 8% 1% 8% 9% 11% 22% 18% 16% 17% 14% 15% 13% 13% 15% 15% 15% 19% 19% 2% 17% 21% 21% 24% 22% 23% 23% 29% 23% 25% 22% 25% 21% % FY14/1Q FY15/1Q FY16/1Q FY17/1Q 38.9 65.1 47.9 13.8% Segment profit ratio (Komatsu conventional) Percentage of sales in Strategic Markets
<Appendix> Construction, Mining & Utility Equipment: Quarterly Sales by Region (To Outside Customers) 25 5 4 3 2 1 44.1 29.3 15.7 34.7 54.9 33.4 14.3 6.1 39.3 56.8 65.3 413.5 25. 14.8 34.1 48. 25.2 13.6 64.7 33.7 68.6 429.4 28.3 11.3 31.5 51.3 22.6 14.3 68.5 32.2 464.2 29.1 18.8 29.3 56.3 21.6 11.9 7.3 4.4 76.6 1.7 85.2 92.3 85.2 388.9 378. 23.7 2.3 17.2 14. 25.6 28.1 52.6 46.5 18.6 13.1 11.5 11.7 58.4 37.5 75.8 48.3 32.7 82.9 48.4 412.1 17.5 2.8 14.6 12.7 26.9 26.2 47.9 42.4 16.4 21.4 13.1 11.2 58.2 5. 3.7 38.4 15.1 16.2 67.5 8. 81.2 78.8 15.4 9.1 24. 4.2 18.7 15.6 49. 35.8 75.6 59.6 376.6 351.8 16.5 6.9 14.9 7.1 25.8 24.1 5.5 4.3 21.7 17.3 14.7 18.2 46 51 29.5 26.2 79.8 8.2 494.4 24.8 12.5 31.5 75.5 39.4 22. 12.6 77.7 79.1 84.9 *1 51.9 27.8 7.4 45.1 64.1 38.3 27.6 56.8 72.2 43.9 43. FY14/1Q FY15/1Q FY16/1Q FY17/1Q Exchange 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ /USD 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 111.2 /EUR 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 121.6 /RMB 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 16.3 343.4 116. 69.1 *1 including KMC Africa Middle East Oceania Asia China CIS Latin America Europe North America Japan
<Appendix> Retail Finance: Quarterly Sales and Segment Profit 26 2 18 17.5 16 15.2 12.9 13.6 13.8 13.5 14 13.4 13.1 11.8 11.7 11.6 12 12.6 12.9 1 8 6 4 2 FY14/1Q FY15/1Q FY16/1Q FY17/1Q Exchange rates 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ /USD 12.5 12.8 114.1 119.2 /EUR 14.9 137.7 142.8 136.9 /RMB 16.4 16.6 18.5 19. 15 28.% 28.8% 29.2% 27.3% 28.% 24.2% 24.% 1 19.3% 2.1% 2.2% 15.9% 5 4.2 3.3 3.7 3.7 3.7 *1 3.2 3.2 *1 *1 2.5 1.8 2.3 2.5 Quarterly sales 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 111.2 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 121.6 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 16.3 Quarterly segment profit Segment profit Segment profit ratio 18.9% 3.3 *1-2.3 FY14/1Q FY15/1Q FY16/1Q FY17/1Q -5 *1 I Including allowances for bad doubtful accounts 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 27 1 Quarterly sales 75 5 43.3 59. 53.5 65.6 44.7 56. 53.6 65.7 34.7 44.2 42.2 69.7 38.6 25 Exchange rates /USD /EUR /RMB FY14/1Q FY15/1Q FY16/1Q FY17/1Q 14/1Q 14/ 14/ 14/ 15/1Q 15/ 15/ 15/ 16/1Q 16/ 16/ 16/ 17/1Q 17/ 17/ 17/ 12.5 12.8 114.1 119.2 121.3 122.6 121.2 118. 19.8 12.9 16.9 114.7 111.2 14.9 137.7 142.8 136.9 133. 136.2 132.3 128. 124.3 114.6 116.7 121.4 121.6 16.4 16.6 18.5 19. 19.6 19.5 19. 17.9 16.9 15.4 15.7 16.7 16.3 15 1 5 Quarterly segment profit Segment profit Segment profit ratio 11.3% 7.3% 7.9% 7.% 7.3% 7.6% 8.3% 7.3 4.9% 5.3% 5.7% 4.6 3.8 4.5 4.2 4.4 3.1 *1 3.2 1.7 2.3 2.3 8.6% 6. 6.1% 2.3 FY14/1Q FY15/1Q FY16/1Q FY17/1Q -5
<Appendix> Book-to-Bill Ratio for Mining Equipment (6 Months) 28 Komatsu America (Mining eqpt) 2% 15% Orders received/sales Index Avg. orders received in value for 6 months/avg. units shipped in value for 6 months) 73E, 83E, 86E, 93E, 96E, 98E 1% 5% % Komatsu Germany (Mining eqpt) 25% 2% PC3, PC4 PC55, PC7 PC8 15% 1% 5% % Komatsu Ltd. (Mining eqpt) 2% 15% HD785, HD15 PC2,PC3, PC4, WA8 up D375A up GD825A up 1% 5% %
<Appendix> Book-to-Bill Ratio for KMC Mining Equipment (6 Months) 29 Avg. orders received in value for 6 months/avg. units shipped in value for 6 months) KMC (Surface) Rope Shovel, Blasthole Drills, Dragline,etc 25% 2% 15% 1% 5% % Orders received/sales Index 25% KMC (Underground) Continuous Miner, Sheerer, Load Haul Dump Machine, Jumbo Drills,etc 2% 15% 1% 5% %
<Appendix> Book-to-Bill Ratio for Industrial Machinery (6 Months) 3 Komatsu Industries 2% Avg. orders in value for 6 months/avg. factory shipment in value for 6 months) 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 17/6 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 17/6
Komatsu to Jointly Develop and Operate LANDLOG, a New Platform to Connect All Processes of Construction Work 31 On July 19 in 217, Komatsu, NTT DOCOMO, INC., SAP Japan Co., Ltd., and OPTiM Corp. have agreed to jointly develop and operate LANDLOG, a new platform to connect everything, such as ground, machines and materials, related to construction processes. Four partners are planning to launch this service in October 217. LANDLOG Open platform designed to accelerate the innovation of construction processes Acceleration of organizing KOTO data *1 Scalability Open innovation Global deployment *1: KOTO data is versatile data created by the combination or processing of raw data.
32 TLH58 3D fiber laser cutting machine features an outstanding improvement in productivity thanks to a new controller. HiF15-2 AC Servo press achieves both high value-added machining and high productivity at the same time. PVS1353-NET hydraulic AC Servodrive press brake offers both high productivity and high-precision machining. Komatsu Industries Corp. exhibited leading-edge industrial machines at the MF-Tokyo 217, the fifth trade fair for press, sheet-metal and forming machines, held at Tokyo Big Sight in July 217. Upholding its theme of Proposing GEMBA of the future: KOM-MICS for future plants, Komatsu Industries also introduced KOM- MICS (KOMatsu Manufacturing Innovation Cloud System), a Komatsu-original IoT-driven production support platform, and attracted keen attention from many visitors. 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/