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  • Projection for FY2012 Tasks and Projection for FY2012 ending March 31, 2013 April 26, 2012 Yasushi Sakano Executive OfficerGeneral Manager, Business Coordination Department Komatsu Ltd. 1
  • Projection for FY2012 Outline of Projection for FY2012 ending March 31, 20131.Sales and profits: Both sales and profits should increase from FY2011, mainly reflecting an increase in demand for construction equipment in Japan and North America as well as an increase in sales of mining equipment and parts. Operating income ratio should also improve, and we should be able to achieve an operating income ratio of 15%, the target figure of the mid-range management plan. FY2011 Results FY2012 Projection Change Net sales 1,981.7 bil yen 2,100.0 bil yen + 6.0 % Operating income 256.3 bil yen 315.0 bil yen + 22.9 % Operating income ratio 12.9 % 15.0 % + 2.1 pts Net income* 167.0 bil yen 190.0 bil yen + 13.7 % ROE 17.3 % 18.0 % + 0.7 pts Net debt-to-equity ratio 0.56 0.43 (0.13) pts ([Excl. retail finance business] (0.28) (0.20) (0.08) pts * “Net income” is equivalent to “Net income attributable to Komatsu Ltd.” in accordance with the FASB Accounting Standards Codification (ASC) 810. (Reference)2. Outlook of two business segments Sales and profits converted to USD and EUR denominations* FY2011 FY2012 - Construction, Mining and Utility Equipment Million USD Results Projection % change In addition to an increase in sales of high-margin mining equipment, Net sales 24,168 26,250 +8.6% parts and service, we project that demand for construction equipment Operating income 3,126 3,938 +26.0% will increase steadily in Traditional Markets, centering on North Net income 2,037 2,375 +16.6% America. Both sales and profits should increase from FY2011. FY2011 FY2012 - Industrial Machinery and Others Million EUR Results Projection % change While we should be able to receive steady orders for presses and Net sales 18,016 20,000 +11.0% machine tools, we expect orders for wire saws to decline and end Operating income 2,330 3,000 +28.7% to extraordinary demand for prefabricated structures for use in Net income 1,519 1,810 +19.2% temporary shelters. In this light, both sales and profits should *The exchange rates for FY2011 reflect the rates at the end of FY2011. decline from FY2011. The exchange rates for FY2012 reflect the rates of projection for FY2012. FY2011 FY2012 Increase 3. Cash dividends (decrease) Annual cash dividends of 48 yen per share are planned. Interim 21 yen 24 yen* + 3 yen* Year end 21 yen 24 yen* + 3 yen* (Consolidated payout ratio should translate into 24%.) Total 42 yen 48 yen* + 6 yen* 2 *Projected
  • Projection for FY2012 Projection for FY2012 ending March 31, 2013- Net sales should increase by 6.0% to 2,100 billion yen, and operating income by 22.9% to 315 billion yen.- Operating income ratio should improve by 2.1 percentage points to 15.0%. Billions of yen FY2011 Results FY2012 Projection % : Profit ratio 1USD = 79 yen 1USD = 80 yen Increase Change [ ]: Sales after elimination of 1EUR = 110yen 1EUR = 105 yen (decrease) % 1RMB = 12.4yen 1RMB = 12.8 yen inter-segment transactionsNet sales 1,981.7 2,100.0 +118.2 +6.0 % Construction, Mining & Utility Equipment [1,739.3] 1,744.2 [1,886.0] 1,890.0 [+146.6] +145.7 [+8.4%] +8.4 % Industrial Machinery & Others [242.4] 251.1 [214.0] 220.0 [(28.4)] (31.1) [(11.7)%] (12.4) % Elimination (13.6) (10.0) +3.6 -Segment profit 13.1 % 258.6 15.3 % 321.0 +62.3 +24.1 % Construction, Mining & Utility Equipment 14.1 % 246.2 16.9 % 320.0 +73.7 +29.9 % Industrial Machinery & Others 6.7 % 16.7 3.2 % 7.0 (9.7) (58.3) % Corporate & elimination (4.4) (6.0) (1.5) -Other operating income (expenses) (2.3) (6.0) (3.6) -Operating income 12.9 % 256.3 15.0 % 315.0 +58.6 +22.9 %Other income (expenses) (6.7) (7.0) (0.2) -Income before income taxes 249.6 308.0 + 58.3 + 23.4 %Net income *1 167.0 190.0 +22.9 + 13.7 %Cash dividends per share 42 yen 48 yen +6 yen*1 Upon adoption of ASC 810, “Net income” is equivalent to “Net income attributable to Komatsu Ltd.” 3
  • Projection for FY2012Construction, Mining & Utility Equipment : Projection of Sales to Outside Customer by Region and Segment Profit - Sales to outside customer of this segment should increase by 8.4%, mainly supported by an increase in sales of construction equipment in Japan and North America and of mining equipment and parts in Strategic Markets. - Segment profit should improve by 2.8 percentage points to 16.9%, mainly reflecting an increase in the percentage share of high-margin mining equipment and parts in total sales. Sales by region (To outside customers) Breakdown (%) Segment profit2,400Billions Billions of yen %of yen Growth rate (year-on-year) +8.4% 400 202,000 +7.7% 1.886.0 Projection for FY2012 16.9% 1,739.3 100.0 350 1,615.6 36.0 90.4 Africa Middle 14.1%1,600 61.5 36.4 192.0 East 13.6% 42.8 161.8 Middle East Africa 300 15 2% Japan 121.6 350.0 Oceania 5% Oceania 16% 252.9 319.4 10% 2501,200 Asia North 200.0 334.2 201.3 90.0 China Asia America 200 10 79.7 19% 14% 800 59.5 235.0 CIS Europe 205.2 320.0 202.2 120.6 120.0 Latin America China Latin 6% 150 104.4 11% CIS America 246.2 257.0 Europe 400 184.5 237.8 5% 12% 100 220.8 5 North America 251.5 286.3 306.0 Traditional Japan 50 0 Markets FY2010 FY2011 FY2012 (Projected) 36% 0 0 ¥85/USD ¥79/USD ¥80/USD FY2010 FY2011 FY2012 ¥113/EUR ¥110/EUR ¥105/EUR Strategic (Projected) ¥12.7/RMB ¥12.4/RMB ¥12.8/RMB Markets : Segment profit ratio 64% Sales before elimination of Sales growth rate (year-on-year basis) inter-segment transactions North Latin % Japan America Europe America CIS China Asia Oceania Middle East Africa Total FY2011 Results +13.8% +28.9% +15.5% +1.5% +34.0% (39.8)% +26.3% +33.1% (15.0)% +46.9% +7.7% FY2012 Projection +6.9% +8.1% (0.5)% +14.5% +12.8% (0.7)% +9.6% +18.6% (1.3)% +10.5% +8.4% 4
  • Projection for FY2012Construction, Mining & Utility Equipment: Causes of Difference in Projected Sales & Segment Profit - An increase in fixed costs should be compensated for by improvements of production costs and selling prices. - Coupled with an increase in the volume of sales and foreign exchange rate differences, we expect segment profit to increase by 73.7 billion yen from FY2011. Billions of yen Segment profit 400 Production, selling price 350 differences, etc. 320.0 Foreign 56.7 Volume [Positive factors] 300 Fixed costs exchange Difference 246.2 difference rate 25.0 - Reduced production costs and selling price difference (15.0) difference 7.0 and others: + 56.7 billion yen 250 - Volume difference: + 25.0 billion yen 200 - Foreign exchange rate difference: + 7.0 billion yen 150 +73.7 [Negative factors] billion yen - Fixed costs difference: -15.0 billion yen 100 Positive factors 50 Negative factors 0 FY2011 FY2012 Increased profit of + 73.7 billion yen (Results) (Projected) ¥ 79 /USD ¥ 80/USD ¥110/EUR ¥105/EUR ¥12.4/RMB ¥12.8/RMB 14.1% Segment profit ratio 16.9% 5
  • Projection for FY2012 Construction & Mining Equipment: Demand for 7 Major Products FY2011: While demand downturned drastically in China, that in other Strategic markets and Traditional Markets expanded, sustaining a growth rate of 4% comparable to FY2010. FY2012: Chinese demand should bottom out and demand in Strategic Markets other than China should continue to increase steadily. We project that global demand will increase by 5% to10% from FY2011. Quarterly demand for 7 major products Annual demand for 7 major productsUnits Growth rate Units150,000 90% Growth rate 600,000 60% Japan Japan North America North America 45% Europe China Europe 63% Others Growth rate China 500,000 40%120,000 60% Others 53% Index : FY2007=100 Growth rate 46% 101~106 40% 22% 100 36% 400,000 13% 16% 13% 96 20% 90,000 30% 15% 5~10% 17% 11% 4% 15%13% 92 13% 14% 300,000 80 0% 4% -3% 7% 60,000 0% 64 -6% 200,000 -20% -10% -20% -20% -33% 30,000 -30% 100,000 -40% -42% -49% -48% 0 -60% 0 -60% FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 07/4-6 07/7-9 07/10-12 08/1-3 08/4-6 08/7-9 08/10-12 09/1-3 09/4-6 09/7-9 09/10-12 10/1-3 10/4-6 10/7-9 10/10-12 11/1-3 11/4-6 11/7-9 11/10-12 12/1-3 (Estimated) (Estimated) (Projected) Estimated by Komatsu 6
  • Projection for FY2012 Construction & Mining Equipment: Demand in Major Markets and Outlook (1) Japan - In FY2011, demand increased sharply by 49%, fueled by restoration/reconstruction works in the earthquake-devastated regions. - Demand for new hydraulic excavators surpassed the number of used equipment exported from Japan, reflecting further decline in the amount of surplus machines on the market and an increase in demand after the earthquake. We project that demand will advance by 5% to 10% from FY2011. Demand for new equipment (7major products) Quarterly demand for 7 major products and construction investment Growth rate Index : FY07/4Q=100 UnitsConstruction investment Year-on-year growth rates of Demand of used equipment for new equipment/ 88 Exports 100% 15,000Trillions of yen 7 major products Units Property 80% 100 12,000 bubble FY11: +49% (estimated)100 80,000 60% 9,000 FY12 : +5% to +10% (projected) 40% 40 45 45 6,000 90 Demand for 60,000 20% 3,000 new equipment 0% 0 80 -20% -3,000 40,000 4Q: +96% -40% (estimated) -6,000 70 -60% -9,000 20,000 Exports of used Used equipment -80% Demand (Units) Growth rate -12,000 60 equipment bubble -100% -15,000 0 FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q FY09 1Q 2Q 3Q 4Q FY10 1Q 2Q 3Q 4Q FY11 1Q 2Q 3Q 4Q 50 Construction investment and machine Demand for new -20,000 Population population for hydraulic excavator equipment/export Units Units 40 40 0000 Demand for new equipment > export 60000 -40,000 35 0000 Export of used Machine population has been increasing. 30 equipment 50000 30 0000 40000 -60,000 25 0000 20 20 0000 30000 Private-sector non-residential Private-sector residential -80,000 15 0000 New equipment 10 20000 Government construction 10 0000 Machine population 10000 0 -100,000 50000 0 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 11 12 FY FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 [Sources] : Construction investment by the Ministry of Land, Infrastructure, Transport & Tourism , (Estimated) (Projected) and Research Institute of Construction and Economy [Source]: FY02 to FY10: Japan Construction Equipment Manufacturers Association Demand for 7 major products estimated by Komatsu No. of used equipment estimated by Komatsu FY11,12: estimated by Komatsu 7
  • Projection for FY2012 Construction & Mining Equipment: Demand in Major Markets and Outlook (2) North America - In FY2011, demand expanded by 36% from FY2010, fueled by strong demand in the rental, mining and energy industries. Yet, it represents only about 60% of the last peak year of FY2005. - In FY2012, demand should remain brisk with an increase of 10% to 15% from FY2011. Demand for 7 major products and US housing starts Quarterly demand for 7 major products Growth Demand for rate Units Housing starts 7 major products Index : FY05/4Q=100 60% 30,000in ten thousands Units 250 6 yrs 9 yrs 11yrs 80,000 100 64 40% 91 20,000 Year-on-year growth rates 66 39 48 of 7 major products 70,000 20% 33 10,000 FY11: +36% (estimated) FY12: +10 to 15% (projected) 60,000 0% 0 200 4Q: +33% -20% -10,000 50,000 (estimated) -40% -20,000 40,000 Demand (Units) Growth rate 150 -60% -30,000 FY05 1Q 2Q 3Q 4Q FY06 1Q 2Q 3Q 4Q FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q FY09 1Q 2Q 3Q 4Q FY10 1Q 2Q 3Q 4Q FY11 1Q 2Q 3Q 4Q 30,000 20,000 100 10,000 Breakdown of demand by segment (Unit based) 0 100% Units 45,000 Demand is recovering centering 13% 15% 16% 15% 14% Others Others +30% 50 on the rental, mining and energy -10,000 40,000 industries, while housing starts 80% 20% 21% 17% 35,000 24% 30% lacks full-recovery momentum. Rental -20,000 30,000 Rental +78% 60% 13% 13% 15% 14% 25,000 Mining & 0 -30,000 14% Mining & 19% energy +45% FY 40% 21% 27% 20,000 energy 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 11 12 23% 19% 15,000 Road Road +16% Housing starts Demand for mojor 7 products 20% 36% 10,000 28% 27% 24% 22% Construction 5,000 Construction +32% [Source]: Housing starts by U.S. Department of Commerce 0% 0 Demand for 7 major products estimated by Komatsu FY07 FY08 FY09 FY10 FY11 8 FY10 FY11
  • Projection for FY2012 Construction & Mining Equipment: Demand in Major Markets and Outlook (3) Europe - In FY2011, demand remained firm, centering on Germany, France and the United Kingdom, and increased by 7% from FY2010. Yet, it remained at about half of the last peak year of FY2007. - In FY2012, we project that demand will improve by 0% to 5%. Annual demand for 7 major products Quarterly demand for 7 major products Growth Index : FY07/4Q=100 Units Year-on-year growth rates of 7 major products rateUnits 60% 52 30,000 FY11: +7% (estimated) 10080,000 FY12: 0% to +5% (projected) 40% 50 20,000 38 36 20% 10,00070,000 0% 0 Other countries -20% 4Q: -4% -10,000 (estimated)60,000 Major 5 countries -40% -20,000 -60% Demand (Units9 Growth rate -30,00050,000 -80% -40,000 Other countries 4Q FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q FY09 1Q 2Q 3Q 4Q FY10 1Q 2Q 3Q 4Q FY11 1Q 2Q 3Q 4Q40,000 Demand for 7 major products: Year-on-year growth rate30,000 Apr., 2010 – Apr., 2011 –20,000 Mar., 2011 Feb., 2012 Major 5 (Germany, France, Germany +67% +15% the U.K., Italy, Spain)10,000 U.K. +35% +6% France +48% +22% 0 Italy -2% -27% 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 FY Spain -4% -13% Estimated by Komatsu Others (29 countries) +40% +17% 9
  • Projection for FY2012 Construction & Mining Equipment: Demand in Major Markets and Outlook (4) China - In FY2011, demand dropped sharply by 37%, as adversely affected by the government’s credit squeeze measure. - We project that FY2012 demand will remain about flat (0% to +5%) from FY2011. Demand for hydraulic excavators (incl. mini models):Units Demand for 7 major products Local and foreign makers and used equipment imports150,000 (Foreign manufacturers only) [Units] 100% [Breakdown] Year-on-year growth rates of 7 major products 250000100,000 FY11: -37% (estimated) Foreign(Japan, U.S. and Europe) Foreign ( Korea) 80% 200000 FY12: 0% to +5% (projected) Local Used (imports) 50,000 60% 150000 100000 40% 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 50000 20% (Projected) Monthly demand for hydraulic excavators 0 0%Units24,000 (Foreign makers: Sum of 6-ton and larger models) FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY07 FY08 FY09 FY10 FY11 FY2012 (Projected) <Chinese new year> : Feb. 10, 2013 % Urbanization rates 10020,000 : Jan. 23, 2012 FY2011 Construction rush of interstate highways : Feb. 3, 2011 90 in the U.S. (1950-1980) FY2010 Jan., 2012: down 57%16,000 FY2009 : Feb. 14, 2010 Feb., 2012: down 33% 80 U.S.A : Jan. 26, 2009 FY2008 Mar. 2012: down 56% 70 6012,000 Construction rush of high- Topped 50% in 2011 50 Japan speed railways in Japan (1970~1990) 40 Construction rush of expressways in Japan Construction rush of 8,000 (1960~1990) high-speed railways 30 in China (2005-2020) 20 China Construction rush of expressways in China (1990-2020) 4,000 10 Five-year plans 6 7 8 9 10 11 12 13 0 CY 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 0 Sources: * Urbanization rates: UN data 4 5 6 7 8 9 10 11 12 1 2 3 High-speed railways in China: “Mid-term Railway Network Plan” (revised in 2008), the Ministry of Railways of China ProjectionMonth Expressways in China: Mid to Long-term Plan for Transport Infrastructure Development” (announced in 2007), Estimated by Komatsu The National Development and Reform Commission of China 10
  • Projection for FY2012Construction & Mining Equipment: Demand in Major Markets and Outlook (6) Other Strategic Markets - In FY2011, demand expanded by 29% from FY2010, supported by strong demand for mining equipment, centering on Southeast Asia and Latin America. - We project that demand will remain firm in FY2012 with an increase of 5% to 10% from FY2011. Demand for 7 major products Quarterly demand for 7 major products in Southeast Asia Other Strategic markets: Southeast Asia, Latin America, India, Growth Demand (Units) Growth rate Units Africa, Middle East, CIS, Oceania and others rate 160% 12,000 Units Index : FY07/4Q=100 221 Year-on-year growth rates of 7 major products 112 120% 165 9,000 Others FY11: +29% (estimated) 100 80% 6,000120,000 FY12: +5% to +10% (projected) 59 Oceania 40% 3,000 Africa 0% 0 Middle East -40% 4Q: +33% -3,000 CIS (estimated) 90,000 -80% -6,000 FY07 1Q FY08 1Q FY09 1Q FY10 1Q FY11 1Q India 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q Latin America Southeast Asia 60,000 Quarterly demand for 7 major products in Latin America Growth Demand (Units) Growth rate (台数) Units rate 120% Index : FY07/4Q=100 9,000 74 101 98 30,000 100 80% 6,000 41 40% 3,000 0% 0 0 -40% 4Q: -3% -3,000 (estimated) 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 -80% -6,000 FY FY07 1Q FY08 1Q FY09 1Q FY10 1Q FY11 1Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q Estimated by Komatsu 11
  • Projection for FY2012 Construction & Mining Equipment: Projection for Demand and Machine Population of Mining Equipment and Backlog Orders- In FY2011, demand expanded by 47% from FY2010, as that remained strong, centering on Southeast Asia and Australia.- We anticipate that FY2012 demand will increase by 13% from FY2011.- Backlog orders should also remain at a high level, supported by expanding demand. We also estimate that our machine population will grow steadily. Demand of mining equipment by region (Units) Machine population of Komatsu’s mining equipment Dump trucks: 75ton (HD785)and larger –Bulldozers: 525HP (D375) and larger Units -Excavators: 150ton (PC1600)and larger - Wheel loaders: 500HP (WA700)and larger 20,000 - Motor graders: 280HP (GD825)and larger Index : FY06=100 18,000 249 Units 9,000 +13% Africa & M. East 16,000 202 8,000 +47% Australia 14,000 164 7,000 12,000 +15% 146 6,000 +40% Asia 134 10,000 5,000 +12% +7% 116 -35% China 8,000 100 4,000 3,000 Europe & CIS 6,000 2,000 4,000 Latin America 1,000 2,000 0 North America 0 FY03 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY03 FY06 FY07 FY08 FY09 FY10 FY11 FY12 (Estimated) (Projected) (Projected) * Finished products excluding parts and service Backlog orders* Including semi-finalized orders.Millions of Billions of Komatsu Ltd. Millions of Komatsu America Corp. (Mining Div.)USD yen (Mining equipment related) EUR Komatsu Mining Germany GmbH2,000 200 7501,500 150 5001,000 100 50 250 500 0 0 0 10/12 11/3 11/6 11/9 11/12 12/3 10/12 11/3 11/6 11/9 11/12 12/3 10/12 11/3 11/6 11/9 11/12 12/3 12
  • Projection for FY2012 Construction & Mining Equipment: Sales Projection for Komatsu Mining Equipment- We project that sales will continue to grow steadily, especially in Southeast Asia, Latin America and Australia.- Sales of parts should also increase steadfastly against the backdrop of growing machine population. Sales of mining equipment by region Sales of mining equipment (incl. parts and service) Billions (Equipment and service/parts)Billionsof yen of yen [ ]: Year-on-year growth rate 800 *Percentage share of mining equipment in total sales of 38% 800 construction, mining and utility equipment except for 36% [ ]: Year-on-year growth rate forklift trucks 664.0 Percentage share of mining 31% 700 equipment in total sales* 700 [+20%] 28% 664.0 Africa & M. 27% 554.0 East 600 600 554.0 [+33%] Australia 19% 19% Equipment, service, etc. 500 422.0 500 417.0 15% Asia [+18%] [+15%] 422.0 417.0 361.5 460.5 400 356.5 400 [+16%] [+22%] [-14%] China 356.5 361.5 292.0 396.0 292.0 [+42%] 300 [+25%] 300 Europe & 278.5 309.0 CIS [+14%] 251.5 [+23%] 243.5 200 200 [+21%] [-21%] 125.5 Latin 207.0 America 125.5 [+23%] Parts 100 North 100 203.5 81.5 118.0 138.5 158.0 105.0 113.0 [+4%] [+17%] [+14%] [+29%] America 85.0 [+24%] [+8%] 44.0 [+30%] 0 0 FY03 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY03 FY06 FY07 FY08 FY09 FY10 FY11 FY12 (Projected) (Projected) 13
  • Projection for FY2012 Industrial Machinery & Others: Projection of Sales and Segment Profit - While orders for presses and machine tools should remain brisk, we project that both sales and profits will decline from FY2011, as adversely affected mainly by a drastic slowdown in sales of wire saws and end to extraordinary demand for temporary shelters.Billions Sales Billions Segment profit Backlog ordersof yen of yen Segment profit ratio Billions of yen 40 18 Presses 80300 238.3 251.1 30 8.8% 60 220.0 6.7% 12200 20.9 40 20 16.7 3.2% 20 7.0 6100 10 0 11/3 11/6 11/9 11/12 12/3 Billions of yen 0 0 0 80 Machine tools FY2010 FY2011 FY2012 FY2010 FY2011 FY2012 (Projected) (Projected) 60 Breakdown of sales 40 (FY2011 result v.s. FY2012 projection) Billions of yen 20 FY2011 FY2012 Increase (Projected) (decrease) 0 11/3 11/6 11/9 11/12 12/3 Komatsu Industries Corp.(Sheet-metal 46.6 50.9 +4.3 Billions of yen and press machine business) 80 Wire saws Komatsu NTC Ltd. 108.8 91.6 (17.2) 60 [Provided by wire saws] [46.5] [18.0] [(28.5)] 40 Gigaphoton, Komatsu House, KELK, the Defense Systems Division and others 95.7 77.5 (18.2) 20 Total 251.1 220.0 (31.1) 0 14 11/3 11/6 11/9 11/12 12/3
  • Projection for FY2012 Retail Finance Business - We expect that assets will increase in North American and some other regions. - Both revenues and pretax income should remain about flat from FY2011. Consolidated retail finance subsidiariesBillions Billionsof yen 1. Assets of yen 2. Revenues 550 70 Revenue 434.5 Pretax income 450 423.0 60 51.6 51.4 North North 50 America America 350 40 Others Others 250 Oceania Oceania 30 150 China China 20 11.1 11.3 50 10 Europe Europe Japan Japan Elimination Elimination -50 0 Mar.31, 2012 Mar. 31, 2013 FY2011 FY2012 (Projected) (Projected) 1USD 82 yen 80 yen 1USD 79 yen 80 yen 1EUR 110 yen 105 yen 1EUR 110 yen 105 yen 1RMB 13.1 yen 12.8 yen 1RMB 12.4 yen 12.8 yen 15
  • Projection for FY2012 Projection of Capital Expenditures, Depreciation, R&D Expenses and Fixed Costs - Capital expenditures: Focusing on test and energy-saving facilities. - R&D expenses: Focusing on ICT applications, environmental friendliness and safety in machine performance and development of next-generation construction equipment. - Fixed costs: Continuing to curb them against growing sales.Billions Billions Billionsof yen of yen of yen Investment in production and R&D Expenses Fixed costs other facilities* and depreciation 100 500100 2.8% 2.8% 2.7% 15% 15% 15% 76.0 400 63.9 5.8 58.5 54.5 54.8 5.5 300 49.0 5.3 11.5 50 50 11.9 51.8 48.7 50.0 8.7 200 70.2 58.4 49.2 43.0 47.0 40.2 100 0 0 0 FY2010 FY2011 FY2012 FY2010 FY2011 FY2012 (Projected) (Projected) FY2010 FY2011 FY2012 (Projected) Industrial Machinery & Others Industrial Machinery & Others Construction Machinery & Others Constuction, Mining & Utility Equipment % of sales Fixed costs % of sales Depreciation *Excl. investment in rental assets 16
  • Projection for FY2012Progress Made in the Mid-Range Management Plan “Global Teamwork for Tomorrow” 17
  • Projection for FY2012 Highlights of Consolidated Business Results - Sustaining a high level of profitability by compensating for the adverse effects of Japanese yen’s sharp appreciation after the Lehman Shock by improving selling prices and costs as well as increasing the percentage shares of mining equipment, parts and others in total sales. Foreign exchange Consolidated business results rate (JPY/USD) Construction, mining and utility equipment: 114 117 114 101 104 108 93 Causes of change in the segment profit ratio 85 (FY2007  FY2012 projection) 79 80 JPY90 used in the mid-range management plan ROE 20.8% 23.5% 25.1%Sales 17.2% 17.3% 18.0% Operating income FY12(Billions 13.1% 20%of yen) 6.6% 9.3% (Billions of yen) 16.9% 4.1%3,000 900 FY07 (Projected) Consolidated net sales (left scale) Operating income (right scale) 15.5% Increased2,500 Operating income ratio 750 15% volume 2,243.0 +0.8% 2,100.0 Increased % 2,021.7 1,981.7 share of high2,000 1,893.3 600 margin 1,843.1 products, etc. 1,612.1 Foreign exchange +2.6% 14.8% 15.0% rate difference 12.1% 12.9% 12.9% 10%1,500 1,356.0 1,431.5 450 - 11.1% Increased 10.1% 315.0 selling 1,127.3 7.1% 332.8 7.5% prices1,000 4.7% 300 +8.0% 2.6% 244.7 256.3 Increased 222.9 materials 5% cost 163.4 151.9 - 2.6% 500 150 Reduced 95.8 67.0 production costs 29.8 Increased +3.8% 0 0 fixed costs 0% FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 - 0.1% (Projected) 18
  • Projection for FY2012 Targets and Progress Made in the Ongoing Mid-Range Management Plan- Looking forward to achieving the target figure of 15% for operating income ratio, even when the Japanese yen is appreciating.- Expecting to attain 18% for ROE with steady improvements.- Looking forward to achieving the target net debt-to-equity ratio (excl. retail finance companies) of 0.2 or below. Target figures and results of the mid-range management plan (FY2010-2012) Target figures for FY2009 FY2012No. Target items FY2012 (Reference) FY2010 FY2011 Projection 1 Operating income ratio 15% 4.7% 12.1% 12.9% 15.0% 2 ROE 20% 4.1% 17.2% 17.3% 18.0% 3 Net debt-to-equity ratio 0.4 or below 0.60 0.50 0.56 0.43 Excl. debt of finance subsidiaries 0.2 or below 0.36 0.24 0.28 0.20 Stable dividend: 4 Consolidated payout ratio 38%* 24% 24% 24% 20-40% *Excl. structural reform expenses Assumptions of mid-range management plan and results FY2009 FY2012No. Items FY2012 FY2010 FY2011 (Reference) Projection1 Sales (Billions of yen) 2,000.0 (+/- 100.0) 1,431.5 1,843.1 1,981.7 2,100.0 JPY/USD 90 93 85 79 80 Foreign2 exchange JPY/EUR 125 131 113 110 105 rates JPY/RMB 13.5 13.6 12.7 12.4 12.8 19
  • Projection for FY2012 Activities of Importance: 1) ICT Applications to Products and Parts- KOMTRAX: Expanding introduction in new regions. Over 260, 000 KOMTRAX-installed machines in operation in more than 70 countries worldwide. (as of Mar. 31, 2012)- Promoting the “150 and Beyond” project to deploy more than 150 Komatsu AHS trucks in Australia by the end of 2015.- Reinforcing sales and support operations to prepare for the launching of DANTOTSU ICT-intensive equipment.- Promoting the development of a fleet management system for forest machines. 1. Advancement of the KOMTRAX 2. AHS (Autonomous Haulage System)1) KOMTRAX (1) Expanding deployment(1) Introducing it to more countries. - Signed MOU with Rio Tinto in November 2011 concerning the - FY11: India, Russia, South Africa, UAE, etc. deployment of at least 150 Komatsu AHS dump trucks in Australia - FY12(plan): Taiwan, Nepal, Zambia, etc. by the end of 2015 (2) Increasing sales by expanding the value chain - Increasing sales of spare parts and service revenues by - Focusing efforts on the reinforcement of AHS operations by enhancing the utilization of the KOMTRAX at distributors establishing the AHS Support Center in Perth, Australia - Applying the “KOMATSU CARE” support program to in December 2011 Tier4-compliant models  Complementary periodical inspections and (2) Applying it to other models DPF cleaning/exchange within a designated period - Starting development of AHS for HD785  Expanding sales of spare parts by increasing the mechanical dump trucks frequency of customer visit.Units <KOMTRAX introduction by region> 930E AHS dump trucks 3. ICT-intensive construction Oth ers operating in Australia300000250000 Over 260,000 units in 70 countries Eu ro p e N. America200000 Ch in a Jap an Development of DANTOTSU ICT-intensive equipment15000010000050000 0 - Getting good results from seeding tests in North America. 07/10 08/4 08/10 09/4 09/10 10/4 10/10 11/4 11/7 11/10 11/32) KOMTRAX Plus (Vehicle health management system for mining equipment) 4. Forest machines -Expanding the applications according to customer needs (ex. Reducing fuel consumption by training operators) Development of the fleet management system for forest3) KOMTRAX Parts machines (Access to the conditions of parts and their replacement records) - Developing the fleet management system for forest machines - Continuing tests for commercialization. operating in large plantations - Preparing for applications and tests for mining equipment 20
  • Projection for FY2012 Activities of Importance: 2) Further Advancement of Environmental Friendliness and Safety in Machine Performance - Launched hybrid hydraulic excavators already in 12 countries. Concerting efforts to accelerate their sales. - Making good progress in launching Tier4-compliant models in the U.S. Starting full-scale launchings in Japan and Europe in FY2012. - Introducing HST-driven forklift trucks, and promoting the development of mini electric excavators. - Promoting the development of downsized and more energy-efficient machine tools.1. Hybrid hydraulic excavators 2. Responses to new emission standards 1) Global launchings of HB205 and 215LC models 1) Facilitating the launchings of Tier4, Stage IIIB and other emission - Launched some 810 units standards-compliant model (as of March. 31, 2012) U.S.A.: Making good progress since launching in FY2011 - Reinforcing sales promotion - Tier4-compliant models represent over 70% of all models (focused on heavy-use customers) sold since then. [No. of units introduced] (as of March 31, 2012) Europe and Japan: Full-scale launchings starting in FY2012 HB205 in Brazil 2) Reducing total product lifecycle costs of customers by extending Models Regions Units <Distribution of fuel consumption by the guarantee period under the KOMATSU CARE program and PC200-8 Hybrid Japan About 260 improving fuel economy with Tier4-compliant engines. hybrid hydraulic excavators> (About 690 China About 430 HB205-1 (New hybrid model) Increasing wholesale prices to distributors. units) PC200-8E0 - Introducing the program in Europe and Japan, following the U.S. Japan About 580 (First hybrid model) HB205 and China About 130 PC200-8N1 (Conventional 3. Forklift trucks, mini construction equipment 215LC N. America, model) and industrial machinery (About 810 units) Latin America, About 100 1) Launching HST-driven forklift trucks Europe, SE - FY2012: Full-scale launchings (Launch event on June. 7) Asia, Oceania - 30% (max) reduction of fuel consumption Total About (under high-load operation) 1,500 2) Developing mini electric Less Fuel consumption More construction equipment - User tests in progress[Percentage share of hybrid models in all 20-ton class hydraulic excavators sold] Japan: About 20% China: About 10% 3) Making machine tools more 2) Expansion of hybrid model range compact and energy efficient ・ 30-ton class hydraulic excavators, wheel loaders, etc. - Machining centers FH50 HST-driven forklift 21
  • Projection for FY2012 Activities of Importance: 3) Expansion of Sales and Service Operations in Strategic Markets- Training distributors’ service mechanics under industry-academia collaboration (construction equipment)- Training service engineers at distributors and the KOMATSU Human Resource Development Center (KHRDC) in Philippines (mining equipment)- Improving next-morning delivery rates by increasing parts depots, expanding stock-mix of parts and expanding capacity and improving QCD of Reman- Winning new customers and improving the prices of new equipment by expanding the used equipment business in Asia 1. Reinforcement of human resource development in Strategic Markets 2. Sales expansion of strategic parts 1) Training distributors’ service mechanics 1) Improving next-morning delivery rates ・ Strengthening under industry-academia collaboration - Increasing parts depots -China: Shandong Jiaotong University (2004 -- ) - Target: 95% or higher rate <No. of parts depots> -Russia: Yaroslavl Institute of Technology (Sep. 2010 -- ) Making good progress Traditional Markets Pacific National University (Oct. 2011 -- ) 2) Expanding stock-mix of parts Strategic Markets 47 ・ Making technical levels, training records, etc. “visible” - Under carriages: Introducing 33 38 16 the dual bush* type for large 16 16 Persons 15 15000 No. of mechanics in Strategic Markets by region equipment to more regions 8 17 22 31 7 Afr ica (*Substantial extension of the undercarriage life) 04/3 10/3 11/3 12/3 10000 - GET(Ground Engaging Tool): Developing Me buckets for Middle East China 5000 Oceania Asia large equipment 0 CIS Latin America 3) Expanding Reman/rebuild capacities and improving CY 07 08 09 10 11 QCD 2) Training mining equipment service engineers - Further enhancing QCD of global Reman plants - Expanding Reman capacity for hydraulic cylinders (Indonesia) ・ Training distributors’ service engineers - Increasing rebuild centers: Brazil (planned to open in Oct. 2012) - Expanding programs for overseas trainees at the Technical Training Center (Komatsu City) - Strengthening OJT through personnel exchange among 3. Expansion of the used equipment business in Asia distributors (dispatching experts from distributors with a 1) Winning new customers and sustaining and increasing wealth of experience) ・ Training service engineers at the KOMATSU HRDC the prices of new equipment by facilitating resale of (Philippines) and training distributors’ service engineers used equipment in Asia by graduates of HRDC 2) Expanding the used equipment business in China 22
  • Projection for FY2012 Activities of Importance: 4) Promotion of Continuous Kaizen by Strengthening Workplace Capability - Further improving the level of sales, production and inventory management centering on the Global HANSEI Operation Center - Reducing risks associated with procurement by databasing suppliers, including 2nd and 3rd stage ones - Further enhancing product development capability by strengthening the foundational technologies of measurement and simulation - Promoting 50% reduction of electric power consumption as group-wide target in Japan1. Improving the level of global sales, production and 2. Reducing procurement risks by databasing suppliers inventory management1) Improvement of the level of control 1) Databasing suppliers (making them “visible”) - Daily control based on the global HANSEI database - Finding out suppliers’ QCD by databasing all suppliers, (retail sales, orders received, etc.) including those in the 2nd and 3rd stages. - Improving verification and analyses by using 2) Reducing risks by clarifying the procurement standards KOMTRAX information - Eliminating concentration on single suppliers - Setting up clear criteria of inventories according to2) Reduction of production lead-time each supplier’s capacity - Making lead-time by model “visible” 3. Strengthening foundational technologies - Reducing lead-time by identifying tasks in every process and improving them Further enhancing product development capability - Horizontally implementing cases of improvement by strengthening measurement and simulation technologies to overseas plants (Examples: Vibration measurement and simulation methods) Global HANSEI Operation Center Cockpit display of global sales, 4. Reducing power consumption (at Osaka Plant) production and inventories Working to cut down electric power consumption to 50% by the end of FY2014 - Implementing demand control of electric power use by making power consumption “visible” - Using more energy-saving facilities and renovating existing facilities - Incorporating inexpensive, alternative energy sources - Improving productivity, reducing the amount of <Making sales, production and inventories “visible”> production processes and machining work, etc. 23
  • Projection for FY2012Cautionary StatementThis presentation sheets contain forward-looking statements that reflect management’s views and assumptions in the light ofinformation currently available with respect to certain future events, including expected financial position, operating results andbusiness strategies. These statements can be identified by the use of terms such as ”will,” “believes,” “should,” “projects,”“plans,” “expects,” and similar terms and expressions that identify future events or expectations. Actual results may differmaterially from those projected, and the events and results of such forward-looking assumptions cannot be assured. Any forward-looking statements speak only as of the date of this presentation sheets, and Komatsu assumes no duty to update suchstatements. Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, butare not limited to, unanticipated changes in demand for the Company’s principal products, owing to changes in the economicconditions in the Company’s principal markets; changes in exchange rates or the impact of increased competition; unanticipatedcosts or delays encountered in achieving the Company’s objectives with respect to globalized product sourcing and newinformation technology tools; uncertainties as to the results of the Company’s research and development efforts and its ability toaccess and protect certain intellectual property rights; the impact of regulatory changes and accounting principles and practices;and the introduction, success and timing of business initiatives and strategies. PC350-10 hydraulic excavator to be launched in Japan, following the U.S. and Europe. (Compliant to Japan’s Act on Regulation, Etc. of Emissions From Non-road Special Motor Vehicles concerning the volume of emissions of NOx and particulate matters) 24