It has been more than one year since the catastrophic destruction brought about by the Great East Japan Earthquake and tsunami on March 11, 2011. Before reporting our business results for the fiscal year ended March 31, 2012, let us first update our recovery assistance efforts in the disaster-stricken regions.
Assistance efforts for restoration and reconstruction
In response to the massive destruction, the Komatsu Group established the Tohoku Operation Department in April of the same year in order to accurately provide specific assistance which has been needed in the damaged regions. Mainly under the leadership of the Department, we have continued our assistance, equivalent to ¥2.8 billion, including free-of-charge lending of construction equipment, forklift trucks, prefabricated structures for use as temporary shelters and other equipment, donation of prefabricated structures for use as clinics, nursery schools and other facilities, as well as scholarships for college students who have been adversely affected by this disaster.
About 670 Komatsu Group employees in 55 business bases in the seriously affected prefectures of Iwate, Fukushima and Miyagi have been delivering construction equipment promptly, which is indispensable for reconstruction of the disaster-stricken regions, by carefully monitoring the local needs. At the same time, they have also been concerting top-priority efforts in machine maintenance service so that construction equipment will keep working at all needed jobsites. Concerning the Fukushima Dai-Ichi nuclear disaster, Komatsu-made radio-controlled construction equipment has been deployed on the power station site which has been exposed to a high degree of radioactivity. It is also projected that our ICT-intensive construction technologies (for automation of construction sites) will be used to remove radioactive soil. The Komatsu Group will continue to engage in group-wide assistance activities for reconstruction of the devastated regions.
Business results
In the construction, mining and utility equipment business, during the fiscal year under review (from April 1, 2011 to March 31, 2012), while demand for construction equipment dropped drastically in China, that in other Strategic Markets and Traditional Markets increased, compensating for the sharp decline in China. In the mining equipment sector, demand for new equipment, parts and service all remained strong. Sales increased from the previous fiscal year, partly reflecting the fact that Komatsu was able to quickly recover production to the normal conditions from the adverse effects caused by the Great East Japan Earthquake and tsunami and accurately capture an increase in demand.
In the industrial machinery and others business, while sales of wire saws declined from the previous fiscal year, sales of presses, machine tools and other products increased, and during the fiscal year under review, Gigaphoton Inc. became a consolidated subsidiary. As a result, sales of the industrial machinery and others business grew from the previous fiscal year.
Consolidated net sales increased by 7.5% from the previous fiscal year, to ¥1,981.7 billion (USD24,168 million at USD1=¥82).
With respect to profits, while the Japanese yen appreciated against the U.S. dollar, Euro and Renminbi more than the previous fiscal year, Komatsu expanded the volume of sales, while placing continuous efforts to improve selling prices and production costs, in particular. As a result, operating income reached ¥256.3 billion (USD3,126 million), registering an increase of 15.0% from the previous fiscal year, and secured an operating income ratio of 12.9%, up 0.8 percentage points from the previous fiscal year. Income before income taxes and equity in earnings of affiliated companies advanced by 13.6% to ¥249.6 billion (USD3,044 million). Net income attributable to Komatsu Ltd. also improved by 10.8% to ¥167.0 (USD2,037 million).
Markets as Positioned by Komatsu
| Traditional Markets | Japan, North America, and Europe |
|---|---|
| Strategic Markets | China, Latin America, Asia & Oceania ,Middle East & Africa, and CIS |
Mid to Long-Range Management Plan and Issues Ahead
The fiscal year, ending March 31, 2013, is the final year of the "Global Teamwork for Tomorrow" mid-range management plan. We are focusing our efforts on the following four activities of importance. At the same time, we are also going to identify tasks for growth strategies into the future and incorporate them in the next mid-range management plan.
Activities of Importance
1) Promotion of ICT applications to products and parts
2) Further advancement of environmental friendliness and safety in machine performance
3) Expansion of sales and service operations in Strategic Markets, and
4) Promotion of continuous Kaizen (improvement) by strengthening workplace capability.
In addition to anchoring and further refining The KOMATSU Way by continuing to engage in Kaizen activities, all employees of the Komatsu Group are also concerting brand management efforts designed to further enhance the relationship with customers and promote mutual growth of Komatsu and customers.
Based on the belief that "its corporate value is the total sum of trust given to Komatsu by society and all its stakeholders," Komatsu is further strengthening its corporate governance to ensure sound and transparent management, while improving management efficiency. Being committed to promoting thorough compliance, Komatsu will also ensure all employees share The KOMATSU Way. In addition to improving its business performance, Komatsu will facilitate both the development of corporate strength and the achievement of social responsibility in a well-balanced manner.
On behalf of the members of the Board, we would like to extend our sincere appreciation to our valued shareholders, customers and business partners around the world for their support.
August 2012
