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Interview with President and CEO12345678910

Q4.Would you share your thoughts on the accomplishments of the "Global Teamwork for Tomorrow" three-year mid-range management plan which was implemented from April 2010 through March 2013?

Consolidated Business Results for FY2008 through FY2013

Under "Global Teamwork for Tomorrow", we worked on ICT applications for products and parts, product development for improved environmental friendliness and safety, expansion of sales and service operations in Strategic Markets, and promotion of continuous improvement by strengthening workplace capability.

During that three-year period, we weathered dramatic changes in our business environment, as represented by the sharp expansion and fall in demand for construction and mining equipment in China and Indonesia, the dynamic increase and drop in demand for wire saws, and the occurence of the Great East Japan Earthquake. Furthermore, the Japanese yen appreciated against other major currencies considerably, far more than our estimation for the mid-range management plan.

For FY2012 or the final year of the plan, consolidated net sales totaled JPY 1,884.9 billion, operating income, JPY 211.6 billion and net income attribatalle to Komatsu Ltd., JPY 126.3 billion. Regrettably, we weren't able to achieve the targets of the plan. Under such challenging conditions, however, we concerted efforts on the development of high value-added products by focusing on environmental friendliness, safety and ICT, such as hybrid hydraulic excavators and new emission standards-compliant models, worked on the reduction of production costs, as represented by the "Up 30% Productivity Program" at all plants in Japan, promoted the reform of marketing operations, such as the Zero Inventories at Distributors program, and made all-out efforts for continuous reduction of fixed costs under the key concept of "separation of costs from growth". As a result of these efforts to improve profitability, I believe we were able to strengthen our corporate muscle.

Operating Income Ratio

Operating Income Ratio

When you compare the segment profit ratio of the construction, mining and utility equipment business for FY2009, the first year of the "Global Teamwork for Tomorrow" mid-range manegement plan, you can see that we were able to inprove it to 12.4% for FY2012 by compensating for a negative factor of the Japanese yen's appreciation, mainly by improving selling prices and production costs.