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Interview with President and CEO12345678910

Q10.Please discuss your projection of business results for FY2013, the first year of the new mid-range management plan.

We are assuming the foreign exchange rates of the Japanese yen in FY2013, to be JPY95 per USD, a depreciation of JPY12.5 from FY2012, JPY123 per EUR, a depreciation of JPY16.3, and JPY15.3 per RMB, a depreciation of JPY2.1.

For FY2013, we are projecting that consolidated net sales should amount to JPY2,050 billion, up 8.8% from FY2012, operating income should reach JPY305 billion, up 44.1%, operating income ratio should increase by 14.9%, and ROE should improve to 14.6%

With respect to mining equipment, we are anticipating that multinational mining companies will curtail capital investment, as uncertain conditions are remaining over the prices of mineral resources, centering on coal. Compared to FY2012, our record-high year of sales, we are estimating a decline in sales for FY2013 on a volume basis which excludes the effects of foreign exchange translation.

Meanwhile, demand for construction equipment is remaining strong in Japan, where full-scale reconstruction projects are expected to start in the earthquake and tsunami destroyed regions, as well as in North America, where demand is brisk in the rental and housing sectors. In Indonesia, where demand nose-dived last year, it is beginning to recover. In China, where demand has remained sluggish since FY2011, it is seemingly bottoming out, centering on small models.

With respect to the construction, mining and utility equipment segment in FY2013, we are expecting that volume of sales will decline slightly from FY2012, but sales after internal transactions should increase by 10.2% to JPY1,848 billion, as affected by the Japanese yen’s depreciation. Similarly, segment profit should advance by 44.5% to JPY302 billion, with the help of reduced fixed costs and improved selling prices, which have resulted from our continuous efforts, in addition to the Japanese yen’s depreciation. In the industrial machinery and others segment, while demand for presses and machine tools remains steady in the automobile manufacturing industry, we estimate that both sales and segment profit will decline slightly from FY2012, as mainly affected by sluggish demand for wire saws.

As we face these market conditions, while making continuous efforts to increase selling prices and cut down costs, we are also working to expand sales of high value-added products on the construction equipment market, such as new emission standards-certified models, for example, Tier 4 in North America, to reinforce North American distributors’ rental businesses, and to expand the aftermarket business, in particular, to advance profits.