• Financial Data
• Business Results
• Annual Reports
• IR Library

• Sales and Profits Gains Reports
• SEC Filings
• Semi-Annual Reports
• Fact Book
• Environmental & Social Reports

• IR Calendar
• Corporate Governance
• Share and Rating

• Stock Information
• Cash Dividends
• Ratings

• FAQ

• Stance on Information Disclosure and Cautionary Statement

Questions and Answers at the Conference on Results for the Year Ended March 31, 2008. (Click the questions for the corresponding answers.)

Q1: Segment profit ratio of the construction and mining equipment business was 16.7%, quite a high level, for the fourth quarter of fiscal 2007, even when the Japanese yen was strong. Please explain the reasons.

Q2: You are projecting an increase of 11% plus in sales of the Construction, Mining & Utility Equipment segment for the current fiscal year ending March 31, 2009. Could you explain the reasons?

Q3: Would you elaborate on the trends of profitability of construction and mining equipment by region for fiscal 2007 and 2008? Please also tell us the trend of profitability of mining equipment.

Q4: With respect to the causes for difference in segment profit of the Construction, Mining & Utility Equipment business for fiscal 2007 and 2008, you are anticipating a gain of 17 billion yen in the net of increased prices of materials and parts, sales prices and production costs reduction and others. How much production costs are you planning to cut down, which depend on your own efforts? Also, please tell us if you can easily cover an increase in prices of materials and parts, including steel materials, with an increase in prices of your products again for the current fiscal year, as you did for fiscal 2007.

Q5: You have announced the projected results for fiscal 2008. Please tell us the major opportunities and risks that you anticipate in relation to the projections.

Q6: Would you tell us your market shares?

Q7: Would you describe a general picture of sales for fiscal 2009, the goal year of your current mid-range management plan?

Q8: Based on the information gained from the KOMTRAX system, can you see any changes in the operating conditions of your machines in different regions? Please also tell us your prediction of demand based on KOMTRAX data.

back to top Q1
Segment profit ratio of the construction and mining equipment business was 16.7%, quite a high level, for the fourth quarter of fiscal 2007, even when the Japanese yen was strong. Please explain the reasons.

A1
The fundamental factor an increase in profits resulting from expanded volume of sales in the fourth quarter, that is, January through March 2008. In addition to substantial growth of demand in China and other markets, we were able to solve all shipping problems which had delayed our delivery up to the fourth quarter.

back to top Q2
You are projecting an increase of 11% plus in sales of the Construction, Mining & Utility Equipment segment for the current fiscal year ending March 31, 2009. Could you explain the reasons?

A2
Roughly speaking, while we are anticipating 11% growth in global demand, plus factors, such as increases in prices and market shares, will be offset by the foreign exchange rates with the Japanese yen’s appreciation. In this light, we are projecting that the growth of our sales will remain about the same level of demand growth.

back to top Q3
Would you elaborate on the trends of profitability of construction and mining equipment by region for fiscal 2007 and 2008? Please also tell us the trend of profitability of mining equipment.

A3
For fiscal 2007 ended March 31, 2008, operating profit ratio was 16%. When we breakdown this figure to domestic and overseas ratios, we have about 6% in Japan and about 18% overseas. Of the overseas regions, only China was above this average ratio of 18%, and the ratios were about the same as the average figure in the rest of the regions. In North America, we are anticipating a slight decline as affected by the Japanese yen’s appreciation.
Operating profit ratio of mining equipment, including parts, was slightly better than the average figure of 16% for construction and mining equipment. For the current fiscal year, we are anticipating a further improvement in operating profit ratio because their rate of growth in sales should be much higher than that of the Construction, Mining & Utility Equipment segment, while only a small increase is expected in overall fixed costs.

back to top Q4
With respect to the causes for difference in segment profit of the Construction, Mining & Utility Equipment business for fiscal 2007 and 2008, you are anticipating a gain of 17 billion yen in the net of increased prices of materials and parts, sales prices and production costs reduction and others. How much production costs are you planning to cut down, which depend on your own efforts? Also, please tell us if you can easily cover an increase in prices of materials and parts, including steel materials, with an increase in prices of your products again for the current fiscal year, as you did for fiscal 2007.

A4
We reduce our production costs by about 10 billion to 20 billion yen every year. For the current fiscal year, we are planning to make the same level of cost reduction as before. With respect to an increase in prices of materials and parts, we should be able to cover with price increases of our products.

back to top Q5
You have announced the projected results for fiscal 2008. Please tell us the major opportunities and risks that you anticipate in relation to the projections.

A5
We believe there are three risks. First, we are projecting that an increase in prices of raw materials, including steel materials, will have a larger impact on our results for the current fiscal year than before. Second, we need to closely monitor any changes in demand for construction equipment in Europe because it is slowing in Western Europe today. And third, it’s the shipment problem. We must double our efforts in managing vessel arrangement in about one and a half years.
With respect to opportunities, in the regions other than Japan, North America and Europe, we can expect an increase in sales over fiscal 2007 especially in China, as long as we expand our production capacity and sufficiently supply our products.

back to top Q6
Would you tell us your market shares?

A6
We have been expanding our market share by about 1 point in Greater Asia every year. This has resulted in an increase of our global market share. We are paying special attention to China and Asia, where we hope to further strengthen our market position. However, the market share is not our goal but we believe it is a result of our comprehensive capabilities, including product competitiveness, sales operation, product support and supply capabilities.

back to top Q7
Would you describe a general picture of sales for fiscal 2009, the goal year of your current mid-range management plan?

A7
Let me explain how we are looking at the market conditions for construction and mining equipment, since they are the premise of our projection of sales in the management plan. When we developed our mid-range management plan last year, we estimated that demand for construction equipment would grow by about 7 to 8% year to year on a unit basis. In fiscal 2007, thriving demand in emerging powers compensated for a decline of North American demand to a great extent, resulting in 15% growth in global demand. For the current fiscal year, we are expecting that growth rate of global demand will be 11%, reflecting a slow down in Europe in addition to slack demand in North America. With respect to fiscal 2009, we are projecting that growth rate of global demand will remain at about the same level as the current fiscal year, sustaining a growth rate of about 10%. Based on this projection, you are welcome to estimate our fiscal 2009 sales.

back to top Q8
Based on the information gained from the KOMTRAX system, can you see any changes in the operating conditions of your machines in different regions? Please also tell us your prediction of demand based on KOMTRAX data.

A8
In China, Komatsu machines remain at a high rate of use, indicating virtually no change in hours of use by day, week or month. In view of the fact that hours of use haven’t declined in spite of an increase of units delivered, we believe that demand is still larger than supply.
We are currently using KOMTRAX data to predict demand in two to three months. It’s still difficult to predict longer-range market demand. Furthermore, we don’t have a sufficient amount of KOMTRAX data to conduct accurate analyses in North America and Europe. We believe that we need more machines equipped with the KOMTRAX delivered on the market in these regions, and that it will take one to two years from now for us to conduct analyses in detail.