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Questions and Answers at the Conference on Results for Six months ended September 30, 2009
(Click the questions for the corresponding answers.)

Q1: Could you tell us how segment profit changed from the first quarter [April - June] to the second quarter [July - September]?

Q2: You have told us that segment profit of the construction, mining and utility equipment business for the first half was adversely affected by foreign exchange rate differences totaling 25 billion yen compared to the first half a year ago. Could you tell us the breakdown by currency?

Q3: I think the rate of growth in sales of the construction, mining and utility equipment business in China for the first half over the first half a year ago looks smaller than that of demand. Were there any other factors besides the foreign exchange rate difference?

Q4:Could share some of your views on the Chinese market for next year and afterward?

Q5:We now understand that you are projecting that demand for mining equipment will decline by 25 to 30% in fiscal 2009 from fiscal 2008. Could you elaborate on your projection a little more?

Q6:What is your projection for sales of the construction, mining and utility equipment business for next fiscal year?

back to top Q1
Could you tell us how segment profit changed from the first quarter [April - June] to the second quarter [July - September]?

A1
It grew by 5.9 billion yen to 13.3 billion yen for the second quarter from 7.4 billion yen for the first quarter. There are two reasons. First, the amount of reduced fixed costs was larger in the second quarter. Second, losses associated with reduced production at plants were smaller in the second quarter.

back to top Q2
You have told us that segment profit of the construction, mining and utility equipment business for the first half was adversely affected by foreign exchange rate differences totaling 25 billion yen compared to the first half a year ago. Could you tell us the breakdown by currency?

A2
More than half was attributable to the U.S. dollar, amounting to about 13 billion yen. We also had a negative effect of about 1 billion yen against the Euro, about 4 billion yen against the Renminbi, and about 2 billion yen against the Australian dollar. We also had negative effects against currencies of other emerging economies.

back to top Q3
I think the rate of growth in sales of the construction, mining and utility equipment business in China for the first half over the first half a year ago looks smaller than that of demand. Were there any other factors besides the foreign exchange rate difference?

A3
The largest part resulted from the foreign exchange rate difference. In addition, the proportion of large models in total demand for hydraulic excavators declined in the first half of the current fiscal year from the first half last year. We believe this was also attributable to the difference.

back to top Q4
Could share some of your views on the Chinese market for next year and afterward?

A4
Current demand in China is being supported by large-scale infrastructure development projects centering on highway and high-speed railway construction as well as publics works in association with urbanizaiton in inner China. These projects are carried out as part of the economic stimulus package worth 4-trillion Renminbi. As these public works should continue at least to the end of next year, we believe that demand for construction equipment will remain strong. Additionally, when the U.S. economy begins to recover, China's export-oriented industries will regain their growth momentum, which will revitalize private-sector demand for construction equipment.

back to top Q5
We now understand that you are projecting that demand for mining equipment will decline by 25 to 30% in fiscal 2009 from fiscal 2008. Could you elaborate on your projection a little more?

A5
Although we are taking a little more conservative stance on unit-based demand compared to the beginning of the fiscal year, it will still remain at a high level of 4,000 units. Thanks to strong sales of parts and service, we are anticipating that sales of the mining equipment business as a whole will decline by only 10% from fisal 2008. Demand for mining equipment changes in tandem with production volume of commodities, such as coal and iron ore. Accordingly, as long as the Chinese economy continues to grow at a certain rate, we believe that demand should remain at a high level around 4,000 units in next fical year and beyond.

back to top Q6
What is your projection for sales of the construction, mining and utility equipment business for next fiscal year?

A6
We cannot say anything specific yet about our projection for next fiscal year. However, we anticipate that we should be able to increase 1) sales in China and Asia, 2) sales of the mining equipment business and 3) sales of the parts and service business from the current fiscal year. We also believe that sales in Japan, North America and Europe are at the bottom now, therefore, we don't think sales in these regions will further drop in the next fiscal year. For the current fiscal year, when we combine 1) sales of equipment in China and Asia, 2) sales of mining equipment and 3) sales of the parts and the service business, we believe combined sales of the three will account for about 70% of total sales of the construction, mining and utility equipment business. Therefore, we believe that our net sales for next fiscal year will change in tandem with the growth rate of sales in these three domains.

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