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Questions and Answers at the Conference on Results for Nine months ended December 31, 2009
(Click the questions for the corresponding answers.)

Q1: How do you feel about third-quarter results (Oct.- Dec. 2009) in comparison with your full- year projection announced in October 2009?

Q2: How about the progress in your inventory adjustment efforts?

Q3: Could you share with us demand for seven major products of construction and mining equipment in the third quarter and your projection for the fourth quarter?

Q4:Do you think that you will be able to achieve your full-year projections of the construction, mining and utility equipment business?

Q5:The industrial machinery and others business recorded a segment loss for the third quarter. Should we expect a similar situation in the fourth quarter?

Q6:Could you share with us your projection for demand in fiscal 2010?

Q7:How about business results for fiscal 2010?

back to top Q1
How do you feel about third-quarter results (Oct.- Dec. 2009) in comparison with your full-year projection announced in October 2009?

A1
In our projection for the full fiscal year which we announced when we disclosed our second-quarter results in October 2009, we revised net sales downward by 100 billion yen but maintained our initial projection for profits. While there are some areas in which we may be slightly behind our projection, I believe that we are making sound progress overall.

back to top Q2
How about the progress in your inventory adjustment efforts?

A2
We already completed the inventory adjustment initiative in the first half period, which involved all our plants worldwide, overseas subsidiaries and distributors, as planned. However, as we are now promoting the Zero Inventory for Distributors program around the world, we will increase inventories on our side for the sake of cutting down distributors' inventories. In this light, we might record smaller sales to our distributors than originally planned.

back to top Q3
Could you share with us demand for seven major products of construction and mining equipment in the third quarter and your projection for the fourth quarter?

A3
Given that there are still some regions where we haven't gotten the final reports, we believe that demand has declined by about 7% worldwide in the third quarter from the previous third quarter. Concerning the fourth quarter, we are anticipating that demand will upturn and increase by over 20% from the fourth quarter a year ago.

back to top Q4
Do you think that you will be able to achieve your full-year projections of the construction, mining and utility equipment business?

A4
We are expecting to increase fourth-quarter sales by about 65 billion yen over the third quarter, because we should be able to enjoy a considerable increase of demand in China, Southeast Asia and other countries. Orders for mining equipment have been finalized as well. Accordingly, we should be able to increase segment profit by about 20 billion yen for the year. If all preconditions are met, we believe that we will be able to achieve our projections for both sales and profits.

back to top Q5
The industrial machinery and others business recorded a segment loss for the third quarter. Should we expect a similar situation in the fourth quarter?

A5
There were two main factors for the segment loss for the third quarter in the industrial machinery and others business. First, machines which we sold to a developing country were their first models, therefore they offered a low margin. Second, we had a small amount of high-profitability service revenues due to a seasonal factor. In this light, we believe we should be able to improve fourth-quarter segment profit to a break-even point.

back to top Q6
Could you share with us your projection for demand in fiscal 2010?

A6
We are currently working to finalize it. As of today, we are expecting that demand in Japan and Europe will remain sluggish. In Japan, we've had some merits, such as public investment and the first supplementary budget, but we believe that there will be even fewer public-sector projects in fiscal 2010 and beyond. Concerning Europe, we are expecting that demand will continue to stay at the bottom on par with the current fiscal year. Meanwhile, we feel basically positive about other regions. Among them, China should continue to generate a high level of demand. We also believe that demand for mining equipment should sustain upward momentum. Accordingly, we are anticipating that overall demand will increase from the current fiscal year.

back to top Q7
How about business results for fiscal 2010?

A7
We are expecting a considerable increase in operating income for the following major reasons in addition to an increase in the volume of sales against the backdrop of demand growth. First, we should be able to eliminate all losses resulting from non-operating time of our plants thanks to the recovery of their operating rate. Second, we should be able to reduce our production costs mainly due to lower prices for steel materials. Third, we should be able to further reduce our fixed costs by taking advantage of structural reform benefits. Lastly, we won't incur structural reform expenses which we have recorded for the current fiscal year.

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