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Questions and Answers at the Conference on Results for Three months ended June 30, 2010
(Click the questions for the corresponding answers.)

Q1: With respect to the construction, mining and utility equipment business, please break down the difference in segment profit for the first quarter under review [April through June 2010] and the last fourth quarter [January through March 2010].

Q2: Based on your current projection for interim results, we can see that segment profit of the construction, mining and utility equipment business for the second quarter [July through September 2010] will decline by about 1.3 billion yen from the first quarter. Please explain.

Q3: In your revised projections for full-year results, while sales of the construction, mining and utility equipment business will increase by 45 billion yen from the previous projections, segment profit will advance by 1.8 billion yen. Compared to sales, segment profit has a considerably larger rate of growth. Please tell us about the influential factors other than volume of sales.

Q4:What about the effects of higher prices of steel and other materials on production costs?

Q5:Against the backdrop of expanding demand for construction equipment, are you anticipating any potential problems in parts procurement and other areas?

Q6:Please elaborate on the Traditional Markets of Japan, North America and Europe. In Japan demand for new equipment increased by 12% in the first quarter under review from the previous first quarter, but growth of your sales was low at 5%. By comparison, in North America and Europe your sales grew at a higher rate than that of demand. What are the reasons?

back to top Q1
With respect to the construction, mining and utility equipment business, please break down the difference in segment profit for the first quarter under review [April through June 2010] and the last fourth quarter [January through March 2010].

A1
Segment profit for the first quarter increased by some 15 billion yen to 54.2 billion yen from 38.9 billion yen for the fourth quarter. Specifically, the volume of sales resulted in a gain of about 8 billion yen, sales prices brought about some 2 billion yen, variable production costs translated into a benefit of some 2 billion yen, and fixed costs improved by about 2.5 billion yen.

back to top Q2
Based on your current projection for interim results, we can see that segment profit of the construction, mining and utility equipment business for the second quarter [July through September 2010] will decline by about 1.3 billion yen from the first quarter. Please explain.

A2
This decline is mainly attributable to a seasonal factor in China. In the second quarter, the post-Chinese New Year sales season is behind, and thus demand will stabilize. We are estimating that second-quarter sales of construction, mining and utility equipment will decline by some 30 billion yen from the first quarter, and segment profit, by about 9 billion yen. Additionally, we are also anticipating that foreign exchange rates will translate into about 3.5 billion yen on the negative side and fixed costs will increase by about 1.5 billion yen.

back to top Q3
In your revised projections for full-year results, while sales of the construction, mining and utility equipment business will increase by 45 billion yen from the previous projections, segment profit will advance by 1.8 billion yen. Compared to sales, segment profit has a considerably larger rate of growth. Please tell us about the influential factors other than volume of sales.

A3
In view of the fact that operating rates of our plants are improving, we are expecting more increased benefits of improved productivity than initially anticipated.

back to top Q4
What about the effects of higher prices of steel and other materials on production costs?

A4
While it is possible that rising prices for steel and other materials in and after the second quarter will result in an increase of production costs, we are planning to absorb that increase by further improving productivity and raising selling prices.

back to top Q5
Against the backdrop of expanding demand for construction equipment, are you anticipating any potential problems in parts procurement and other areas?

A5
At present, we have no problems. However, the operating rate of our Oyama Plant where we manufacture engines and hydraulic systems is becoming higher. To ensure a trouble-free supply of castings, which are used for engines and hydraulic systems, we have recently expanded the production capacity of Komatsu Castex Ltd. We are going to be well prepared to increase production volume.

back to top Q6
Please elaborate on the Traditional Markets of Japan, North America and Europe. In Japan demand for new equipment increased by 12% in the first quarter under review from the previous first quarter, but growth of your sales was low at 5%. By comparison, in North America and Europe your sales grew at a higher rate than that of demand. What are the reasons?

A6
We believe that Japanese, North American and European demand has bottomed out. In Japan, because new equipment accounts for about one third of total domestic sales, first-quarter sales did not increase as much as demand did. In North America and Europe, because we worked on the inventory adjustment of our distributors last year, first-quarter-sales grew at a higher rate than that of demand.

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