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Questions and Answers at the Conference on Results for Nine months ended December 31, 2010
(Click the questions for the corresponding answers.)

Q1: What are the factors of difference in segment profit of the construction, mining and utility equipment business between the second quarter [July-September 2010] and the third quarter [October-December 2010]? Similarly, what factors are you anticipating for the difference in segment profit between the third and fourth [January-March 2011] quarters?

Q2: You have made upward revisions of projected full-year net sales by 55 billion yen and operating income by 30 billion yen. Compared to net sales, operating income shows a larger rate of growth. What are the positive factors other than an increase in volume of sales?

Q3: You are anticipating that fourth-quarter sales in China will increase by about 40% from the fourth quarter last year, to about 120 billion yen. How much growth of market demand are you projecting? How about your production capacity in relation to market growth?

Q4: You have revised upward your projections for full-year results. Are you estimating that fixed costs will also increase? How about the next fiscal year?

back to top Q1
What are the factors of difference in segment profit of the construction, mining and utility equipment business between the second quarter [July-September 2010] and the third quarter [October-December 2010]? Similarly, what factors are you anticipating for the difference in segment profit between the third and fourth [January-March 2011] quarters?

A1
Third-quarter segment profit increased by 6 billion yen from the second quarter in the construction, mining and utility equipment business. In breakdown, while positive factors included about 10 billion yen from increased volume of sales and about 2 billion yen from improved selling prices, negative factors included about 3 billion yen from foreign exchange translations and a slight increase in fixed costs. We are anticipating an increase of 14.5 billion yen in fourth-quarter segment profit from the third quarter. In breakdown, while positive factors will include about 18 billion yen from an increase in volume of sales and about 3 billion yen from price realization, negative factors will include a slight increase in fixed costs.

back to top Q2
You have made upward revisions of projected full-year net sales by 55 billion yen and operating income by 30 billion yen. Compared to net sales, operating income shows a larger rate of growth. What are the positive factors other than an increase in volume of sales?

A2
Of the increase of 30 billion yen in operating income, slightly more than half will come from an increase in volume of sales. Other positive factors will include more-than-anticipated price realization as well as more-than-estimated increases in the composition ratio of higher profit regions and products.

back to top Q3
You are anticipating that fourth-quarter sales in China will increase by about 40% from the fourth quarter last year, to about 120 billion yen. How much growth of market demand are you projecting? How about your production capacity in relation to market growth?

A3
We are estimating that unit-based demand for construction equipment will increase by 30 to 35% in the fourth quarter from the previous fourth quarter. Because we are expecting the sales proportion of higher-priced products will grow, our sales should increase at a rate higher than market demand. Concerning our supply capacity of products, we have worked to build up inventories since around the end of last year and ensured the prevention of opportunity loss in our operation.

back to top Q4
You have revised upward your projections for full-year results. Are you estimating that fixed costs will also increase? How about the next fiscal year?

A4
We have controlled fixed costs not to grow year on year through the third quarter of fiscal 2010 as planned, and we should be able to keep fixed costs for the full year at about the same level as the previous fiscal year. Concerning next fiscal year, there are some items, such as development costs, which we will increase strategically, but we hope to keep overall fixed costs at about the same level as the current fiscal year.

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