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Questions and Answers at the Conference on Results for Three months ended June 30, 2011
(Click the questions for the corresponding answers.)

Q1: With respect to the construction, mining and utility equipment business, please tell us the change and its factors for segment profit from the preceding quarter (January-March, 2011) to the first quarter under review (April-June, 2011).

Q2: How successfully have you been improving segment profit of the construction, mining and utility equipment business in light of the initial plan?

Q3: Although the Chinese market is slowing down today, you haven’t changed the projection for business results for the current fiscal year. Please explain the reasons.

Q4: Could you tell us the current and future market conditions in China?

Q5: How about your projection of demand for construction equipment? Is there any change from the initial projection (April 27)?

back to top Q1
With respect to the construction, mining and utility equipment business, please tell us the change and its factors for segment profit from the preceding quarter (January-March, 2011) to the first quarter under review (April-June, 2011).

A1
Compared to segment profit for the preceding quarter, first-quarter segment profit declined by about 3.5 billion yen to 60.8 billion yen. More specifically, declined sales from the preceding quarter translated into a decline of operating profit by about 10 billion yen; however, we were able to further reduce fixed costs, improve selling prices and cut down production costs by about 6.5 billion yen from the preceding quarter. The difference comes to about 3.5 billion yen. While segment profit declined, segment profit ratio further improved from 13.7% to 13.9%.

back to top Q2
How successfully have you been improving segment profit of the construction, mining and utility equipment business in light of the initial plan?

A2
Although fixed costs for the first quarter under review increased by 3.5 billion yen from the previous first quarter a year ago, we were able to cut them down by 2.2 billion yen from the initial plan. Furthermore, while we planned to reduce fixed costs together with improvement of selling prices and lowering production costs for the current fiscal year by 25 billion yen from fiscal 2010, we have already generated positive results worth about 10 billion yen in the first quarter alone. Therefore, we are doing quite well.

back to top Q3
Although the Chinese market is slowing down today, you haven’t changed the projection for business results for the current fiscal year. Please explain the reasons.

A3
As shown on page 14 of the hand-out materials, we are estimating that full-year sales in China will be smaller than our projection at the beginning of the current fiscal year. Meanwhile, market conditions are better than our expectations in Strategic markets other than China and Traditional Markets as well as for mining equipment and parts. All combined, we believe we should be able to achieve our initial projection for business results. With respect to profits for the full year, we have been successfully improving selling prices, production and fixed costs and other matters coupled with the percentage of mining equipment and parts, which have higher margins than construction equipment, is growing in total sales. Therefore, we should be fine in achieving projected profits.

back to top Q4
Could you tell us the current and future market conditions in China?

A4
While we are projecting that the second and third quarters (July-September and October-December, respectively) will be lower than the corresponding periods a year ago, we are expecting that demand will recover in the fourth quarter (January-March, 2012) on par with the previous fourth quarter. As the next Chinese New Year will start 11 days earlier than this year, the sales season should begin earlier. Therefore, fourth-quarter demand should have this addition.

back to top Q5
How about your projection of demand for construction equipment? Is there any change from the initial projection (April 27)?

A5
We have revised upward in all regions except for China as shown in the table below.

	Initial projection	Current projection
Japan (excl. the rental sector)	+/-0%	+35% -- +45% (+15% -- +20%)
North America	+25%	+25% -- +30%
Europe	+15%	+20% -- +25%
China	+10%	-5% -- -10%
Other Strategic markets	+15%	+15% -- +20%
Total	+13%	+13%

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