Komatsu has recently embarked on the "Move The World. KOMATSU 5-800" mid-range management plan for the year ending March 31, 2006. With "Move The World," we express our firm determination to "move" the hearts of our customers around the world, as each and every employee of the Komatsu Group remains committed in Quality and Reliability and provides products and services that customers are happy to own. By doing so, we will work to accomplish record-high operating income of \800 Oku (Japanese denomination for 100 million) or \80 billion for the fiscal 2006 ending March 31, 2006. The number "5" means that we are going to achieve ROA of 5%.
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KOMATSU Launches the Mid-Range Management Plan "Move The World. KOMATSU 5-800"
Goals of the "Move The World. KOMATSU 5-800" Plan (Consolidated)
Note:
1) Operating profit stated above is the sum of segment profit. In conformity with Japanese accounting principles, operating income is obtained by subtracting cost of sales and selling, general and administrative expenses from net sales.
2) ROA = Pre-tax income / ((Total assets at the beginning of the year + Total assets at the end of the year) / 2)
3) Net DER = (Interest-bearing debt - Cash and time deposits) / Shareholders' equity
| Basic Stance for the "Move The World. KOMATSU 5-800" Plan | Komatsu had faced tough conditions for the past few years, represented by prolonged downturn of the world economies. Under such an environment, since October 2001, Komatsu has worked to strengthen its business practices by aggressively carrying out the Reform of Business Structure project, which centers on the New Growth Strategy for the Construction and Mining Equipment Business, reduction of fixed costs and substantial cutbacks on production costs. As a result, Komatsu made the first step for a V-shaped recovery of its business performance for the previous fiscal year. We have set a clear management goal to renew our record-high operating income of \78.7 billion for the fiscal year ended December 31, 1982. To accelerate the recovery speed of our business performance, we will seize the opportunities of improving market conditions with self-driven, decisive actions, as we push forward the Reform of Business Structure project, which has generated successful results. All Komatsu Group employees worldwide, including top management, are resolutely determined to work with speed on above tasks and strive to accomplish management goals. To accomplish the above management goals, we have identified two concepts, i.e., implementation of management in speed and realization of a business structure for high profitability. We will establish a corporate strength capable of meeting changes in the business environment promptly and accurately across the board, from management decision-making to everyday work for each and every employee. We will also continue our efforts to reform our business structure (by reducing fixed and production costs, etc.), facilitate efficient utilization of assets and further strengthen earnings power. |
| Management Strategy | In addition to construction and mining equipment, we have placed "industrial-use machinery," such as metal-sheet machines and forging presses, forklift trucks and forestry equipment, as Komatsu's core business, in which we can demonstrate advantages of our superior manufacturing. In the "Move The World. KOMATSU 5-800" mid-range management plan, there will be no change in what Komatsu has to do. We are placing our utmost efforts on the following five management tasks. 1) To accelerate the implementation of the New Growth Strategy for the Construction and Mining Equipment Business Demand for construction and mining equipment has entered a recovery phase in North America, the largest in the world. We also anticipate that demand for our equipment will continue to grow steadily in a mid range in developing markets such as China, Russia, Southeast Asia and the Middle East, where Komatsu has enjoyed a strong market position. Against this backdrop, we are going to reinforce our product and regional strategies and demonstrate the advantages of our extensive international networks as a full-line manufacturer in order to enhance our global market position further. In Japan, we are accelerating the development of new IT-based, world's pacesetting business models to expand our business in the downstream markets of rental and used equipment, parts and service, as we take advantage of a rich stock of Komatsu machines owned and used by our customers. 2) To reinforce our competitiveness based on the "Spirit of Manufacturers" Manufacturing is the source of Komatsu's competitiveness. We will further promote our successful reform efforts based on the "Spirit of Manufacturers" commitment. We will converge our efforts to develop Unique and Unrivaled products, achieve the top cost-competitive level in each region of the world where we operate, and build on our unique manufacturing technologies. 3) To facilitate selective focus on the criteria of technological advantage and profitability We will further promote our selective focus by evaluating all business operations of the Komatsu Group by the criteria of progress of differentiation based on technological advantages and above-the-average profitability of the respective industries which they belong to. For research, which is the key for innovation, we have shifted our R&D force to the fields of construction and mining equipment from electronics, strengthening our technological capabilities in the core business. 4) To reinforce our competitive foundation based on technological capabilities and financial position The basics of competitiveness are technological capabilities (future-leading and today's forefront technologies), strong financial structure and flexible and agile organization and groups with the spirit of challenge held by employees. We will continue to reinforce our competitive foundation by keeping a specified level of investment in our R&D operation, making our financial structure lean and strong and introducing systems and programs to encourage employees to demonstrate their spirit of challenge. 5) To further strengthen corporate governance While ensuring neutrality, soundness, transparency and objectivity of management in addition to effectiveness, Komatsu is also going to establish corporate ethics and engage in environmental conservation and safety management even more seriously than before. We are working to maximize the corporate value of the Komatsu Group and make Komatsu a company that will enjoy the greater trust of shareholders and all other stakeholders. |
The cornerstone of Komatsu's management lies in its commitment to Quality and Reliability in order to maximize the corporate value of the Company. This commitment is not limited to delivering safe and innovative products and services which incorporate the viewpoints of customers. It is our most important task to constantly enhance the Quality and Reliability, in a broader sense of the term, of all organizations, businesses, employees and management of the entire Group.
As we push forward the "Move The World. KOMATSU 5-800" mid-range management plan, we remain committed to further enhancing the Quality and Reliability of management and the corporate value of the Company.
Information in the news releases is current on the date of the announcement and is subject to change without notice.
2003/11/07
KOMATSU Corporate Communications
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