Recording Impressive Gains in Quarterly Profits and Making Upwards Revisions for Interium and Full-Year Results.

Komatsu Ltd. (President & CEO: Kunio Noji) announced today its consolidated business results for the three months ended June 30, 2007.

Consolidated net sales for the first quarter period of the fiscal year, ending March 31, 2008, reached ¥540.8 billion, up 25.9% over the corresponding first quarter period a year ago. Operating income for the first quarter period advanced to ¥79.6 billion, an increase of 48.6%. Net income for the first quarter period improved 65.4%, to ¥56.4 billion. With all these results above, Komatsu has renewed its record-high first quarter sales and profits. Operating income ratio for the first quarter period improved by 2.2 percentage points over the previous first quarter period, to 14.7%. While the Construction and Mining Equipment segment continued to enhance its business performance, the Industrial Machinery, Vehicles and Others segment steadily advanced its business results.

Note: Segment profit is obtained by subtracting cost of sales and SG&A expenses, from net sales. Sales after elimination of internal sales are used as denominators to obtain segment profit ratio.

With respect to the construction and mining equipment business, we anticipate that global demand will grow more than our earlier projection. More specifically, while demand in the Americas will decline more than our projection, as mainly affected by slowing U.S. housing starts, demand in other areas of the world will increase more.
In addition, by considering foreign exchange gains under Japanese yen's depreciation which we anticipate during our current fiscal year, we are revising our projection of full-year business results which we announced on April 26, 2007.
With respect to foreign exchange rates which are part of the assumption for our projection, we have changed our projections as follows: from ¥115 to ¥119 to US$1 and from ¥150 to ¥161 to EUR1 as the average rates for the first half period of our current fiscal year, and from ¥150 to ¥155 to EUR1 as the average rate for the last half period. As for the average exchange rate against the US dollar for the last half period, we are keeping our earlier assumption of ¥115. For the full year, we have changed our assumptions from ¥115 to ¥117 on average to US$1 and from ¥150 to ¥158 on average to EUR1.

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Cautionary Statement
The announcement set forth herein contains forward-looking statements which reflect management's current views with respect to certain future events, including expected financial position, operating results, and business strategies. These statements can be identified by the use of terms such as "will," "believes," "should," "projects" and similar terms and expressions that identify future events or expectations. Actual results may differ materially from those projected, and the events and results of such forward-looking assumptions cannot be assured.
Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are not limited to, unanticipated changes in demand for the Company's principal products, owing to changes in the economic conditions in the Company's principal markets; changes in exchange rates or the impact of increased competition; unanticipated cost or delays encountered in achieving the Company's objectives with respect to globalized product sourcing and new Information Technology tools; uncertainties as to the results of the Company's research and development efforts and its ability to access and protect certain intellectual property rights; and, the impact of regulatory changes and accounting principles and practices.