Reporting Expanded Sales for the First Six-Month Period and 2-Yen Increase in Interim Cash Dividend per Share

Komatsu Ltd. announced today its business results for the first six-month period of the fiscal year ending March 31, 2009. Highlights are described below.

Consolidated net sales for the first six-month period totaled ¥1,211.2 billion (US$11,427 million), registering an increase of 12.2% from the corresponding period a year ago. In the construction, mining and utility equipment business, while facing such negative factors as sluggish demand in Japan, the United States and Europe, sharp depreciation of the U.S. dollar and South African rand against the Japanese yen, Komatsu continued to expand sales by capitalizing on resource development around the world and infrastructure development centering on emerging economies. Also in the industrial machinery and others business, Komatsu boosted sales over the corresponding six-month period a year ago. The strong growth in sales partly reflects the fact that KOMATSU NTC LTD. (formerly NIPPEI TOYAMA Corporation) became a consolidated subsidiary in March 2008.

With respect to profits, Komatsu particularly concerted efforts to expand the sales volume of equipment and increase selling prices; however, operating income for the six-month period under review declined by 2.0% from the corresponding period a year ago as affected by the depreciation of the U.S. dollar and South African rand. Net income from continuing operations before income taxes, minority interests and equity in earnings of affiliated companies decreased 1.2% from the corresponding period a year ago, to ¥156.7 billion (US$1,479 million) for the six-month period under review. Net income for the first six-month period amounted to ¥100.3 billion (US$947 million), 3.3% less than the corresponding period a year ago.

While the financial turmoil centering on the United States and Europe continues, we are witnessing drastic drops in currencies of resource-rich emerging economies in addition to the U.S. dollar and euro. We are also projecting that demand for earthmoving equipment will remain slack in Japan, the United States and Europe. By considering these unfavorable factors, we have changed the projection for business results for the fiscal year ending March 31, 2009, which was announced on April 30, 2008, as follows.

With respect to foreign exchange rates on which the new projection is based, Komatsu has changed the assumptions of average rates for the third and fourth quarters (October 1, 2008 - March 31, 2009) as follows: ¥95 per US$1 and ¥120 per EUR1. Accordingly, Komatsu has also changed the assumptions of average rates for the full fiscal year (April 1, 2008 – March 31, 2009) as follows: ¥101 per US$1 and ¥141 per EUR1, compared to the initial assumptions of ¥103 per US$1 and ¥160 per EUR1.

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