Launching New Mid-Range Management Plan "Global Teamwork for Tomorrow"

We, at Komatsu Group, have just launched the new mid-range management plan "Global Teamwork for Tomorrow" for three years, from April 2010 to March 2013. This new name expresses our determination to generate further growth through teamwork among all employees and with distributors and suppliers around the world, as we look and move ahead. We are going to strive to improve business results and enhance our corporate value, as each and every one of us proactively works on the activities of importance spelled out in this new management plan.

To improve our profitability, strengthen our financial position, enhance our market position in Greater Asia and so forth, We worked on the "Global Teamwork for 15" mid-range management plan for three years, from April 2007 to the end of March 2010.

[Phase 1: April 1, 2007 - September 30, 2008]
For the fiscal year ended March 31, 2008, we attained an operating income ratio of 14.8%, virtually achieving the goal of 15%, against the backdrop of good tailwind on the market in addition to our own efforts, such as the development of DANTOTSU products. We sustained a high ratio up through the first half of the following fiscal year.

[Phase 2: October 1, 2008 (after the financial crisis triggered in the United States) - March 31, 2010]
In the wake of the financial crisis triggered in the United States in September 2008, world economies went into recession, reducing the volume of global demand for construction equipment to half the size of the peak period recorded in April through June, 2008. We also weathered a similarly drastic drop in demand in our other businesses. In response to this drastic change in our business environment, we quickly promoted structural reforms, such as the reorganization of production on a global scale and consolidation of sales operation, and cut down our inventories and fixed costs. As a result, we have sculpted our corporate structure into a leaner and stronger entity.

[April 1, 2010: Launched the new mid-range management plan "Global Teamwork for Tomorrow"]
Today, market demand for construction and mining equipment has upturned for recovery in China and other emerging countries in Asia and Latin America. We anticipate that economic growth in these emerging countries will drive global demand upward. We are going to turn our rudder sharply again for growth as we capitalize on market recovery by taking advantage of our solid corporate strength built through previous structural reforms.

In the "Global Teamwork for Tomorrow," we have positioned China, Asia, Oceania, Latin America, Africa and some other emerging economies as "Strategic Markets." Together with this move, we are going to work on the following activities of importance in order to further refine our accumulated strengths, such as IT applications, development of key components, manufacturing technologies, global sales and service networks, and flexible procurement and production. We will generate positive outcomes. We are also continuing our efforts to anchor The KOMATSU Way by encouraging all employees of the Komatsu Group to acquire it through their Kaizen (improvement) activities, while emphasizing the importance of brand management designed to build on relationships with customers and promote mutual business growth with them. We are going to materialize these two efforts in the form of human resource development needed for global business expansion.

1)Promotion of IT Applications
We have refined our IT applications mainly in the domain of construction and mining equipment as represented by KOMTRAX (Komatsu Machine Tracking System) for construction equipment and Autonomous Haulage System for use in large-scale mines. We are continuing our applications of leading-edge IT to machine management, machine control and construction management to enhance our product competitiveness. We are also going to proactively promote IT applications to industrial machinery and forklift trucks. Furthermore, we are going to advance our utilization of KOMTRAX-originated information to improve customers' productivity and our sales and production planning.

2)Development of Environment-Friendly Products
To help our customers reduce CO2 emissions from their equipment, we are going to advance our hybrid and HST (hydrostatic transmission) technologies for construction equipment and forklift trucks and our AC Servo technology for presses in the industrial machinery business. With respect to hybrid hydraulic excavators, in particular, we are going to lead other companies in worldwide marketing. In the domain of mining equipment, we are going to generate steady results in the biodiesel fuel project we have recently started.

Starting in and after 2011, the new emission control regulations which require further reduction of NOX (nitrogen oxides) and PM (particulate matters) will be effective in Japan, the United States and Europe. We are going to continue our efforts to develop new regulations-compliant products by integrating leading-edge technologies into our strategic advantage of in-house development and manufacturing capabilities for engines, hydraulic units and control systems and to ensure their smooth market introduction.

3)Expansion of Sales and Service Operations in Strategic Markets
In strategic markets with high growth potential and in the domain of mining equipment, we are going to make a difference from competitors by not only supplying products featuring excellent QCDS (quality, costs, delivery and safety) but also enhancing operating rates of customers' equipment through quick and responsive delivery of parts and service. To this end, we are going to upgrade our sales and service capabilities by developing and strengthening distributors, expanding service support bases, reinforcing parts and Reman businesses and supporting customers through IT applications. Also, in the domains of industrial machinery and forklift trucks, we are going to promote more synergy effects with the construction equipment operation and improve sales and service networks in response to an expanding weight on strategic markets centering on China.

4)Promotion of Continuous Kaizen (Improvement) by Strengthening Workplace Capability
While growth of emerging economies offers us a great chance to expand our business, we need to expect new competition with companies of emerging economies in addition to conventional competition. To win this global mega competition, it is important for us to continuously refine our capability and cost competitiveness to meet the changes, as we advance our engagement in activities for growth which are defined in the new mid-range management plan. To this end, it is absolutely necessary for us to demonstrate workplace capability, i.e., the power to continue our Kaizen (improvement) activities. With this workplace capability and effective IT utilization, we are going to further heighten our operational flexibility of global production, optimize logistics, and reduce our production costs substantially. We are also going to continue efforts to reform and streamline our administrative work. Through these Kaizen (improvement) activities, we are going to further enhance our workplace capability and promote human resource development.

Based on the belief that "our corporate value is the total sum given to us by society and all our stakeholders," we are further strengthening our corporate governance to ensure sound and transparent management, while improving management efficiency. Being committed to promoting thorough compliance, we will also ensure that all employees share The KOMATSU Way. In addition to improving our business performance, we will facilitate the development of both corporate strength and social responsibility in a well balanced manner.

(end)