Komatsu Ltd S/Adr

I'm Horikoshi, CFO. I will explain the business results for the second quarter FY2023. On page 4, I will explain the highlights for the second quarter FY2023. Exchange rates were 144.2 yen to a dollar, 157.3 yen to euro, and 95.4 yen to Australian dollar, yen depreciated to major currencies of dollar, euro, and Australian dollar year-on-year. Net sales were 923.4 billion yen, up 8% a year. Operating income was 150 billion yen, up 27%. And operating income ratio went up 2.4 points to 16.2%. Both net sales and operating income increased due to the improvement in selling prices and positive effects of foreign exchange rates. Net sales were record high as those of the second quarter, and operating income was a quarterly record high. On page 5, I explained the segment sales and profit. Sales in construction, mining, and utility equipment increased 8.8% a year to 860.7 billion yen. Segment profit increased 36.6% to 142.4 billion yen. And segment profit ratio increased 3.3 points to 16.5%. Sales in retail finance increased 14.2% a year to 24.6 billion yen, and segment profit decreased 7% to 6.6 billion yen. Sales in industrial machinery and others decreased 9.3% a year to 44.6 billion yen, and segment profit decreased 66.6% to 2.5 billion yen. I'll explain the causes of difference of each segment later. Page 6 shows the sales by region of construction mining and utility equipment. Sales of construction mining and utility equipment increased 9.1% year-on-year to 860.6 billion yen. By region, sales in CIS, China, and Asia decreased, but sales in North America and Latin America increased substantially. The ratio of sales in traditional market was 45% and that in strategic market was 55%.

Page 7 shows highlights for the first half of FY2023. The actual rates were 140.3 yen to the dollar, 152.5 yen to the euro, and 92.6 yen to the Australian dollar. The yen depreciated against the dollar and the euro and appreciated against the Australian dollar. Compared with the last year, for the first half of FY23, net sales increased 12.6% to 1,823 billion yen. Operating income increased 40.3% to 297 billion yen, with income ratio up 3.2 percentage points to 16.3%. Both sales and OP increased due to the positive effects of increased sales volumes, foreign exchange rates, and higher selling prices. Net sales were the highest ever for the first half of a year, and operating income, operating margin, and net income were highest ever for a six-month period. Net income increased 26.4% to 205.5 billion yen, which was highest ever for a six-month period, as I said earlier. The dividend at the end of Q2 is 72 yen per share, an increase of 3 yen from the initial forecast of 69 yen. Page 8 shows segment sales and profits. Net sales in construction, mining and utility equipment increased 13.4% to 1,707.6 billion yen, and the segment income increased 49.7% to 280.8 billion yen. Net sales in retail finance increased 14.5% to 47.5 billion yen, and the segment income decreased 12.5% to 13 billion yen. Net sales in industry machinery and others increased 1.6% to 85 billion yen, released segment income decreased 59.8% to 4.4 billion yen. I will discuss variance in each segment later in my presentation. Page 9 shows construction, mining and utility equipment, sales by region. Sales to outside customers increased 13.3% to 1,702,000,000,000 yen. Sales in North America, Latin America, and all other regions increased, although sales in the CIS and China regions decreased. The ratio of sales in traditional markets was 45%, while that in strategic markets was 55%.

Page 10 shows the causes of difference in sales and segment profit in the construction, mining, and utility equipment segment. Sales increased by 201.4 billion yen a year, mainly due to the positive effects of increased volume, foreign exchange rates, and improved selling prices. Segment profit increased by 93.3 billion yen a year, mainly due to the positive effects of improved selling prices and foreign exchange rates. The segment profit ratio increased by 4.0 percentage points year-near to 16.4%. Page 11 shows the status of the retail finance segment. Assets increased from the end of the previous fiscal year mainly due to the effect of foreign exchange rates. New contracts increased year and year, reflecting foreign exchange rates and increased sales in the construction equipment. Revenues increased by 6 billion yen due to the positive effects of interest rate hikes and foreign exchange rates. Segment profit decreased by 1.9 billion yen year-on-year mainly due to the absence of a gain on reversal of allowance for doubtful accounts recorded in North America for the corresponding period a year ago. Page 12 shows sales and segment profit of the industrial machinery and other segment. Sales of this segment increased 1.6% year-on-year to 85 billion yen. Segment profit declined by 59.8% year-on-year to 4.4 billion yen, and segment profit ratio was down 7.9 percentage points to 5.2%. Sales of large presses for the auto industry increased but profit decreased due to a decline in maintenance revenues for Exima Laser, which have high profit margins against the background of declining demand for semiconductors globally. I will explain the consolidated balance sheet on page 13. Total assets were 5 trillion 404.1 billion yen, an increase of 528.2 billion yen from the end of the previous fiscal year partly due to the weaker yen. Inventories increased by 264.3 billion yen from the end of the previous fiscal year mainly due to the yen depreciation and increased demand for mining equipment and parts. Shareholders' equity ratio increased by 0.9 points from the end of the previous fiscal year to 53.0%. Net DE ratio was 0.29. That is all from me.