Komatsu Ltd S/Adr

This is Horikoshi, CFO of the company. I will go through the highlights of the financial results for fiscal year 2023, which has just ended. As shown on page 4, for FY23, based on the exchange rates of 144.3 yen to the dollar, 156 yen to the euro, and 94.7 yen to the Australian dollar, the yen depreciation against all of the three conspiracies over the previous year levels were recorded. Net sales increased 9.1% year-on-year to 3,865.1 billion yen, and the OP increased 23.7% to 607.2 billion, with income ratio up 1.9 percentage points to 15.7%. Sales and OP increased due to the positive impact of exchange rates and improved selling prices. Net income increased 20.5% to 393.4 billion yen. Net sales, segment profits, operating income, operating margin and net income all reached record highs. ROE was 14.4% up 0.4 percentage points from the previous year. Dividend per share for FY23 is projected at 167 yen up from 144 yen announced in October for a consolidated payment ratio of 40.1%. Page 5 shows sales and profits by segment. In construction, mining, and utility equipment, sales increased by 9.7% to 3,615.2 billion yen, segment profit increased by 29.4% to 574 billion yen, and segment margin increased by 2.4 points to 15.9%. Retail finance revenue increased 20.9% year-on-year to 103.5 billion yen, and segment profit declined 11.1% to 24.2 billion yen. Sales of industrial machinery and others increased by 2.5% to 195.6 billion yen, and segment profit decreased by 54.5% to 10.3 billion yen. I will discuss detailed factor analysis by segment later in my presentation. Page 6 shows sales by region for the construction, mining, and utility equipment segment. Sales increased 9.3% year-on-year to 3,591.4 billion yen. By region, sales increased in North America, Latin America, and Oceania, and decreased in CIS, Asia, and other regions.

Page 7 shows causes of difference in sales and segment profit of construction, mining, and utility equipment. Sales increased by 318.6 billion yen year-on-year, mainly by the positive effects of foreign exchange rates and selling prices. Segment profit expanded by 130.4 billion yen year-on-year, reflecting the positive effects of foreign exchange rates and selling prices, which absorbed decreased volume of sales and increased production and fixed costs. Segment profit ratio was 15.9%, up by 2.4 points year-on-year. Page 8 shows retail finance. Assets and new contracts increased from the previous fiscal year end and from FY 2022, respectively, mainly due to foreign exchange rates. Revenues increased by 17.9 billion yen due to the positive effects of interest rate hikes and foreign exchange rates. Segment profit decreased by 3 billion yen mainly due to the absence of a gain on reversal of our allowance for doubtful accounts recorded in the previous year. Page 9 shows segment sales and profits of industrial machinery and others. Sales increased by 2.5% year-on-year to 195.6 billion yen. Segment profit decreased by 54.5% year-on-year to 10.3 billion yen, and segment profit ratio decreased by 6.5 points year-on-year to 5.3%. Sales increased mainly due to the increased sales of large process for automotive industry, but profit decreased mainly due to the decline in external laser maintenance revenues, which have high margins, affected by a globally declining demand for semiconductors. Page 10 shows consolidated balance sheet. Total assets increased by 760.8 billion yen from the previous fiscal year end to 5,636.7 billion yen, partly affected by depreciation of yen. Inventory use increased by 211.5 billion yen mainly due to the depreciation of yen and increased demand for mining equipment and parts. Commerce Limited shareholder's equity ratio was 53.8%, up 1.7 points, and net debt-to-equity ratio was 0.26. From page 11, I'll explain the progress made in the mid-term management plan. In the current midterm management plan, DANTOS value together to the next. For sustainable growth, which started in FY 2022, we have been acting with three major growth strategies of accelerating growth by means of innovation, maximizing earnings power, and enhancing corporate resilience. And FY 2024 will be the final year of the actions.

First, accelerate growth by means of innovation. In smart construction business, we advance our DX partner program with Japanese customers. In overseas, we expanded sales of smart construction 3D machine guidance. In the mining business, the cumulative number of AHS units installed became 727 units as of the end of March this year. We also started commercial operation of the remote-controlled bulldozers. In response to carbon neutrality, we have introduced four electric models for Japanese and European markets. We also acquired American Battery Solutions, a U.S. battery manufacturer with the aim of developing and producing batteries optimized for construction and mining machineries and accelerating technological development toward carbon neutrality. In addition, we have begun a proof of concept for hydraulic excavators equipped with hydrogen fuel cells. And for super large dump trucks, we have signed a joint development agreement with General Motors on hydrogen fuel cells. Next, for maximizing earning power. In strategic markets, the number of vehicles allocated increased due to expansion of models and region covered by two-line model strategy. In aftermarket business, the number of contracts for extended warranties with maintenance contracts, which leverage our strengths in enhanced component development and production and IoT steadily increase. For enhanced corporate resilience, in addition to activities aimed at building a supply chain that's resistant to geopolitical risks and fluctuation in production volume through cross-sourcing and multi-sourcing, we introduced enterprise risk management. In addition, we continue to work on reforming the way employees work and improving their skills, such as by conducting global engagement survey, promoting diversity inclusion, and developing AI and DX talents. Page 12 shows the progress toward achieving a management target for MTP. In FY2023, with decline in demand, particularly for construction equipment, we actively worked to improve sales price combined with a trend toward a weaker yen and the results of growth strategy and structure reforms. We achieved record sales and operating profits. Regarding business targets, the operating income ratio was 15.7%, an improvement of 1.9 percentage points year-on-year. We will continue to improve sales prices and pursue growth strategy. In terms of efficiency, ROE was 14.1%, exceeding the target of 10%. Regarding the shareholder returns, we will maintain a consolidated payout ratio of 40% or higher. Regarding ESG, we have been selected by the Dow Jones Sustainability Indexes, and we've been rated A by CDP in both climate change and water risk. We also made steady progress in our efforts to reduce CO2 emissions and increase the rate of renewable energy use with a view to achieving our 2030 targets. In the retail finance business, we have achieved our targets for both ROA and net DE ratio. That's all from me.