Komatsu Ltd S/Adr

I am Horikoshi, CFO. I will explain the business results for the first quarter FY2024. Page 4 shows highlights for the first quarter of FY2024. Foreign exchange rates were 155.5 yen to a dollar, 167.5 yen to a euro, and 101.9 yen to Australian dollar, yen depreciated against dollar, euro, and Australian dollar year-on-year. Net sales increased 6.7% year-on-year to 959.8 billion yen, operating income increased 6.8% year-on-year to 157 billion yen, and operating income ratio increased 0.1 point to 16.4%. Net sales and operating income increased due to the positive effects of foreign exchange rates and improved selling prices. Net income increased 4.1% to 109.7 billion yen. Net sales marked the record high for the first quarter and segment profit, operating income, operating income ratio and net income marked the quarterly record highs. Page 5 shows segment sales and profit. Net sales of construction, mining, and utility equipment increased 5.6% year-on-year to 894.3 billion yen. Segment profit increased 2.8% to 142.3 billion yen, and segment profit ratio decreased 0.4% to 15.9%. Net sales of retail finance increased 33.2% year-on-year to 30.5 billion yen, and segment profit increased 20.4% to 7.6 billion yen. Net sales of industrial machinery and others increased 12.6% a year to 45.5 billion yen, and segment profit increased 160.9% to 5 billion yen. I will explain 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 5.8% a year to 891.3 billion. By region, sales increased mainly in North America, Latin America, and Oceania, but decreased in Europe, CIS, and Asia, etc. In North America, Latin America, and Oceania, which marked the sales growth, excluding the foreign exchange effects, sales decreased due to the sales decline in construction equipment.

Page 7 shows the causes of difference in sales and segment profit in the construction, mining, and utility equipment segment. Sales increased by 47.5 billion yen year-on-year as the positive impact of foreign exchange and selling prices outweighed the negative impact of lower volume. Segment profit increased by 3.8 billion yen year-on-year, as the positive impact of foreign exchange and selling prices exceeded the negative impact of lower volume and higher costs. The segment profit ratio went down 0.4 percentage points from the corresponding period a year ago to 15.9%. Page 8 is about the retail finance business. Assets and new contracts increased from previous fiscal year-end and from the corresponding period a year ago, respectively, mainly due to the positive impact of foreign exchange rates. Revenues increased by 7.6 billion yen year-on-year to 30.5 billion yen, and segment profit increased by 1.3 billion yen year-on-year to 7.6 billion yen, mainly due to the positive impact of foreign exchange rates, a rise in the interest-income ratio, and an increase in financing receivables. Page 9 shows sales and segment profit of the industrial machinery and others segment. Sales increased 12.6% from the corresponding period a year ago to 45.5 billion yen. Segment profit expanded by 160.9% to 5 billion yen, and the segment profit ratio rose 6.2 percentage points to 11%. The increase in sales and profit was mainly due to higher sales of large press machines to the automotive industry and a recovery in maintenance revenues of Eximer lasers to the semiconductor industry, which has high margins. Page 10 is about the consolidated balance sheet. Total assets were 6 trillion 37.9 billion yen, an increase of 401.2 billion yen from the previous fiscal year end, mainly due to the weaker yen. Inventories increased by 157.8 billion yen from the end of the previous fiscal year, mainly due to the weaker yen. The shareholders' equity ratio decreased by 1.5 percentage points from the end of the previous fiscal year to 52.3%. Shareholders' equity as of the end of June includes approximately 56 billion yen in of the 100 billion yen maximum amount of share buybacks resolved at the Board of Directors meeting held on April 26, 2024, as they were acquired prior to end of June. The net DE ratio was 0.3 times. That is all for myself.

Next, Mr. Hishinuma, General Manager at Business Coordination Department said, We explain the projection of FY20-24 business results and conditions of major markets. I'm Hishinuma, General Monitor, Business Coordination Department. I'll explain the projection of FY20-24 business results and conditions of major markets. Page 12 shows the outline of projection for FY2024. We have not changed our projection of the full year results of FY2024. The projection of consolidated payout ratio does not take into account the share buyback impact which was decided in the Board of Directors meeting on April 26, 2024. I explained the actual and projected demand for seven major products on the next page onward. From page 13, I will explain the actual and projected demand for seven major products. The chart shows the demand of seven major products, including mining equipment, and the first quarter FY2024 figure is our estimated preliminary figure. In the first quarter, FY2024, demand decreased 7% year-on-year, and in FY2024, we expect demand will decrease between minus 5 and minus 10% year-on-year, which remains unchanged from the projection in April. On the next page onward, I explain the conditions of major markets. Page 14 shows the actual end projected demand in Japanese market. In the first quarter FY2024, demand decreased 4% year-on-year due to a decline in demand for new equipment for rental users. In FY2024, we expect demand will remain almost flat year-on-year, which remains unchanged from the projection in April. Page 15 shows the actual and projected demand in North America market. In the first quarter FY2024, demand decreased 4% year-on-year. Demand for rental and energy decreased, but demand for infrastructure remained steady. In FY2024, we expect demand will decrease between minus 5% and minus 10% year-on-year, which remains unchanged from the projection in April. With the inflation higher than expectation, the U.S., the timing of rate cut was delayed compared to the forecast, but we'll monitor the situation closely going forward. Page 16 shows actual and projected demand in European market. In the first quarter FY2024, demand decreased by 20% year-on-year. Demand for construction equipment decreased, centering on Germany, the United Kingdom and Italy due to the interest rate hikes and high energy prices. In FY 2024, we expect demand will decrease between minus 5% and minus 10% year-on-year, which remains unchanged from the projection in April. Europe turned to interest rate cut in June, but the economic uncertainty still continues and the full-fledged demand recovery is yet to come. Page 17 shows actual and projected demand in Chinese market. This slide shows the demand for hydraulic excavators, excluding mini-shovels. Total demand, including those of local makers, is also shown as a reference. Demand growth is that of foreign makers. In the first quarter FY2024, demand increased by 14% year-on-year. and the total demand including local makers increased 21% year-on-year. In FY2024, we expect demand will decline between minus 20% and minus 30% year-on-year, and the total demand including local makers will decline between minus 10% and minus 20% year-on-year, and they remain unchanged from the projection in April. Sluggish economy triggered by the slumped real estate market remains almost unchanged, but we continue to watch the situation closely going forward.