Corporate Vision · PDF fileCONNECT TOGETHER 2019 4 0 50 100 150 200 250 300 ... Emerging...
Transcript of Corporate Vision · PDF fileCONNECT TOGETHER 2019 4 0 50 100 150 200 250 300 ... Emerging...
FY17-3Q
Corporate Vision
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
Public Relations Strategy Office
Contents
Corporate Vision
Management Plan
1. Management Plan
2. Operating Results & Forecast
3. Regional Trend & Business Strategy
4. Company Outline and Topics
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
3
“CONNECT TOGETHER 2019” 【FY2017-FY2019】
Mid-term Management Plan
2020VISION
“Close and reliable partner" anywhere on the earth with the
best solutions through Kenkijin Spirit
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
4 CONNECT TOGETHER 2019
0
50
100
150
200
250
300
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Go Together 2013 GROW TOGETHER 2016 CONNECT TOGETHER 2019
De
ve
lope
d
co
un
tries
Em
erg
ing
co
un
tries
Ch
ina
Thousand units / Year
Hydraulic excavator global demand
Planting seeds
for growth
Structural reform
Changes/ Connect
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
5
Items 2000 2010 2020
Social Trend
Economic Trend
Construction
Machinery
Industry
Basic performance
(durability/operability)
Environmental responsiveness (global warming countermeasure)
Infrastructure development and urbanization in emerging countries
Labor shortages, aging and
handing down of technology
Increase of crude oil and resource prices Slumping resource prices
Tightening of exhaust
gas regulations
Equipped with
communication function
i-Construction (automation)
Diversification of customer choices
(Lease / Rental / Used etc..)
Changes in Business Environment
Emerging markets (BRICs) Rapid deceleration Remain flat Rapid
expansion Lehman
shock
Energy saving Safety, Productivity, Life cycle
cost
AHS (Autonomous
Haulage System)
Spread to emerging countries
Machinery
management Remote monitoring
Preventive
maintenance
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
6 Business Environment Assumption
0
50
100
150
200
250
09 10 11 12 13 14 15 16 17 18 19
Construction
Thousand
units
Fiscal
year
0
500
1,000
09 10 11 12 13 14 15 16 17 18 19
0
1,000
2,000
09 10 11 12 13 14 15 16 17 18 19
Mining
Units
Restricted investment due to resource prices stuck
at the mid-level.
Lengthening of machinery usage period
Fiscal
year
Significant demand recovery is not expected.
ICT machinery is expected to be widespread in
Japan, the United States, Europe, Australia, etc.
(Over 100t)
(Over 150t)
Fiscal
year
Units
Small and medium-sized hydraulic excavator global demand
Ultra large hydraulic excavator global demand
Rigid dump truck global demand
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
7
Main products
Other product group
Pro
ducts
Skid-steer loader
Crawler crane
Backhoe loader
Bulldozer
Current FY2019 target
Value chain business ratio
New
machinery
Value
chain New
machinery
Value
chain
Marketing
R&D
Production
Procurement
Logistics
Value chain
Renta
l
Fin
ance
New
ma
ch
inery
Used m
achin
ery
Serv
ice
Parts
Parts
recyclin
g
Deepening Value Chain
Customer interests: Safety and productivity improvement, reduction of life cycle cost
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
8
ICT machinery
(Application for i-Construction)
New machinery
sales
Resale (used machinery)
Used machinery
with warranty
Valu
e C
hain
Surv
ey
Desig
n a
nd
constru
ctio
n p
lan
Constru
ctio
n
Inspectio
n
i-Construction Rental
Solu
tion
Environment Responsiveness
Energy saving and efficiency
Automation, Computerization
Machinery which adopt latest
exhaust gas regulation
Hybrid machinery
Electric machinery
Lumada
Remote monitoring Big data analysis Artificial Intelligence
Sensor
Used
machinery
distribution
Value Chain Connect (Construction)
L i f e C y c l e
Pro
duct D
evelo
pm
ent
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
9 Value Chain Connect (Mining)
Trolley spec Safety support system
AHS(自律運転トラック)
• Provision of service solutions
• Development, manufacturing and
sales aftermarket parts
• Casting, manufacturing and distribution
service of casting products
Durability, Reliability Electrification,
Energy saving, Safety Labor-saving, Automation
AHS (Autonomous Haulage System)
Maintenance
management of
main components
Fleet management
Big data analysis Service (M&A)
New machinery
sales
L i f e C y c l e
Pro
duct D
evelo
pm
ent
Valu
e C
hain
S
olu
tion
Remote
monitoring
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
10 Global Restructuring
Capital Investment Plan
Manufac
turing Sales
IT investment
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
11 Global Value Chain
• Provision of service solutions
• Development, manufacturing and sales
aftermarket parts
• Casting, manufacturing and distribution
service of casting products
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
12
Transform to the corporate structure with high adaptability to
changes by improving the profitability and efficiency through value
chain enhancement and business structure reform
Numerical Management Targets
Sales revenue ¥850 billion Foreign exchange rate $1=¥100 / €1=¥110 / RMB1=¥15
GT2016 <FY2016>
CT2019 <FY2019>
Adjusted operating
income ratio 3.7% Over 9%
ROE 2.0% Over 9%
Net D/E ratio 0.46 0.4 or less
Dividend payout policy 31.8% Approximately 30%
or more
< FY2019 preconditions >
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
13
Contribution to community
development
Enhanced initiatives to increase social
infrastructure workforce
Solutions to global environmental issues
Create a corporate value from the mid-/long- term perspective, and Promote information disclosure from the ESG perspective
ESG Management (Strategic CSR)
3 CSV Themes
Three themes having high social expectations and a high level of correlation with our business operations
Basic 5 themes ··· essential contents for realizing the 3 key CSV themes
1. Pursuit of safe, effective
and sophisticated products,
services and working
environments
2. Occupational safety
and work-style reform
3. Development of
global and local
human resources
4. Making better
business transactions
and value chain
enhancement
5. Governance
Integrate the CSR initiatives with the management strategy, and contribute to the social issues through business FY2030
CSV target
Corporate Target
Solution Target
Hybrid machinery
ICT machinery
CSV:Creating Shared Value
Improvement of productivity and safety, reduction of life cycle cost
CO2 saving rate by product (comparison with 2010)▲33%
Management Plan
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
14 ICT/IoT Solution
Solution Linkage is ICT・IoT Solutions provided by Hitachi Construction Machinery to solve
customers’ challenge for “High Safety”, “High Productivity” and ” Low life-cycle cost” with them.
Hitachi Construction Machinery aims to be the partner who is able to solve the customers’ problem together
not only by providing products and system ,but also by sharing the Machinery and working field data with customer.
Management Plan
Contents
Corporate Vision
1. Management Plan
2. Operating Results & Forecast
3. Regional Trend & Business Strategy
4. Company Outline and Topics
Operating Results & Forecast
Operating Results & Forecast
16 I. Summary of consolidated results
・Revenue increased by 35% compared to the previous year due to the increase in sales volume.
・Adjusted operating income and other income increased compared to the previous year.
*1 "Adjusted operating income" is calculated by excluding "Other income" and "Other expenses" from "Operating Income" listed in
Consolidated Statements of Income.
*2 "EBIT" stands for Earnings Before Interests and Taxes, and is calculated by excluding "Interest income" and "Interest expenses" from
“Income before income taxes”
change
Revenue 35%
Adjusted
operating income *1 9.7% 66.0 2.2% 11.0 500%
Operating income 10.0% 68.6 1.6% 8.2 740%
Income before
10.1% 69.2 1.9% 9.4 635%
6.3% 42.9 0.5% 2.5 -
EBIT *2 10.4% 71.3 2.0% 10.1 604%
Rate (YEN/US$) 5.2Rate (YEN/EURO) 10.5
Rate (YEN/RMB) 0.7
income taxes
(billions of yen)
FY2017
1Q-3Q
FY2016
1Q-3Q
683.9 507.0
owners of the parent
Net income attributable to
F
X
111.8 106.6
128.4 117.9
16.7 16.0
Operating Results & Forecast
17 Revenue by geographic region (consolidated)
amount %
Japan 142.3 (21%) 158.8 (31%) -16.4 -10%
Asia 54.9 (8%) 42.3 (8%) 12.6 30%
India 45.6 (7%) 33.9 (7%) 11.6 34%
Oceania 110.6 (16%) 63.4 (13%) 47.2 74%
Europe 71.2 (10%) 58.6 (12%) 12.6 22%
N.America 103.3 (15%) 54.6 (11%) 48.6 89%
L.America 11.7 (2%) 3.4 (1%) 8.3 246%
Russia-CIS 20.0 (3%) 13.4 (3%) 6.5 49%
M.East 11.8 (2%) 14.6 (3%) -2.8 -19%
Africa 34.2 (5%) 24.4 (5%) 9.8 40%
China 78.3 (11%) 39.5 (8%) 38.8 98%
Total 683.9 507.0 176.9 35%
79% 69%
(billions of yen)
FY2017
1Q-3Q
FY2016
1Q-3Qchange
(ratio) (ratio)
Revenue increased by 89% or 48.6 billion yen in North America year on year, by 74% or 47.2 billion yen
in Oceania year on year, and by 98% or 38.8 billion yen in China year on year.
Overseas revenue
ratio
Overseas revenue
ratio
Operating Results & Forecast
18 Mining revenue
68.0 66.2 66.5 66.5 71.4 79.1 72.4
82.597.2
60.3 55.6 44.141.7
27.4
150.4163.4
126.8 122.1115.5
120.8
99.9
0.0
50.0
100.0
150.0
200.0
FY11 FY12 FY13 FY14 FY15 FY16 FY171-3Q
New machine
Parts & Services
(billions of yen)
shows sales ratio against total company sales
[ % ] shows changed ratio from the same period of
previous year
%
18%
21%
16% 15% 15%
16%
15% [ 5%]
[ -5%]
[ 11%]
[ 19%]
[ -1%]
[ 29%]
Revenue of new machines has decreased by 1% year on year due to the production interruption of below 150 tons
dump trucks from this fiscal year, however sales of parts and services have increased by 29% year on year.
Operating Results & Forecast
19 Value chain revenue (*1)
175.7 168.2 144.0 120.8
6.7 69.4
103.4 90.466.9
64.6
279.1265.2
280.3
185.4
0.0
100.0
200.0
300.0
400.0
FY15 FY16 FY171-3Q
FY161-3Q
Rental & others
Solution business
Parts & Services (Construction)
Parts & Services (Mining)
104.3
71.4
89.1
79.1
71.6
72.4
64.8
55.9
(billions of yen) shows sales ratio against total company sales
[ % ] shows changed ratio from the same period of
previous year
%
37% 35%
41%
37%
(*2)
[ -4%]
[ 10%]
[29%]
[ - ]
[ 51%]
(*2)Solution business: Business segment consists of parts manufacturing, sales of parts and services
that are not included in construction machinery business.
Sales of value chain business have dramatically increased by 94.9 billion yen year on year due to the increase
in the sales of parts and service and solution business, which is composed of H-E Parts Group companies and
Bradken Group companies. Also, the ratio in total sales has increased by 4%.
[19%]
(*1) Value chain: Total of Parts & services, Solution business, Rental etc. other than new machine sales.
Total of parts & services
Operating Results & Forecast
20 Comparison of consolidated profit & loss
Adjusted operating income has increased by 55.0 billion yen year on year due to the increased sales volume
of construction machines, the incorporation of the solution business and favorable foreign exchange rates
despite the HSC deconsolidation.
(billions of yen)
Ad
juste
d o
pe
ratin
g
inco
me
(*1)
Sa
les v
olu
me
, mo
del
mix
& o
the
rs
Se
lling
pric
e
11.0
63.8 2.0
11.0 0.6 -22.3
66.0
8.2
55.0 68.6 F
ore
ign
exch
an
ge ra
te
Ma
teria
l co
st
Ove
rhea
d
Ad
juste
d o
pe
ratin
g
inco
me
(*1)
Op
era
ting in
com
e
Op
era
ting in
com
e
Va
riance o
f ad
juste
d
op
era
ting in
com
e
Oth
er o
pera
ting in
com
e
an
d e
xp
en
se
s
*1 "Adjusted operating income" is calculated by excluding "Other income" and "Other expenses" from "Operating Income" listed in
Consolidated Statements of Income.
3.1
Solution business 20.9
HSC deconsolidation -6.8
Construction machinery
business 41.1
Solution business -19.6
HSC deconsolidation 4.7
R&D expense -2.6
US$ 3.9
EUR 3.8
RMB 1.3
2.3
Exp
enses re
late
d
stru
ctu
ral re
form
Operating Results & Forecast
21 Consolidated statement of income
amount
Revenue 683.9 507.0 176.9
Cost of Sales (72.5%) 496.2 (77.1%) 390.7 105.5
SGA expenses (17.8%) 121.7 (20.8%) 105.3 16.4
Adjusted operating income *1 (9.7%) 66.0 (2.2%) 11.0 55.0
Other Income/expenses 2.6 -2.8 5.4
Operating income (10.0%) 68.6 (1.6%) 8.2 60.4
Financial income/expenses -2.3 1.2 -3.5
2.9 0.0 2.8
Income before income taxes (10.1%) 69.2 (1.9%) 9.4 59.8
Income taxes 20.2 4.6 15.7
Net income (7.2%) 49.0 (1.0%) 4.9 44.1
(6.3%) 42.9 (0.5%) 2.5 40.4
66.4 1.3 65.1
(billions of yen)
%
FY2017
1Q-3Q
FY2016
1Q-3Q
change
35%
27%
16%
500%
-
740%
-
Share of profits of investments
accounted for using the equity method -
635%
344%
909%
Net income attributable to
-
Comprehensive income -
owners of the parent
Net income attributable to owners of the parent increased by 40.4 billion yen to 42.9 billion yen compared to
the previous year due to the increase in operating income and share of profits of investments accounted for
using the equity method.
*1 "Adjusted operating income" is calculated by excluding "Other income" and "Other expenses" from "Operating Income" listed in
Consolidated Statements of Income.
Operating Results & Forecast
22 Summary of quarterly consolidated revenue and operating income/loss (ratio)
2015 2016
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Rate (YEN/US$) 102.2 103.9 114.5 119.1 121.4 122.2 121.5 115.5 108.1 102.4 109.3 113.6 111.1 111.0 113.0
Rate (YEN/EURO) 140.1 137.8 143.1 134.2 134.2 136.0 133.0 127.2 122.0 114.3 117.8 121.1 122.2 130.4 133.0
Rate (YEN/RMB) 16.4 16.9 16.8 19.1 19.6 19.3 18.9 17.6 16.5 15.4 16.0 16.6 16.2 16.6 17.1
20172014FX rate
187.7 201.4 190.6 236.0 177.4 187.7 184.1 209.2 161.3 173.6 172.1 246.9 211.5 228.8 243.6
7.0%7.8% 7.8%
7.7%
3.1% 5.8%
-0.7%
3.9%
1.5%
2.1%2.9%
7.0%
7.9%9.1%
11.7%7.1% 7.8% 8.1% 7.9%
2.8%
5.9%
-2.0%
10.4%
2.3%
0.4%
2.2%
6.3%
8.0%
9.8%
12.0%
-7.0%
-2.0%
3.0%
8.0%
13.0%
18.0%
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2014 2015 2016 2017
Revenue
Adjusted operating income/loss Ratio
Operating income/loss Ratio
(billions of yen)
(billions of yen)(billions of yen)
2015 2016
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Revenue 187.7 201.4 190.6 236.0 177.4 187.7 184.1 209.2 161.3 173.6 172.1 246.9 211.5 228.8 243.6
Adjusted operating income/loss 13.1 15.7 14.8 18.3 5.5 11.0 -1.2 8.1 2.4 3.6 5.0 17.3 16.8 20.9 28.4
Operating income/loss 13.2 15.8 15.5 18.6 4.9 11.1 -3.8 21.8 3.7 0.7 3.8 15.5 16.9 22.4 29.3
20172014
Operating Results & Forecast
23 Consolidated statement of financial position
(billions of yen)
(A) (B) (C) (A)-(B) (D) (E) (F) (D)-(E)
FY17-3Q Mar '2017 FY16-3Q change FY17-3Q Mar '2017 FY16-3Q change
Cash and cash equivalents 82.6 65.5 81.4 17.1 Trade and other payables 265.5 227.3 209.1 38.2
Trade receivables 200.2 184.5 145.4 15.7 Bonds and borrowings 262.0 248.7 210.9 13.3
Inventories 273.7 232.4 252.4 41.4 Total current liabillities 602.4 549.2 483.7 53.2
Total current assets 609.1 527.0 548.9 82.1(Equity attributable to owners of
the parent ratio) (40.4%) (40.0%) (42.1%) (0.4%)
Total non-current assets 499.3 472.6 383.7 26.7 Total equity 506.0 450.4 448.9 55.6
Total assets 1,108.4 999.6 932.6 108.8 Total liabilities and equity 1,108.4 999.6 932.6 108.8
Trade receivables incl.
non-current 238.7 215.7 171.6 22.9
Unit 69.2 49.8 77.3 19.4 (23.6%) (24.9%) (22.6%) (-1.2%)
Parts 93.9 86.3 91.3 7.6 Interest-bearing debt 262.0 248.7 210.9 13.3
Raw materials, WIP and etc 110.6 96.3 83.7 14.3 Cash and Cash equivalents 82.6 65.5 81.4 17.1
Total inventories 273.7 232.4 252.4 41.4 Interest-bearing debt, net (16.2%) (18.3%) (13.9%) (-2.1%)
(Days) Debt 179.4 183.2 129.5 -3.8
Trade receivables 94 104 87 -10
Inventories 107 112 129 -5 Net D/E Ratio 0.40 0.46 0.33 -0.06
Trade payables 69 64 65 5
Net working capital 131 151 149 -20
Inventories by products
On hand days(divided by net sales)
・Days of trade receivables on hand including non-current were reduced by 10 days to 94 days compared to
the previous fiscal year-end.
・Days of inventories on hand were reduced by 5 days to 107 days compared to the previous fiscal year-end.
*The balance as of the end of FY2016 announced in April 2017 is before the reclassification to specify the impact of purchase price allocation.
Operating Results & Forecast
24 Consolidated cash flow
Net income 49.0 4.9 44.1Depreciation and amortization 77.1 28.1 30.1 25.3 47.0 2.9(Increase)decrease in trade/lease receivables -11.3 32.7 -44.0(Increase)decrease in inventories -33.1 -3.5 -29.6Increase(decrease) in trade payables -9.7 34.7 49.6 20.4 -59.2 14.3Others, net -20.1 -14.8 -5.2
Net cash provided by (used in) operating activities 47.3 64.9 -17.5Cash flow margin for operating activities 6.9% 12.8% -5.9%
Net cash provided by (used in) investing activities -29.4 -31.6 2.2Free cash flows 17.9 33.3 -15.4
Net cash provided by (used in) financing activities -3.7 -31.0 27.3
(billions of yen)
FY2017
1Q-3Q
FY2016
1Q-3Qchange
・Net cash provided by (used in) operating activities was a positive 47.3 billion yen due to the increase in net
income despite the increase in working capital arising from the increase of revenue.
・Free cash flow was a positive 17.9 billion yen despite 17.6 billion yen of acquisition shares to acquire 100%
ownership of the Bradken Group.
Operating Results & Forecast
25 II. Consolidated earnings forecast (Market Environment)
HCM expects the FY2017 global demand for hydraulic excavators to grow by 16% to 201K units year on year
due to an increase in all regions except Middle East and Africa.
*Emerging Countries: China, Asia/Oceania, and others
Operating Results & Forecast
26 Summary of consolidated earnings forecast
HCM forecasts a FY2017 income statement with an upward-corrected revenue by 4% and adjusted operating income of
20.0 billion yen against the previous forecast due to increased sales volume of 3Q and reflecting the impact of the
depreciating trend of the Japanese yen on foreign exchange rates.
(billions of yen)
amount %
Revenue (890.0) 930.0 753.9 176.1 23%
(6.4%) (8.3%) (3.7%) (4.5%)
Adjusted operating income *1 (57.0) 77.0 28.3 48.7 172%
(6.2%) (8.3%) (3.1%) (5.1%)
Operating income (55.0) 77.0 23.6 53.4 226%
Income before (5.7%) (8.3%) (3.2%) (5.1%)
income taxes (51.0) 77.0 23.9 53.1 223%
Net income attributable to (3.4%) (4.9%) (1.1%) (3.9%)
owners of the parent (30.0) 46.0 8.0 38.0 473%
EBIT *2 (54.3) 80.0 24.7 55.3
Rate (YEN/US$) (107.9) 110.0 108.7 1.3
Rate (YEN/EURO) (118.0) 122.8 118.9 3.9
Rate (YEN/RMB) (15.6) 16.1 16.2 -0.2
Cash dividend per share (yen) *3 12 -
note : ( ) shows previous forecast as of October 2017
FX sensitivity of adjusted operating income (4Q) (Impact by 1 yen for US$ and EURO, 0.1 yen for RMB depreciation)
FX rate
US$ (1.0) 105.0 (0.6) 0.3
EURO (1.0) 110.0 (0.4) 0.2
RMB (0.1) 15.0 (0.1) 0.1
FX sensitivityCurrency
to be determined
FY2017
Forecast
FY2016
Actual
change
FY
rate
Operating Results & Forecast
27 Segment information
(billions of yen)
614.5 69.6 -0.2 683.9
10.5% 64.7 8.8% 6.1 - 10.4% 70.8
-4.8 -4.8
10.5% 64.7 1.9% 1.3 - 9.7% 66.0
<Actual>
FY2017
1Q-3Q
Reportable segment
Adjustments
*1TotalConstruction
Machinery
Business
Solution
Business
Revenue
Adjusted operating income
Amortization of PPA
Adjusted operating income
(After amortization of PPA)
PPA = Purchase Price Allocation Note(*1): Adjustments represent eliminations of intersegment transactions, and amounts of companies that do not belong to any operation segment.
(billions of yen)
837.4 92.8 -0.2 930.0
8.9% 74.7 8.9% 8.3 - 8.9% 83.0
-6.0 -6.0
8.9% 74.7 2.5% 2.3 - 8.3% 77.0
Amortization of PPA
Adjusted operating income
(After amortization of PPA)
Adjustments
*1TotalConstruction
Machinery
Business
Solution
Business
Revenue
Adjusted operating income
<Forecast>
FY2017
Reportable segment
・We booked 4.8 billion yen of the amortization cost resulted from PPA for H-E Parts and Bradken.
・HCM forecasts the FY2017 adjusted operating income ratio of solution business to be 2.5% including 6.0
billion yen of amortization cost resulted from PPA. (8.9% excluding the amortization cost)
Operating Results & Forecast
28 Sales forecast by geographic region (consolidated)
Compared with the previous fiscal year, HCM forecasts an increase of 23% in total revenues for FY2017
due to an increase in sales volume based on improved demand and considering the impact of consolidation
of H-E Parts Group companies and Bradken Group companies, despite the decrease in revenue in Japan
and Middle East.
amount %
Japan 196.9 (21%) 226.0 (30%) -29.1 -13%
Asia 72.7 (8%) 62.2 (8%) 10.4 17%
India 60.5 (7%) 48.6 (6%) 12.0 25%
Oceania 150.6 (16%) 96.4 (13%) 54.2 56%
Europe 98.8 (11%) 87.6 (12%) 11.3 13%
N.America 136.7 (15%) 78.5 (10%) 58.2 74%
L.America 16.1 (2%) 7.0 (1%) 9.1 129%
Russia-CIS 24.8 (3%) 19.5 (3%) 5.3 27%
M.East 21.8 (2%) 22.7 (3%) -0.9 -4%
Africa 42.9 (5%) 34.1 (5%) 8.8 26%
China 108.3 (12%) 71.5 (9%) 36.8 52%
Total 930.0 (100%) 753.9 (100%) 176.1 23%
Overseas revenue ratio 79% 70%
FY2017
Forecast
FY2016
Actual
change
(billions of yen)
Operating Results & Forecast
29 Mining revenue forecast
68.0 66.2 66.5 66.5 71.4 79.194.6
72.4
22.2
82.5 97.2
60.3 55.6 44.141.7
39.0
27.4
11.6
150.4163.4
126.8 122.1115.5
120.8133.7
99.9
33.8
0.0
50.0
100.0
150.0
200.0
FY11 FY12 FY13 FY14 FY15 FY16 FY17Forecast
FY171-3Q
FY174Q
New machine
Parts & Services
shows sales ratio against total company sales
[ % ] shows changed ratio from the same period of
previous year
%
18%
21%
16% 15%
15% 16%
15%
[ 11%]
[ -6%]
[ 20%] [ -9%]
[-17%]
[ -4%]
14%
14%
[ 19%]
[ -1%]
[ 29%]
(billions of yen)
HCM forecasts a decrease in FY2017 sales of new machines by 6% compared to the previous year due to the
production interruption of below 150 tons dump trucks from this fiscal year, however HCM forecasts that the
sales of parts and services will increase by 20% compared to the previous year.
Operating Results & Forecast
30 Value chain revenue forecast (*1)
175.7 168.2189.6
144.0
45.6
6.7
92.6
69.4
23.2
103.4 90.4
92.2
66.9
25.4
279.1265.2
374.4
280.3
94.1
0.0
100.0
200.0
300.0
400.0
500.0
FY15 FY16 FY17Forecast
FY171-3Q
FY174Q
Rental & others
Solution business
Parts & Services (Construction)
Parts & Services (Mining)
104.3
71.4
89.1
79.1
71.6
72.4
95.0
94.6 23.422.2
(billions of yen)
HCM forecasts a large increase in FY2017 sales of value chain business by 41% (109.2 billion yen)
compared to the previous year due to the increase in the sales of parts and service and solution business due
to acquisition of H-E Parts Group companies and Bradken Group companies
37% 35%
40%
41%
38%
(*2)
[41%]
[ 7%]
[20%]
[ 2%]
[ - ]
[ 18%]
[ -4%]
[ -4%]
[ -1%]
[ 247%]
[ 4%]
[10%]
[29%]
[ - ]
[51%]
(*2)Solution business: Business segment consists of parts manufacturing, sales of parts and services that are not included in
construction machinery business.
(*1) Value chain: Total of Parts & Service, solution business, rental etc. other than new machine sales.
[ 13%] [19%]
[ -4%]
Total of parts & services
shows sales ratio against total company sales
[ % ] shows changed ratio from the same period of
previous year
%
Operating Results & Forecast
31 Comparison of consolidated profit & loss forecast
HCM forecasts FY2017 adjusted operating income to significantly increase by 48.7 billion yen compared to the
previous year due to the positive influence of depreciation of the Japanese yen and increase in sales volume of
construction machines, as well as the consolidation of solution business, despite the HSC deconsolidation.
(billions of yen)
Ad
juste
d o
pe
ratin
g
inco
me
(*1)
Sa
les v
olu
me
, mo
del
mix
& o
the
rs
Se
lling
pric
e
28.3
71.2 2.8 4.9 0.6 -30.8
77.0
23.6
0.9 3.8
Fo
reig
n e
xch
an
ge ra
te
Ma
teria
l co
st
Overh
ead
Ad
juste
d o
pe
ratin
g
inco
me
(*1)
Op
era
ting in
com
e
Op
era
ting in
com
e
Va
riance o
f ad
juste
d
op
era
ting in
com
e
Oth
er o
pe
ratin
g in
com
e
an
d e
xp
en
se
s
77.0
*1 "Adjusted operating income" is calculated by excluding "Other income" and "Other expenses" from "Operating Income" listed in
Consolidated Statements of Income.
48.7
US$ 1.3
EUR 1.9
RMB 0.1
ZAR 0.7
Solution business 25.3
HSC deconsolidation -11.3
Construction machinery business 44.0
(55.1) (2.8) (-3.0) (-0.7) (-25.5)
(57.0)
note : ( ) shows previous forecast as of Oct. 2017
(28.7) (0.9) (1.8) (55.0)
Solution business -23.5
HSC deconsolidation 6.2
R&D expense -6.0
Exp
enses re
late
d
stru
ctu
ral re
form
Operating Results & Forecast
32 <Appendix 1> Detail of mining revenue
(billions of yen)
1-3Q 4Q Year 1-3Q 4Q Year 1-3Q 4Q Year
America Excavator 7.8 2.3 10.1 10.6 2.6 13.2 2.8 0.3 3.1
Dump Truck 3.9 2.1 6.0 5.8 1.7 7.5 1.9 -0.4 1.5
Total 11.7 4.4 16.1 16.5 4.3 20.7 4.7 -0.1 4.6
Europe, Africa Excavator 10.2 5.1 15.3 13.4 3.3 16.8 3.3 -1.8 1.5
and Middle East Dump Truck 14.5 4.1 18.6 12.4 3.5 15.9 -2.1 -0.7 -2.7
Total 24.7 9.3 33.9 25.8 6.8 32.7 1.2 -2.5 -1.3
Asia & Oceania Excavator 31.7 15.4 47.1 41.9 15.4 57.3 10.2 0.0 10.1
Dump Truck 13.6 7.6 21.1 14.3 6.2 20.4 0.7 -1.4 -0.7
Total 45.3 23.0 68.3 56.2 21.5 77.7 10.9 -1.4 9.4
China Excavator 0.8 0.4 1.2 1.0 1.0 2.0 0.2 0.6 0.8
Dump Truck 0.1 0.1 0.2 0.1 0.1 0.1 -0.1 0.0 -0.1
Total 0.9 0.5 1.4 1.1 1.1 2.1 0.2 0.6 0.8
Japan Excavator 1.1 0.1 1.1 0.3 0.1 0.4 -0.7 0.0 -0.7
Dump Truck 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total 1.1 0.1 1.1 0.3 0.1 0.4 -0.7 0.0 -0.7
Total Excavator 51.5 23.3 74.8 67.2 22.4 89.7 15.7 -0.9 14.9
Dump Truck 32.1 13.9 46.0 32.6 11.4 44.0 0.5 -2.5 -2.0
Total 83.6 37.2 120.8 99.9 33.8 133.7 16.2 -3.4 12.8
FY16
Actual
FY17
Forecast
Change
from FY16
Operating Results & Forecast
33 <Appendix 2>
Impact of settlements by solution business of purchase price allocation (PPA).
(billions of yen)
1Q-3Q
(Actual)
3.1
0
3. Intangible assets 1.7
Total depreciation(amortization) 4.8
----- 24.2
6.0 1.2 1.2 1.2 ----- 33.0
One-time amortization/
Average of amortization is 20years2.4 0.9 0.9 0.9
2. Tangible assetsNon-depreciable/
Average of depreciation is 15years0.5 0.3 0.3 0.3 ---- 5.7
----- 3.1
After FY2021
(Including the
foreign currency
translation
adjustments)
Total
(※1)The amount for the Bradken Group is our estimation since a portion of the PPA has not been completed by the end of the third quarter.
(※2)For the H-E Parts Group, the amortization expense of FY2017 is the total for the period from January 2017 through March 2018 (15 months) since the company recognizes it retroactively to the acquisition date.
Assets Term of depreciation(amortization)FY2017
FY2018 FY2019 FY2020
1. Inventories Depreciation in one year 3.1
(※2)
(billions of yen)
34.6
14.6
49.2
-33.0
12.6
28.8Goodwi l l on Consol idation
(After PPA)
Goodwi l l on Consol idation
(Before PPA)
Goodwill of Individual
Tota l Goodwi l l
(Before PPA)
Increased assets
Deferred tax liability, etc.
2. Remeasurements of goodwill by PPA.
1. Prospect of depreciation(amortization) by PPA.
A forecasted impact on the consolidated financial results from the PPA for the acquired assets and liabilities
of H-E Parts and Bradken acquired in FY2016 is as follows.
Contents
1. Management Plan
2. Operating Results & Forecast
3. Regional Trend & Business Strategy
4. Company Outline and Topics
Corporate Vision
Regional Trend & Business Strategy
35 35
Regional Trend & Business Strategy
Global Demand Trend for Hydraulic Excavators
10 14 23 28
40 31
24 23 26 26 15
23
27 25
27 31
30 35 37 38
10
13
19 24
24 27
26 25
27 27
29
40
48 44
36 32
32 41
43 43
15
28
38 39
34
32
24
19
20 20
73
111
70
42 50
30
19
30
42 47
151
230 225
202
211
183
155
173
194
201
0
25
50
75
100
125
150
175
200
225
250
'09 '10 '11 '12 '13 14 '15 '16 '17 '17
(K Units)
FY
*Estimates by HCM , Excluding Chinese manufacturer
Emerging Countries 2017:55% (Y-o-Y Change:+3%)
*Emerging Countries: China, Asia/Oceania, and others
Japan
Western Europe
North America
Asia Oceania
Others
Total
China
*Incl. India
(Distributing, copying, or forwarding prohibited) Previous Outlook
Present Outlook
Year-on-Year Change
'16 '17
Previous
Outlook
'17 Present
Outlook
+12% +12% +16%
+58% +39% +56% Russia, CIS,
E Europe +23% +15% +34%
Africa +13% -12% -9%
Middle East -45% +3% -10%
Latin America -15% -2% +9%
-18% +0% +0%
India +44% +16% +16%
Indonesia +36% +29% +42%
Others +16% -10% -11%
+28% +5% +5%
-4% +9% +9%
+17% +3% +6%
-4% +13% +13%
China
N America
W Europe
Japan
Total
Others
Asia & Oceania
36 36
Regional Trend & Business Strategy
<Japan>
-150%
-100%
-50%
0%
50%
100%
150%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q
-150%
-100%
-50%
0%
50%
100%
150%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q-40%
-20%
0%
20%
40%
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q
-150%
-100%
-50%
0%
50%
100%
150%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q
◇While housing investment decreased, capital investment and public investment have recovered. ◇Regarding demand for construction machinery from October to December 2017, the demand growth
of hydraulic excavators and wheel loaders slowed due to the end of last-minute demands in anticipation of the new emissions regulations.
Market Environment: Housing/Public Spending and Capex (y-o-y)
Demand Trend for Hydraulic Excavators Demand Trend for Wheel Loaders
Demand Trend for Mini Excavators
(K units) (K units)
*Estimates by HCM *Estimates by HCM
(K units)
*Estimates by HCM
New housing starts (number of houses)
Capex (Orders for machinery, excluding foreign demands)
Public spending (Public work orders)
*Source: MLIT, Cabinet Office, and Construction
Surety Company
37 37
Regional Trend & Business Strategy
<Europe>
-1%
0%
1%
2%
CY12/1Q
2Q
3Q
4Q
CY13/1Q
2Q
3Q
4Q
CY14/1Q
2Q
3Q
4Q
CY15/1Q
2Q
3Q
4Q
CY16/1Q
2Q
3Q
4Q
CY17/1Q
2Q
3Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3Q
◇GDP showed solid growth throughout the Euro zone. ◇Demand for hydraulic excavators and wheel loaders remained brisk. Demand for mini excavators
continuously increased mainly in France and Italy. (Demand for hydraulic/mini excavators increased 10% and 18% y-o-y, respectively.)
Demand Trend for Hydraulic Excavators Demand Trend for Wheel Loaders
Demand Trend for Mini Excavators GDP Growth Rate in Major Countries (y-o-y)
*Source: IMF, etc
(K units)
*Estimates by HCM
(K units) (K units)
*Estimates by HCM *Estimates by HCM
France
UK
Germany
Italy
Others
France
UK
Germany
Italy
Others
France
UK
Germany
Italy
Others
UK
Germany
France
EUR zone
38 38
Regional Trend & Business Strategy
<North America>
75%
100%
125%
150%
CY
12
/1
Q
2Q
3Q
4Q
CY
13
/1
Q
2Q
3Q
4Q
CY
14
/1
Q
2Q
3Q
4Q
CY
15
/1
Q
2Q
3Q
4Q
CY
16
/1
Q
2Q
3Q
4Q
CY
17
/1
Q
2Q
3Q
4Q
Residential Non-residential State & local
0
5
10
15
20
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
3Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
3Q
-100%
-50%
0%
50%
100%
-10%
-5%
0%
5%
10%
0
500
1000
1500
2000
CY
12
/1
Q
2Q
3Q
4Q
CY
13
1Q
2Q
3Q
4Q
CY
14
/1
Q
2Q
3Q
4Q
CY
15
/1
Q
2Q
3Q
4Q
CY
16
/1
Q
2Q
3Q
4Q
CY
17
/1
Q
2Q
3Q
4Q
*Bureau of Economic Census, US Census Bureau
*Bureau of Economic Census, US Census Bureau
◇Housing starts remained brisk. Residential and public construction spending have increased.
◇Demand for hydraulic/mini excavators continuously increased (12% and 22% y-o-y, respectively).
Demand Trend for Mini Excavators
Demand Trend for Hydraulic Excavators
Construction Spending in US (y-o-y)
GDP Growth Rate, Housing Starts in US (K units) (K units)
*Estimates by HCM
*Estimates by HCM
GDP (y-o-y/Right axis)
(Seasonally adjusted)
Housing starts (Left axis)
(K units)
39 39
Regional Trend & Business Strategy
<China>
0
10
20
30
40
50
60
70
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
3Q
-150%
-100%
-50%
0%
50%
100%
150%
*当社推定
0%
10%
20%
30%
40%
CY
11
/1
Q2
Q3
Q4
QC
Y1
2/1
Q2
Q3
Q4
QC
Y1
3/1
Q2
Q3
Q4
QC
Y1
4/1
Q2
Q3
Q4
QC
Y1
5/1
Q2
Q3
Q4
QC
Y1
6/1
Q2
Q3
Q4
QC
Y1
7/1
Q2
Q3
Q4
Q
0
5
10
15
20
(%)
(K units)
North China 237%/229%/202%/86%
North West 72%/150%/128%/46%
South West 105%/110%/72%/77%
North East 114%/146%/153%/167%
South Middle China 97%/101%/92%/120%
East China 124%/162%/99%/124%
Total China 109%/132%/102%/100%
FY16 4Q FY17 1Q/2Q/3Q
(6.8%) (2.1 %)
*当社推定
0%
20%
40%
60%
80%
100%
FY14
1H 2H
FY15
1Q 2Q 3Q 4Q
FY16
1Q 2Q 3Q 4Q
FY17
1Q 2Q 3Q
◇The GDP growth rate from October to December 2017 remained stable at around 6.8%. ◇Demand for hydraulic excavators continued to significant increase (2 times y-o-y), mainly due to
increased public investment.
GDP and Fixed Asset Investment
Demand Trend for Hydraulic Excavators
Quarterly Demand for Hydraulic Excavators by Region (y-o-y)
Demand Composition by Class for Mini Excavators and Hydraulic Excavators
*Estimates by HCM Y-o-y comparison data is limited to foreign manufactures only
*National Bureau of Statistics of China
*Foreign manufactures only
*Estimates by HCM (y-o-y)
GDP (Right axis)
Fixed Asset Investment (y-o-y) (Left axis)
20t and below
20t over
~6t
20t
10~15t
21~29t
30~39t
40t~
6~10t
Domestic
Foreign
40 40
Regional Trend & Business Strategy
<(Supplementary Information) China>
Demand Trend for Hydraulic Excavators (y-o-y)
0
5
10
15
4月 5月 6月 7月 8月 9月 10月11月12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月11月12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月11月12月
-80%
-40%
0%
40%
80%
120%
160%
200%
240%
280%
0
1
2
3
4
5
6
7
8
9
10
4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月
FY2015 Actual
y-o-y
FY2016 Actual
-15% +58% +83% +109%
FY2017 (Forecast)
+132% +102%
FY2015 FY2016 FY2017
+100%
Monthly Demand Trend for Hydraulic Excavators (Compared to the same month in the previous year)
(Foreign Manufactures only)
*Estimates by HCM
(K units)
(K units)
*Estimates by HCM
(Foreign Manufactures only)
Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.
【Chinese New Year】 Feb 8, 2016 Jan 28, 2017 Feb 16, 2018
* Actual result (From April to December)
Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
41 41
Regional Trend & Business Strategy
<Asia, Oceania, and India>
0
2
4
6
8
10
FY
12
/1
Q2
Q3
Q4
QFY
13
/1
Q2
Q3
Q4
QFY
14
/1
Q2
Q3
Q4
QFY
15
/1
Q2
Q3
Q4
QFY
16
/1
Q2
Q3
Q4
QFY
17
/1
Q2
Q3
Q
-200%
-150%
-100%
-50%
0%
50%
0
1
2
3
4
5FY
12
/1
Q2
Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q2
Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q2
Q
3Q
4Q
FY
17
/1
Q
2Q
3Q
-100%
-50%
0%
50%
100%
-10
-5
0
5
10
15
20
CY
12
/1
Q
2Q
3Q
4Q
CY
13
/1
Q
2Q
3Q
4Q
CY
14
/1
Q
2Q
3Q
4Q
CY
15
/1
Q
2Q
3Q
4Q
CY
16
/1
Q
2Q
3Q
4Q
CY
17
/1
Q
2Q
3Q
(%)
◇Demand for hydraulic excavators significantly increased in Indonesia, the Philippines, and Australia. Despite continuously decreasing in Thailand, demand has increased in the entire Asia Pacific region (15% y-o-y).
◇Demand for hydraulic excavator increased in India (21% y-o-y), mainly for infrastructure investments, such as railways and roads.
*Estimates by HCM
Demand Trend for Hydraulic Excavators in Asia & Oceania
(K units)
GDP Growth Rate in Major Countries (y-o-y)
*Estimates by HCM
(K units)
Demand Trend for Hydraulic Excavators in India
* Calculation criteria for GDP growth rate in India was revised in CY2013 2Q
*Source: IMF, etc
Thailand
Malaysia
Singapore
Indonesia
Australia
NZ
Others
Malaysia Indonesia India
Singapore
Thailand
42 42
Regional Trend & Business Strategy
《Topic》
Participated in EXCON 2017, an exhibition held in India
●Participated in "EXCON 2017," the largest construction machinery exhibition in South Asia (December 2017).
●The event attracted over 40,000 visitors (number of visitors in 2015 was approximately 30,000).
●We displayed various machineries, including the latest hybrid excavators, and introduced the new model backhoe loader.
<Exhibition booth> <SHINRAI BX80>
43 43
Regional Trend & Business Strategy
<Russia and the Middle East>
0
1
2
3
4
5
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
3Q
-100%
0%
100%
200%
-100%
-50%
0%
50%
100%
0
1
2
3
4
5
FY
12
/1
Q2
Q3
Q4
QFY
13
/1
Q2
Q3
Q4
QFY
14
/1
Q2
Q3
Q4
QFY
15
/1
Q2
Q3
Q4
QFY
16
/1
Q2
Q3
Q4
QFY
17
/1
Q2
Q
3Q
0.01
0.014
0.018
0.022
0.026
0.03
0.034
0.038
0
5
10
15
20
30
55
80
105
130
(US$) (US$)
FY12 FY13 FY14 FY15 FY16 FY17
FY12 FY13 FY14 FY15 FY16 FY17
◇In Russia, demand significantly increased throughout the fiscal year, underpinned by revival of crude oil prices (increased by 1.9 times cumulatively y-o-y).
◇In the Middle East, demand remained at a low level, mainly around Saudi Arabia.
Demand Trend for Hydraulic Excavators in the Middle East Price Trend of Crude Oil and Natural Gas
Demand Trend for Hydraulic Excavators in Russia Foreign Exchange Rate of the Ruble
Against US$
Against EUR€
*According to HCM’s research
(K units)
*Estimates by HCM *Ex-Works base *Incl. Local manufacturing
*Estimates by HCM *Ex-Works base (Turkey: retail-prices base)
(K units)
UAE
Saudi Arabia
Turkey
Others
Crude Oil (Left axis)
Natural Gas (Right axis)
*Created by HCM , the source from The World Bank HP
44 44
Regional Trend & Business Strategy
<Mining Machinery>
-100%
-50%
0%
50%
100%
-
500
1,000
1,500
2,000
2,500
3,000
FY12 FY13 FY14 FY15 FY16 FY17
DT(over 150t)(Left axis)
SH(over 100t)(Left axis)
y-o-y (Right axis)
◇Demand for mining machinery is expected to increase 50% y-o-y.
◇Demand forecast (vs last year): 100t excavators +90%, over 200t excavators 20%, and trucks 40%.
◇Demand for excavators increased in Russia and Asia, and demand for trucks increased in Russia and North, Central and South America.
0
500
1,000
1,500
2,000
2,500
3,000
FY12 FY13 FY14 FY15 FY16 FY17
Central and South America
North America
Europe Russia CIS
Oceania
Asia
Africa and Middle East
(Units)
Ultra-large Excavator (over 100t), Truck (over 150t)
(Units) Demand by product Demand by region
*According to HCM’s research estimate estimate
45 45
Regional Trend & Business Strategy
<(Supplementary Information) BB Ratio>
0%
100%
200%
300%
400%
500%
600%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
FY11 FY12 FY13 FY14 FY15 FY16 FY17
0%
100%
200%
300%
400%
500%
600%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
FY11 FY12 FY13 FY14 FY15 FY16 FY17
BB Ratio (Dump Truck, over 150t)
BB Ratio (Ultra-large Hydraulic Excavator, over 100t)
* Book-to-Bill(BB)Ratio = Bookings (Orders received)/Billings (Value of shipment)
Non-consolidated basis (average of 6 months)
Contents
1. Management Plan
2. Operating Results & Forecast
3. Regional Trend & Business Strategy
4. Company Outline and Topics
Corporate Vision
Company Outline and Topics
47 Company Outline and Topics
・Company Name Hitachi Construction Machinery Co., Ltd.
Stock Exchange Listings:Tokyo (#6305)
・Major Operations Manufacturing , sales and service of construction machinery,
transportation machinery, and other machines and devices.
・Established 1 October, 1970
・Capital 81,576 million Yen (Hitachi, Ltd:51%)
・President Kotaro Hirano
・Subsidiaries
Affiliates
Japan: 10 companies, Overseas: 74 companies
Japan: 4 companies, Overseas: 8 companies
・Number of Employees Consolidated :23,962 Non-consolidated :4,124
Company Outline
(December 31, 2017)
48 Company Outline and Topics
Construction
New Machine
and others
72%
Construction
Parts &
Services
12%
Mining
New
Machine
6%
Mining
Parts &
Services
10%
Double-Front Work
Machine
Wheel-drive Type
Hydraulic Excavator
Mini excavator
Road
Construction
Machinery
Our Products and Revenue
Wheel Loader
Hydraulic Excavator
(Hybrid hydraulic excavator,
ICT hydraulic excavator)
Mining
Construction
Solution Business
Dump Truck Ultra-large Hydraulic Excavator
Mine management system
FY2016 Revenue
753.9
(Billions of yen )
ConSite
H-E PARTS Bradken
49 Company Outline and Topics
81.6
0
20
40
60
80
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
'70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
Overseasrevenue
Domesticrevenue
Overseasrevenue ratio
( Billions of yen ) (%)
“Made in Japan”
main
Localizing Manufacturing
‘85 Plaza Accord
‘91 the bursting of
the Japan’s bubble
economy
‘97 Asian
Financial Crisis
‘08 the collapse of Lehman Brothers
Globalizing and Localizing Manufacturing
Europe &
America China Sales network
covering the Europe,
3.8 22.2 21.4 Capital( Billions of yen )
Main business: Jpan Expansion of
overseas business
Mini excavator
Wheel Loader Dump truck
1,000
900
800
700
600
500
400
300
200
100
0
50 Company Outline and Topics
Globalization of Manufacturing & Sales Bases (Major group companies)
※Europe Middle east and Africa
The Americas Manufacturing:3
Sales:2
EMEA※ Manufacturing & Sales:1
Sales:4
Southern Africa Manufacturing & Sales:1
India Manufacturing & Sales:1
China Manufacturing:2
Sales:3
Asia Manufacturing:1
Sales:5
Oceania Manufacturing & Sales:1
Sales:2
Japan Manufacturing:4
Sales:1
Russia& CIS. Manufacturing & Sales:1
51 Company Outline and Topics
Clarion Co., Ltd.
Sky Angle
Hitachi Ltd.
Grid box
Hitachi Ltd.
AC drive system(Control cabinet)
Hitachi Ltd.
AC Wheel motor
Hitachi Ltd.
Alternator
Hitachi Power Solutions Co., Ltd..
Pantograph(Trolley Dump Trucks)
Dump Truck The synergy of Hitachi Group
・The synergy of Hitachi Group ・High-Performance Stability Control Technologies
52 52
Company Outline and Topics Dump Truck Product characteristic
AWARD - JSME(The Japan Society of Mechanical Engineer)
Medal for New Technology 2014,
We received JSME Medal for New Technology 2014 from The Japan Society of
Mechanical Engineers for “High-Performance Stability Control Technologies” installed in
the new AC-3 dump truck series.
The technologies were “Pitching restraint control” and “Sideslip prevention control”. The
former reduces pitching of the truck, resulting in better operating comfort and fewer load
spillage. The latter prevents sideslip of the truck, resulting in enabling stabilized operation
under various road conditions including slippery rutted surfaces. This award was highly
evaluated these two technologies.
Pitching restrain control
Sideslip prevention control EH5000AC-3 dump equipped with
”High-Performance Stability Control Technologies"
Without control
Without
control
With
control
With control
53 53 Company Outline and Topics
i-Construction
国土交通省が提唱する i-Constructionへの対応 Provide Solution for customer’s Challenge
3D Data Provide
ICT excavator check3D
Data
Survey Design・Execution
scheme Execution Check
3D Survey
Process
HCM HCM Japan
Hitachi Group・Survey machine and company・Software for construction
Manage・ Update
Manage earthmoving
Hitachi Group・Survey machine and company・Software for construction
Demo site for customer to experience Solution was established at Hitachi-naka city, Ibaraki Prefecture, in October 2016.
■Purpose
We provide following experience to customers
through test drive and training session;
・ Informatization execution
・ Deep understanding for i-Construction
・ Solution from various partner with HCM
14,000㎡(largest class in Japan)
2,467 people visited (as of December 31, 2017)
One Hitachi and Open Innovation
© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.
54
Main products
Other product group
Pro
ducts
Skid-steer loader
Crawler crane
Backhoe loader
Bulldozer
Current FY2019 target
Value chain business ratio
New
machinery
Value
chain New
machinery
Value
chain
Marketing
R&D
Production
Procurement
Logistics
Value chain
Renta
l
Fin
ance
New
ma
ch
inery
Used m
achin
ery
Serv
ice
Parts
Parts
recyclin
g
Deepening Value Chain
Customer interests: Safety and productivity improvement, reduction of life cycle cost
Solution Business
Company Outline and Topics
55 © Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
55 Company Outline and Topics
Overview of H-E Parts International
Business
Description
Provides service solutions for mining /
construction machines and develops,
manufactures and sales aftermarket parts
CEO Steve McBrayer
Headquarters Atlanta (USA)
Countries Australia, USA, Chile, Canada, et al.
Foundation 2006 (commencement of business)
Employees approx. 750
≪Topics≫ Overview of H-E Parts International
Financial Overview(1)
(1) Consolidated base, exchange rate of USD/JPY:115.0, AUD/JPY:85.0
Transaction Overview
Acquisition Ownership 100%
Enterprise Value USD 240mn
Key Dates Board Resolution: Dec 21, 2016
Agreement: Dec 21, 2016
Closing: Dec 21, 2016
Seller H-E Parts Investors LLC (SPC owned
by Frontenac and Champ Ventures)
Overview of Seller
Frontenac US-based PE fund established in 1971
Focus on food, services and industrials
Invests in mid-sized companies
Champ
Ventures
Australia-based PE fund established in 1987
Invests in a broad range of companies from
seed stage to later stage
Invests in mid-sized companies
(JPYbn)
18.6
26.1 23.5
28.8
11.1%
9.3% 10.9% 11.1%
0.0%
5.0%
10.0%
15.0%
20.0%
(2.0)
3.0
8.0
13.0
18.0
23.0
28.0
33.0
2013A 2014A 2015A 2016E
Revenue EBITDA Margin
56 © Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
56 Company Outline and Topics
≪Topics≫ Transaction Rationale
0
5,000
10,000
15,000
20,000
0
2,500
5,000
7,500
10,000
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14E '15E
Coal Iron Ore Copper
Global Production of Coal, Iron Ore & Copper(1)
Strategic Rationale of the Acquisition
Grow solutions business and establish a
leading position in the aftermarket services
segment by leveraging H-E Parts’ platform
Strengthen distribution network by utilizing
sales and services network of H-E Parts
Enhancement of our value chain through
gaining access to the aftermarket services,
remanufactured parts, and non-genuine parts
markets
Effective use of remanufacturing / rebuilding
facilities
Industry Trends
Demand for mining equipment is recovering
• Growth market in the medium to long-term
Increase in customers’ needs driven by
improvements in safety and productivity as well
as decreases in life-cycle cost
• Market participants are differentiated by
providing value added solutions to
customers’ challenges
Innovation led by ICT-IoT at production &
operating site
(1) HCM research
(M Metric t: Coal, Iron Ore) (K Metric t: Copper)
57 © Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
57 Company Outline and Topics
Comprehensive aftermarket solutions for mobile
mining equipment including haul trucks, shovels
and dozers
Maintenance and repair services and alternative
parts for major makes and models
Largest global footprint and broadest product
coverage of any non-OEM
Customize parts to meet clients’ demands
Products and Services Offered:
General Parts
Drive Systems
Cooling Systems
≪Topics≫ H-E Parts Operating Segments
Mining Solutions Crushing Solutions
Engine Solutions Construction
Aftermarket services & parts for crushing
equipment as well as on-site and off-site
services & repairs
Services to design, evaluate and optimize to
reduce costs and increase productivity
Innovative computer modelling and scanning
for application-specific crushing machines
Products and Services Offered:
Crusher Parts
Wear Plates
Comprehensive, high-horsepower diesel
engine remanufacturing solutions
Parts and rebuilds for diesel engines ranging
from 1,500 to 4,000 horsepower
Provide rebuilding services using customized
parts and components, which boast the
industry's lowest failure rates and superior
engine performance
Products and Services Offered:
Camshaft Machining
Dyno Testing
Crankshafts Machining
Comprehensive undercarriage parts
and ground engagement tools (G.E.T.)
for mobile construction equipment
ln-house designing and engineering to
lower the total cost of undercarriage
and G.E.T.
Products and Services Offered:
Undercarriage for construction
G.E.T. (Ground Engaging Tools)
for construction
6% of Total Revenue 7% of Total Revenue
Clutch & Brakes
Hydraulics
Cylinder Block Machining
Magnaflux
59% of Total Revenue 28% of Total Revenue
Note: Revenue share for FY2015
58 © Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
58 Company Outline and Topics
≪Topics≫ Revenue Breakdown
Mining Solution 59%
Crushing Solution 28%
Construction Machinery
7%
Engine Solution 6%
Australia 44%
USA 27%
Chile 13%
Canada 6%
Others 10%
Gold 18%
Copper 17%
Iron Ore 13% Thermal Coal
10%
Coking Coal 10%
Construction 8%
Aggregate 3%
Oil Sand 3%
Other 18%
After Parts Solution
48%
Remanufacturing / Rebuilding
37%
Fabrication / Service
14%
Other 1%
Geography
Commodity Solution Sales by Type
Segment
Note: Revenue share for FY2015
59 © Hitachi Construction Machinery Co., Ltd. 2016. All rights reserved.
59 Company Outline and Topics
≪Topics≫ Synergies with H-E Parts
Current
Business
Access to On-Site Operating Machines
Collaboration with Wenco System
Distribution and Services Network
• Access to H-E Parts’ existing clients presents significant business
opportunities
• Obtaining access to long-term operating machines
• Selling opportunity of H-E Parts’ original compatible parts
Expansion of Mining Parts Offering
Access to Services Market
• Rebuilding and remanufacturing engines as
well as processing services
• Differentiation through upgraded parts
• Rebuilding / remanufacturing engines
• Utilization of distribution and services
network of H-E Parts
60 60
Company Outline and Topics
Overview of the Transaction
Acquisition price
A$ 3.25 per ordinary share (a 37.7% premium to the 1 month VWAP of Bradken shares up to 30 September) Maximum total consideration of A$ 689 million (JPY 51.6 billion JPY75=A$)
Acquisition structure
A cash takeover offer for 100% of the ordinary shares
Source of funds Existing cash reserves and external funding
Anticipated schedule*1
1 Nov. 2016: Commence takeover bid
7 Apr. 2017: Complete takeover bid
Number of Shares Tendered
193,741,575 shares
Ratio of Shares Tendered
92.8%
Overview of Bradken
Name Bradken Limited
Business Casting, manufacturing and distribution service of casting products
Representative Paul Zuckerman (CEO)
Headquarters Newcastle (NSW), Australia
Established 1922
No. of employees Almost 3,500
Stock listing Australian Stock Exchange (ASX: BKN)
*1 The schedule is subject to extension
Key Financials Share Performance
1,008
1,154
1,4561,317
1,138
968
82116.6% 17.0%
15.1%16.2%
15.2%14.1%
13.2%
8.0%
12.0%
16.0%
20.0%
24.0%
28.0%
0
200
400
600
800
1,000
1,200
1,400
1,600
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Revenue EBITDA margin
(A$ million) (A$)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0.0
2.0
4.0
6.0
8.0
10.0
12.0
'10 '11 '12 '13 '14 '15 '16
Share price S&P/ASX 200 Index
≪Topics≫Acquisition of Bradken
61 Company Outline and Topics
High-precision wear parts for
mobile mining equipment
Revenue:A$228.4mm
% total revenue:27.8%
Global leader in crawler systems,
GET
Crawler systems
GET(Ground Engaging Tools)
Industrial product for infrastructure
Mining wear parts business Specialty castings
business
Wear surface solutions for fixed
plant mining equipment
Revenue:A$349.5mm
% total revenue:42.6%
Global leader in metallic mill
liners
Metallic mill liners
Wear surface solutions
Live, remote wear monitoring technology
High-spec, specialty castings for
the industrial, energy and
defence industries
Revenue:A$227.2mm
% total revenue:27.7%
Customized specialty castings
Industrial
Energy
Defence
* Revenue and % Total Revenue based on 2016/6A.
In addition to these three businesses, Bradken’s total revenue includes Cast Metal Services (A$13.9 mm, 1.7%), Others (A$1.6mm, 0.2%).
≪Topics≫Core Products and Solutions of Bradken
62 62
Company Outline and Topics
Australia/NZ
North America
South America
Africa
Europe
SE Asia
China
Coal
Iron Ore
Copper
Gold
Other Minerals
Oil & Gas
ConsumableProducts
CapitalProducts
Resources
Non-Resources
REVENUE BY INDUSTRY SECTOR REVENUE BY PRODUCT
Strong presence in the resources sector
Consumable products account for c.
90% of total revenue
REVENUE BY REGION REVENUE BY COMMODITY
Strong presence in Australia and North America
Well-balanced exposure to commodities
Note: Revenue for FYE 2016/6.
15.3%
84.7%
10.6%
89.4%
45.0% 44.1%
2.9%
2.7% 2.6%
0.2% 2.5%
23.7%
19.2%
18.8%
18.1%
11.7%
8.5%
≪Topics≫Overview of Bradken~Revenue Breakdown~
63 63 Company Outline and Topics
Combined Market of Parts & Services
Genuine Products Non-branded Products
Landscape of Construction & Mining Machinery Parts & Services Market
≪Topics≫ Anticipated Synergies① Enhancement of Value Chain through Reinforcement of the Mining Wear Parts Business
The acquisition of Bradken will not only raise the capture rate of mining wear parts used in our
own construction machinery, but also raise those in our competitors’ machinery.
HCM genuine products
for HCM machinery
【Hardware manufacturer
(HCM)】
【Hardware manufacturer
(other companies)】
Market for genuine products
manufactured by HCM
competitors
(HCM unable to capture)
Non-branded products
for HCM machinery
【Parts manufacturer (Bradken)】
Market for non-branded
products
(Bradken already in market)
【Parts manufacturer (Bradken)】
Oth
er
OE
Ms
HC
M
Capture Rate: High
Market for non-
branded products
【Parts manufacturer
(other companies)】
Competitor’s share of
non-branded products
for HCM machinery
【Parts manufacturer
(other companies)】
Capture Rate: Low
・・
・
・・
・
Penetrate parts & services business of
competitors
Increase capture rate
Pu
rsu
e s
yne
rgy
Pu
rsu
e s
yne
rgy
64 64 Company Outline and Topics
Upgrade productivity Reduction of life cycle cost Improve safety
Bradken’s Strength
Competitive mining consumable products
Ability to respond to sophisticated
customers’ needs
Superior casting technology
Experienced management team
Brand value based on established
relationship with customers
HCM’s Strength
New Equipment development capability
Production technology cultivated over
years
Continuous innovation (ICT・IoT, hybrid)
Large operating fleet based on high
reliability and durability
Brand value based on established
relationship with customers
Consolidated
revenue
JPY 758bn*1
Consolidated
revenue
A$821mn *1
Provide solutions to
customers
Synergies Synergies
≪Topics≫ Anticipated Synergies②Accelerate Innovation
Combining Superior Technology, Product Capability and Operational Know-How
*1 HCM: 2016/3A; Bradken: 2016/6A
65
END
Public Relations Strategy Office
Corporate Vision
© Hitachi Construction Machinery Co., Ltd. 2018. All rights reserved.
Any forward-looking statements in the “Corporate Vision” , including
results forecasts, are based on certain assumptions that were
deemed rational as well as information currently available to the
Company at this time. However, various factors could
cause actual results to differ materially.
FY17-3Q