Komatsu Limited Annual Report 2014

Plain-text annual report

KOMATSU REPORT 2014 KOMATSU REPORT 2014 01 02 03 04 06 10 11 13 14 18 23 24 26 29 33 36 37 38 40 41 42 45 48 50 52 53 About the KOMATSU REPORT | KOMATSU REPORT 2014 2014/07/09 12:05 About KOMATSU REPORT KOMATSU REPORT 2014 About KOMATSU REPORT KOMATSU REPORT 2014 About KOMATSU REPORT We at Komatsu Ltd. prepare KOMATSU REPORT by reﬂecting on the fundamental concepts developed by the International Integrated Reporting Council (IIRC) . With respect to the content of this REPORT, we work to focus our attention on the most important information and express it in a concise manner. Concerning ﬁnancial conditions, environmental conservation and corporate social responsibility, we separately prepare the respective reports in more detail and disclose information therein. Organization of Komatsu’s Annual Reports Note: KOMATSU REPORT, Securities Report, CSR Report and Environmental Report, in both Japanese and English, are uploaded on Komatsu’s website. Reporting Period April 1, 2013 -- March 31, 2014 Unless otherwise indicated, all ﬁgures in this Report represent those for FY2013 ended March 31, 2014, namely from April 1, 2013 to March 31, 2014. Cautionary Statement This Report contains forward-looking statements that reﬂect management's views and assumptions in the light of information currently available with respect to certain future events, including ﬁnancial position, operating results and business strategies. These statements can be identiﬁed by the use of terms, such as “will,” “believes,” “should,” “plans,” “expects,” and similar terms and expressions that identify future events or expectations. Actual results may differ materially from those projected, and the events and results of such forward-looking assumptions cannot be assured. Any forward-looking statements speak only as of the date of this Report, and Komatsu assumes no duty to update such statements. Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are not limited to, unanticipated changes in demand for Komatsu's principal products, owing to changes in the economic conditions in Komatsu’s principal markets; changes in foreign exchange rates or the impact of increased competition; unanticipated costs or delays encountered in achieving Komatsu's objectives with respect to globalized product sourcing and new information technology tools; uncertainties as to the results of Komatsu's research and development efforts and its ability to access and protect certain intellectual property rights; the impact of regulatory changes and accounting principles and practices; and the introduction, success and timing of business initiatives and strategies. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information KOMATSU REPORT 2014 Corporate Information 01 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/intro/ 1/1 ページ KOMATSU REPORT 2014 FY2013 Highlights Consolidated Results Environmental Performance KOMATSU REPORT 2014 02 Consolidated results | KOMATSU REPORT 2014 2014/07/09 12:05 FY2013 Highlights KOMATSU REPORT 2014 FY 2013 Highlights Consolidated Results Consolidated Results KOMATSU REPORT 2014 Net Sales Operating Income and Ratio Net Income and ROE and Net Debt-to-Equity Ratio Shareholders' Equity, Net Interest-Bearing Debt* Cash Dividend* FY2013 Highlights Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Note: All projected ﬁgures for FY2014 reﬂect those announced on April 25, 2014. Mid-range Focused Activities KOMATSU REPORT 2014 For Sustainable Growth 03 Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines For further details, please click here Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/highlights/ 1/1 ページ Consolidated results | KOMATSU REPORT 2014 2014/07/09 12:05 Consolidated results | KOMATSU REPORT 2014 2014/07/09 12:06 KOMATSU REPORT 2014 FY 2013 Highlights Consolidated Results Consolidated Results FY2013 Highlights KOMATSU REPORT 2014 FY 2013 Highlights Environmental Performance KOMATSU REPORT 2014 Environmental Performance Reducing CO2 Emissions in Manufacturing Operations Effective Utilization of Resources in Manufacturing Operations (Waste) Net Sales Operating Income and Ratio Effective Utilization of Resources in Manufacturing Operations (Water Resources) Reducing CO2 Emissions in Manufacturing Operations CO2 Emissions (Japan) CO2 Emissions (Overseas) Net Income and ROE and Net Debt-to-Equity Ratio Shareholders' Equity, Net Interest-Bearing Debt* Cash Dividend* Note: All projected ﬁgures for FY2014 reﬂect those announced on April 25, 2014. Effective Utilization of Resources in Manufacturing Operations (Waste) Amount of Waste Generated Amount of Waste Generated (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in Japan) (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in overseas) FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here KOMATSU REPORT 2014 04 Effective Utilization of Resources in Manufacturing Operations (Water Resources) Amount of Water Resources Used and Base Measurement Units (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in Japan) (Reﬂects results of the reviews of the data on Komatsu Castex Ltd. for the year 2009 and earlier) Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/highlights/ 1/1 ページ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/highlights/nonﬁnancialindicators.html 1/1 ページ Consolidated results | KOMATSU REPORT 2014 2014/07/09 12:06 KOMATSU REPORT 2014 FY 2013 Highlights Environmental Performance Environmental Performance Reducing CO2 Emissions in Manufacturing Operations Effective Utilization of Resources in Manufacturing Operations (Waste) Effective Utilization of Resources in Manufacturing Operations (Water Resources) Reducing CO2 Emissions in Manufacturing Operations CO2 Emissions (Japan) CO2 Emissions (Overseas) Effective Utilization of Resources in Manufacturing Operations (Waste) Amount of Waste Generated Amount of Waste Generated (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in Japan) facilities in overseas) FY2013 Highlights KOMATSU REPORT 2014 Effective Utilization of Resources in Manufacturing Operations (Water Resources) Amount of Water Resources Used and Base Measurement Units (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in Japan) (Reﬂects results of the reviews of the data on Komatsu Castex Ltd. for the year 2009 and earlier) FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 05 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/highlights/nonﬁnancialindicators.html 1/1 ページ Consolidated results | KOMATSU REPORT 2014 2014/07/09 12:06 KOMATSU REPORT 2014 FY 2013 Highlights Environmental Performance Environmental Performance Reducing CO2 Emissions in Manufacturing Operations Effective Utilization of Resources in Manufacturing Operations (Waste) Effective Utilization of Resources in Manufacturing Operations (Water Resources) Reducing CO2 Emissions in Manufacturing Operations CO2 Emissions (Japan) CO2 Emissions (Overseas) Effective Utilization of Resources in Manufacturing Operations (Waste) Amount of Waste Generated Amount of Waste Generated (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in Japan) facilities in overseas) Effective Utilization of Resources in Manufacturing Operations (Water Resources) Amount of Water Resources Used and Base Measurement Units (Data coverage: Komatsu Ltd. and Komatsu Group manufacturing facilities in Japan) for the year 2009 and earlier) (Reﬂects results of the reviews of the data on Komatsu Castex Ltd. To All Our Stakeholders KOMATSU REPORT 2014 FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 06 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/highlights/nonﬁnancialindicators.html 1/1 ページ To All Our Stakeholders | KOMATSU REPORT 2014 2014/07/10 17:27 To All Our Stakeholders KOMATSU REPORT 2014 To All Our Stakeholders To All Our Stakeholders Performance Achievements and Tasks Ahead Environmental Conservation Efforts CSR Efforts KOMATSU REPORT 2014 Tetsuji Ohashi , President and CEO Kunio Noji , Chairman of the Board Performance For the ﬁscal year under review (April 1, 2013 - March 31, 2014), in the construction, mining and utility equipment business, while demand for mining equipment remained slack, that for construction equipment increased in Japan, China and some other regions. In addition, reﬂecting the Japanese yen's depreciation, sales increased from the previous ﬁscal year. With respect to the industrial machinery and others business, while sales of sheet-metal and press machines were ﬁrm, total sales declined from the previous ﬁscal year, largely affected by a further decline in sales of wire saws. As a result, consolidated net sales for the year increased by 3.6% from the previous ﬁscal year, to JPY1,953.6 billion. Concerning proﬁts, operating income improved by 13.7% from the previous ﬁscal year, to JPY240.4 billion, supported by the Japanese yen's depreciation and our continued focus on improving selling prices and production costs, as well as curtailing ﬁxed costs. Operating income ratio was 12.3%, up 1.1 percentage point. Consolidated Business Results for the year Fiscal year ended March 31, 2014 (FY2013) Billions of JPY (except for operating income ratio) Results for the year Change (FY2013/FY2012) Net sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies 1,953.6 + 3.6% 240.4 12.3% 242.0 + 13.7% + 1.1 pt + 18.3% Net income attributable to Komatsu Ltd. 159.5 + 26.3% Projections for the Fiscal Year 2014 (Announced on April 25, 2014) Fiscal year ending March 31, 2015 (FY2014) Billions of JPY (except for operating income ratio) FY2014 Change (FY2014/FY2013) Net sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies 1,880.0 243.0 12.9% 237.0 - 3.8% + 1.0% +0.6 pts - 2.1% Net income attributable to Komatsu Ltd. 154.0 - 3.5% Sales by operation (Based on the amounts before elimination of transactions between operations) Note: Figures are rounded down to the hundred-million JPY. Construction, Mining and Utility Equipment 1,752.2 + 4.3% Results for the year Change (FY2013/FY2012) Industrial Machinery and Others Elimination Total Dividends KOMATSU REPORT 2014 - 3.3% 07 209.1 (7.7) 1,953.6 + 3.6% Note: Figures are rounded down to the hundred-million JPY. Annual cash dividends per share: FY2012: JPY 48 FY2013: JPY 58 FY2014: JPY 58 (planned) Dividend Policy ・Concerning cash dividends to our shareholders, we continue to maintain the policy of redistributing proﬁts by considering consolidated business results to strive to continue stable dividends. ・We have set the goal of a consolidated payout ratio of 30% or higher, and maintain the policy of not decreasing dividends as long as a consolidated payout ratio does not surpass 50%. Achievements and Tasks Ahead In April 2013, we embarked on the “Together We Innovate GEMBA Worldwide” three-year, mid-range management plan. Since then, we have engaged in business that emphasizes three focused efforts: 1) growth strategies based on innovation; 2) growth strategies of existing businesses; and 3) structural reforms designed to reinforce our business foundation. With respect to growth strategies based on innovation, we launched the medium-sized D61PXi-23 intelligent Machine Control (iMC) dozers in North America, Europe and Japan. This model features the world's ﬁrst automatic blade control as a next-generation product. We also widened its model range. Concerning strategies of existing businesses, by taking advantage of KOMTRAX (Komatsu Machine Tracking System) information about machine operations, we worked to strengthen the aftermarket business, which includes the provision of services and sales expansion of strategic parts. With respect to models certiﬁed for new emission regulations, which have become effective in the United States, Europe and Japan since 2011, we continued an aggressive market introduction together with KOMATSU CARE, a service program designed to reduce the total lifecycle costs of these models and prolong machine life. In structural reforms designed to reinforce our business foundation, we facilitated activities to cut down electric power consumption to half at all plants in Japan, including a new factory which will feature dynamic energy-saving and productivity by means of cutting-edge technologies, at the Awazu Plant in Ishikawa Prefecture, Japan. Looking ahead, we will step up our group-wide efforts to reinforce business models designed to offer comprehensive merits to customers, and strive to expand sales in the entire value chain, which includes not only sales of new equipment but also rental-to-used equipment and retail ﬁnance businesses. At the same time, we will also make continuous efforts to improve selling prices, production costs and the like. Environmental Conservation Efforts We consider environmental conservation efforts a top management priority of the Komatsu Group. Based on the Komatsu Earth Environment Charter, the Komatsu Group is working to reduce environmental impact in each and every aspect of its business activities. In the area of product development, we are making concerted efforts to not only develop models featuring super fuel economy and low CO2 emissions in response to the latest emission regulations in Japan, the United States and Europe, but also cut down environmental load in the entire product lifecycle, for example, by developing iMC dozers capable of dramatically shortening the construction period. With respect to production, we are promoting the project to cut down power consumption volume to half in all plants in Japan. In May 2014, we began operation at a new assembly factory at the Awazu Plant. This factory incorporates dynamic process reforms and cutting-edge, high-efﬁciency facilities, achieving both improved productivity and outstanding reduction of purchase power consumption. We will continue to implement production reforms driven by reduction of power consumption in all other plants in Japan as planned. At the same time, we are also continuing to advocate the development of a recycling-oriented society and conserve air and water environments as well as biodiversity. We deﬁne our CSR priorities by understanding where our business activities intersect with our contributions to society, and we specify three areas CSR Efforts of focused efforts on a global scale as follows. (cid:127) Enhancing quality of life: providing products required by society (cid:127) Developing people (cid:127) Growing with society Through innovations, such as Autonomous Haulage System (AHS) and iMC dozers, we are working to provide realistic solutions by not only enhancing economy and safety but also responding to social issues, such as labor shortage. In the area of human resource development, we are not only strengthening our distributors outside of Japan, but also developing people to meet the needs of local communities around the world. To ensure sustainable growth of society by promoting group-wide efforts, we think about what we can and must do by capitalizing on our strengths built on through business, such as reconstruction assistance in the regions destroyed by the Great East Japan Earthquake and tsunami of 2011 as well as removal of landmines and community redevelopment in Cambodia and Angola. Based on the belief that “our corporate value is the total sum of trust 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. We will also ensure all employees share The KOMATSU Way and continue to constantly address the fundamentals of safety, environmental conservation, compliance and business performance. We will also facilitate both the development of corporate strength and the achievement of social responsibility in a well- On behalf of the members of the Board, we would like to extend our sincere appreciation to our stakeholders around the world for their support. balanced manner. July 2014 Kunio Noji Chairman of the Board Tetsuji Ohashi President and CEO FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/message/ 1/1 ページ 08 209.1 (7.7) + 4.3% - 3.3% 1,953.6 + 3.6% Construction, Mining and Utility Equipment 1,752.2 to expand sales in the entire value chain, which includes not only sales of new equipment but also rental-to-used equipment and retail ﬁnance Industrial Machinery and Others Elimination Total Looking ahead, we will step up our group-wide efforts to reinforce business models designed to offer comprehensive merits to customers, and strive KOMATSU REPORT 2014 To All Our Stakeholders | KOMATSU REPORT 2014 2014/07/10 17:27 For the ﬁscal year under review (April 1, 2013 - March 31, 2014), in the construction, mining and utility equipment business, while demand for To All Our Stakeholders | KOMATSU REPORT 2014 2014/07/10 17:27 KOMATSU REPORT 2014 To All Our Stakeholders To All Our Stakeholders Performance Achievements and Tasks Ahead Environmental Conservation Efforts CSR Efforts Tetsuji Ohashi , President and CEO Kunio Noji , Chairman of the Board Performance mining equipment remained slack, that for construction equipment increased in Japan, China and some other regions. In addition, reﬂecting the Japanese yen's depreciation, sales increased from the previous ﬁscal year. With respect to the industrial machinery and others business, while sales of sheet-metal and press machines were ﬁrm, total sales declined from the previous ﬁscal year, largely affected by a further decline in sales of wire saws. As a result, consolidated net sales for the year increased by 3.6% from the previous ﬁscal year, to JPY1,953.6 billion. Concerning proﬁts, operating income improved by 13.7% from the previous ﬁscal year, to JPY240.4 billion, supported by the Japanese yen's To All Our Stakeholders depreciation and our continued focus on improving selling prices and production costs, as well as curtailing ﬁxed costs. Operating income ratio was 12.3%, up 1.1 percentage point. KOMATSU REPORT 2014 Consolidated Business Results for the year Fiscal year ended March 31, 2014 (FY2013) Billions of JPY (except for operating income ratio) Results for the year Change (FY2013/FY2012) Net sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies 1,953.6 + 3.6% 240.4 12.3% 242.0 + 13.7% + 1.1 pt + 18.3% Net income attributable to Komatsu Ltd. 159.5 + 26.3% Projections for the Fiscal Year 2014 (Announced on April 25, 2014) Fiscal year ending March 31, 2015 (FY2014) Billions of JPY (except for operating income ratio) FY2014 Change (FY2014/FY2013) Net sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies 1,880.0 243.0 12.9% 237.0 - 3.8% + 1.0% +0.6 pts - 2.1% Net income attributable to Komatsu Ltd. 154.0 - 3.5% Sales by operation (Based on the amounts before elimination of transactions between operations) Note: Figures are rounded down to the hundred-million JPY. Results for the year Change (FY2013/FY2012) Tetsuji Ohashi , President and CEO Kunio Noji , Chairman of the Board Dividends Note: Figures are rounded down to the hundred-million JPY. Performance For the ﬁscal year under review (April 1, 2013 - March 31, 2014), in the construction, mining and utility equipment business, while demand for mining equipment remained slack, that for construction equipment increased in Japan, China and some other regions. In addition, reﬂecting the Japanese yen's depreciation, sales increased from the previous ﬁscal year. With respect to the industrial machinery and others business, while sales of sheet-metal and press machines were ﬁrm, total sales declined from the previous ﬁscal year, largely affected by a further decline in sales of wire saws. As a result, consolidated net sales for the year increased by 3.6% from the previous ﬁscal year, to JPY1,953.6 billion. Concerning proﬁts, operating income improved by 13.7% from the previous ﬁscal year, to JPY240.4 billion, supported by the Japanese yen's depreciation and our continued focus on improving selling prices and production costs, as well as curtailing ﬁxed costs. Operating income ratio was 12.3%, up 1.1 percentage point. Annual cash dividends per share: FY2012: JPY 48 FY2013: JPY 58 FY2014: JPY 58 (planned) Dividend Policy ・Concerning cash dividends to our shareholders, we continue to maintain the policy of redistributing proﬁts by considering consolidated business results to strive to continue stable dividends. ・We have set the goal of a consolidated payout ratio of 30% or higher, and maintain the policy of not decreasing dividends as long as a consolidated payout ratio does not surpass 50%. Consolidated Business Results for the year Fiscal year ended March 31, 2014 (FY2013) Billions of JPY (except for operating income ratio) Results for Change the year (FY2013/FY2012) Projections for the Fiscal Year 2014 (Announced on April 25, 2014) Fiscal year ending March 31, 2015 (FY2014) Billions of JPY (except for operating income ratio) FY2014 Change (FY2014/FY2013) Net sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies 1,953.6 + 3.6% 240.4 12.3% 242.0 + 13.7% + 1.1 pt + 18.3% Net sales Operating income Operating income ratio Net income attributable to Komatsu Ltd. 159.5 + 26.3% Income before income taxes and equity in earnings of afﬁliated companies 1,880.0 243.0 12.9% 237.0 - 3.8% + 1.0% +0.6 pts - 2.1% Sales by operation (Based on the amounts before elimination of transactions between operations) Note: Figures are rounded down to the hundred-million JPY. Achievements and Tasks Ahead In April 2013, we embarked on the “Together We Innovate GEMBA Worldwide” three-year, mid-range management plan. Since then, we have engaged in business that emphasizes three focused efforts: 1) growth strategies based on innovation; 2) growth strategies of existing businesses; and 3) structural reforms designed to reinforce our business foundation. With respect to growth strategies based on innovation, we launched the medium-sized D61PXi-23 intelligent Machine Control (iMC) dozers in North America, Europe and Japan. This model features the world's ﬁrst automatic blade control as a next-generation product. We also widened its model range. Concerning strategies of existing businesses, by taking advantage of KOMTRAX (Komatsu Machine Tracking System) information about machine operations, we worked to strengthen the aftermarket business, which includes the provision of services and sales expansion of strategic parts. Net income attributable to Komatsu Ltd. 154.0 - 3.5% With respect to models certiﬁed for new emission regulations, which have become effective in the United States, Europe and Japan since 2011, we continued an aggressive market introduction together with KOMATSU CARE, a service program designed to reduce the total lifecycle costs of these models and prolong machine life. In structural reforms designed to reinforce our business foundation, we facilitated activities to cut down electric power consumption to half at all plants in Japan, including a new factory which will feature dynamic energy-saving and productivity by means of cutting-edge technologies, at the Awazu Plant in Ishikawa Prefecture, Japan. KOMATSU REPORT 2014 To All Our Stakeholders To All Our Stakeholders Performance Achievements and Tasks Ahead Environmental Conservation Efforts CSR Efforts Construction, Mining and Utility Equipment 1,752.2 Industrial Machinery and Others Results for Change the year (FY2013/FY2012) + 4.3% - 3.3% 209.1 (7.7) 1,953.6 + 3.6% Note: Figures are rounded down to the hundred-million JPY. Elimination Total Dividends Annual cash dividends per share: FY2012: JPY 48 FY2013: JPY 58 FY2014: JPY 58 (planned) Dividend Policy ・Concerning cash dividends to our shareholders, we continue to maintain the policy of redistributing proﬁts by considering consolidated business results to strive to continue stable dividends. ・We have set the goal of a consolidated payout ratio of 30% or higher, and maintain the policy of not decreasing dividends as long as a consolidated payout ratio does not surpass 50%. In April 2013, we embarked on the “Together We Innovate GEMBA Worldwide” three-year, mid-range management plan. Since then, we have engaged in business that emphasizes three focused efforts: 1) growth strategies based on innovation; 2) growth strategies of existing businesses; and 3) structural reforms designed to reinforce our business foundation. With respect to growth strategies based on innovation, we launched the medium-sized D61PXi-23 intelligent Machine Control (iMC) dozers in North America, Europe and Japan. This model features the world's ﬁrst automatic blade control as a next-generation product. We also widened its model range. Concerning strategies of existing businesses, by taking advantage of KOMTRAX (Komatsu Machine Tracking System) information about machine operations, we worked to strengthen the aftermarket business, which includes the provision of services and sales expansion of strategic parts. With respect to models certiﬁed for new emission regulations, which have become effective in the United States, Europe and Japan since 2011, we continued an aggressive market introduction together with KOMATSU CARE, a service program designed to reduce the total lifecycle costs of these models and prolong machine life. In structural reforms designed to reinforce our business foundation, we facilitated activities to cut down electric power consumption to half at all plants in Japan, including a new factory which will feature dynamic energy-saving and productivity by means of cutting-edge technologies, at the Awazu Plant in Ishikawa Prefecture, Japan. Looking ahead, we will step up our group-wide efforts to reinforce business models designed to offer comprehensive merits to customers, and strive to expand sales in the entire value chain, which includes not only sales of new equipment but also rental-to-used equipment and retail ﬁnance businesses. At the same time, we will also make continuous efforts to improve selling prices, production costs and the like. Environmental Conservation Efforts We consider environmental conservation efforts a top management priority of the Komatsu Group. Based on the Komatsu Earth Environment Charter, the Komatsu Group is working to reduce environmental impact in each and every aspect of its business activities. In the area of product development, we are making concerted efforts to not only develop models featuring super fuel economy and low CO2 emissions in response to the latest emission regulations in Japan, the United States and Europe, but also cut down environmental load in the entire product lifecycle, for example, by developing iMC dozers capable of dramatically shortening the construction period. With respect to production, we are promoting the project to cut down power consumption volume to half in all plants in Japan. In May 2014, we began operation at a new assembly factory at the Awazu Plant. This factory incorporates dynamic process reforms and cutting-edge, high-efﬁciency facilities, achieving both improved productivity and outstanding reduction of purchase power consumption. We will continue to implement production reforms driven by reduction of power consumption in all other plants in Japan as planned. At the same time, we are also continuing to advocate the development of a recycling-oriented society and conserve air and water environments as well as biodiversity. We deﬁne our CSR priorities by understanding where our business activities intersect with our contributions to society, and we specify three areas CSR Efforts of focused efforts on a global scale as follows. (cid:127) Enhancing quality of life: providing products required by society (cid:127) Developing people (cid:127) Growing with society Through innovations, such as Autonomous Haulage System (AHS) and iMC dozers, we are working to provide realistic solutions by not only enhancing economy and safety but also responding to social issues, such as labor shortage. In the area of human resource development, we are not only strengthening our distributors outside of Japan, but also developing people to meet the needs of local communities around the world. To ensure sustainable growth of society by promoting group-wide efforts, we think about what we can and must do by capitalizing on our strengths built on through business, such as reconstruction assistance in the regions destroyed by the Great East Japan Earthquake and tsunami of 2011 as well as removal of landmines and community redevelopment in Cambodia and Angola. Kunio Noji Chairman of the Board Tetsuji Ohashi President and CEO FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/message/ 1/1 ページ Achievements and Tasks Ahead We deﬁne our CSR priorities by understanding where our business activities intersect with our contributions to society, and we specify three areas businesses. At the same time, we will also make continuous efforts to improve selling prices, production costs and the like. Environmental Conservation Efforts We consider environmental conservation efforts a top management priority of the Komatsu Group. Based on the Komatsu Earth Environment Charter, the Komatsu Group is working to reduce environmental impact in each and every aspect of its business activities. In the area of product development, we are making concerted efforts to not only develop models featuring super fuel economy and low CO2 emissions in response to the latest emission regulations in Japan, the United States and Europe, but also cut down environmental load in the entire product lifecycle, for example, by developing iMC dozers capable of dramatically shortening the construction period. With respect to production, we are promoting the project to cut down power consumption volume to half in all plants in Japan. In May 2014, we began operation at a new assembly factory at the Awazu Plant. This factory incorporates dynamic process reforms and cutting-edge, high-efﬁciency facilities, achieving both improved productivity and outstanding reduction of purchase power consumption. We will continue to implement production reforms driven by reduction of power consumption in all other plants in Japan as planned. At the same time, we are also continuing to advocate the development of a recycling-oriented society and conserve air and water environments as well as biodiversity. CSR Efforts of focused efforts on a global scale as follows. (cid:127) Enhancing quality of life: providing products required by society (cid:127) Developing people (cid:127) Growing with society Through innovations, such as Autonomous Haulage System (AHS) and iMC dozers, we are working to provide realistic solutions by not only enhancing economy and safety but also responding to social issues, such as labor shortage. In the area of human resource development, we are not only strengthening our distributors outside of Japan, but also developing people to meet the needs of local communities around the world. To ensure sustainable growth of society by promoting group-wide efforts, we think about what we can and must do by capitalizing on our strengths built on through business, such as reconstruction assistance in the regions destroyed by the Great East Japan Earthquake and tsunami of 2011 as well as removal of landmines and community redevelopment in Cambodia and Angola. Based on the belief that “our corporate value is the total sum of trust 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. We will also ensure all employees share The KOMATSU Way and continue to constantly address the fundamentals of safety, environmental conservation, compliance and business performance. We will also facilitate both the development of corporate strength and the achievement of social responsibility in a well- On behalf of the members of the Board, we would like to extend our sincere appreciation to our stakeholders around the world for their support. balanced manner. July 2014 Kunio Noji Chairman of the Board Tetsuji Ohashi President and CEO FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/message/ 1/1 ページ Based on the belief that “our corporate value is the total sum of trust 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. We will also ensure all employees share The KOMATSU Way and continue to constantly address the fundamentals of safety, environmental conservation, compliance and business performance. We will also facilitate both the development of corporate strength and the achievement of social responsibility in a well- Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved balanced manner. July 2014 On behalf of the members of the Board, we would like to extend our sincere appreciation to our stakeholders around the world for their support. To All Our Stakeholders | KOMATSU REPORT 2014 To All Our Stakeholders | KOMATSU REPORT 2014 2014/07/10 17:27 2014/07/10 10:21 KOMATSU REPORT 2014 KOMATSU REPORT 2014 To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders Performance Performance Achievements and Tasks Ahead Achievements and Tasks Ahead Environmental Conservation Efforts Environmental Conservation Efforts CSR Efforts CSR Efforts Tetsuji Ohashi , President and CEO Tetsuji Ohashi , President and CEO Kunio Noji , Chairman of the Board Kunio Noji , Chairman of the Board Performance Performance For the ﬁscal year under review (April 1, 2013 - March 31, 2014), in the construction, mining and utility equipment business, while demand for For the ﬁscal year under review (April 1, 2013 – March 31, 2014), in the construction, mining and utility equipment business, while demand for mining equipment remained slack, that for construction equipment increased in Japan, China and some other regions. In addition, reﬂecting the mining equipment remained slack, that for construction equipment increased in Japan, China and some other regions. In addition, reﬂecting the Japanese yen's depreciation, sales increased from the previous ﬁscal year. With respect to the industrial machinery and others business, while Japanese yen’s depreciation, sales increased from the previous ﬁscal year. With respect to the industrial machinery and others business, while sales of sheet-metal and press machines were ﬁrm, total sales declined from the previous ﬁscal year, largely affected by a further decline in sales of sales of sheet-metal and press machines were ﬁrm, total sales declined from the previous ﬁscal year, largely affected by a further decline in sales of wire saws. As a result, consolidated net sales for the year increased by 3.6% from the previous ﬁscal year, to JPY1,953.6 billion. wire saws. As a result, consolidated net sales for the year increased by 3.6% from the previous ﬁscal year, to JPY1,953.6 billion. Concerning proﬁts, operating income improved by 13.7% from the previous ﬁscal year, to JPY240.4 billion, supported by the Japanese yen's Concerning proﬁts, operating income improved by 13.7% from the previous ﬁscal year, to JPY240.4 billion, supported by the Japanese yen’s depreciation and our continued focus on improving selling prices and production costs, as well as curtailing ﬁxed costs. Operating income ratio was depreciation and our continued focus on improving selling prices and production costs, as well as curtailing ﬁxed costs. Operating income ratio was 12.3%, up 1.1 percentage point. 12.3%, up 1.1 percentage points. Consolidated Business Results for the year Consolidated Business Results for the year Fiscal year ended March 31, 2014 (FY2013) Fiscal year ended March 31, 2014 (FY2013) Billions of JPY Billions of JPY (except for operating income ratio) (except for operating income ratio) Results for Results for Change Change the year the year (FY2013/FY2012) (FY2013/FY2012) Projections for the Fiscal Year 2014 Projections for the Fiscal Year 2014 (Announced on April 25, 2014) (Announced on April 25, 2014) Fiscal year ending March 31, 2015 (FY2014) Fiscal year ending March 31, 2015 (FY2014) Billions of JPY Billions of JPY (except for operating income ratio) (except for operating income ratio) FY2014 FY2014 Change Change (FY2014/FY2013) (FY2014/FY2013) Net sales Net sales Operating income Operating income Operating income ratio Operating income ratio Income before income taxes and Income before income taxes and equity in earnings of afﬁliated companies equity in earnings of afﬁliated companies 1,953.6 1,953.6 + 3.6% + 3.6% 240.4 240.4 12.3% 12.3% 242.0 242.0 + 13.7% + 13.7% + 1.1 pt + 1.1 pt + 18.3% + 18.3% Net sales Net sales Operating income Operating income Operating income ratio Operating income ratio Net income attributable to Komatsu Ltd. Net income attributable to Komatsu Ltd. 159.5 159.5 + 26.3% + 26.3% Income before income taxes and Income before income taxes and equity in earnings of afﬁliated companies equity in earnings of afﬁliated companies 1,880.0 1,880.0 243.0 243.0 12.9% 12.9% 237.0 237.0 - 3.8% - 3.8% + 1.0% + 1.0% +0.6 pts +0.6 pts - 2.1% - 2.1% Net income attributable to Komatsu Ltd. Net income attributable to Komatsu Ltd. 154.0 154.0 - 3.5% - 3.5% Sales by operation (Based on the amounts before elimination of Sales by operation (Based on the amounts before elimination of transactions between operations) transactions between operations) Note: Figures are rounded down to the hundred-million JPY. Note: Figures are rounded down to the hundred-million JPY. Construction, Mining and Utility Equipment Construction, Mining and Utility Equipment 1,752.2 1,752.2 Industrial Machinery and Others Industrial Machinery and Others Note: Figures are rounded down to the hundred-million JPY. Note: Figures are rounded down to the hundred-million JPY. Results for Results for Change Change the year the year (FY2013/FY2012) (FY2013/FY2012) + 4.3% + 4.3% - 3.3% - 3.3% 209.1 209.1 (7.7) (7.7) 1,953.6 1,953.6 + 3.6% + 3.6% Elimination Elimination Total Total Dividends Dividends Annual cash dividends per share: Annual cash dividends per share: FY2012: JPY 48 FY2012: JPY 48 FY2013: JPY 58 FY2013: JPY 58 FY2014: JPY 58 (planned) FY2014: JPY 58 (planned) Dividend Policy Dividend Policy ・Concerning cash dividends to our shareholders, we continue to maintain the ・Concerning cash dividends to our shareholders, we continue to maintain the policy of redistributing proﬁts by considering consolidated business results to strive policy of redistributing proﬁts by considering consolidated business results to strive to continue stable dividends. to continue stable dividends. ・We have set the goal of a consolidated payout ratio of 30% or higher, and ・We have set the goal of a consolidated payout ratio of 30% or higher, and maintains the policy of not decreasing dividends as long as a consolidated payout maintain the policy of not decreasing dividends as long as a consolidated payout ratio does not surpass 50%. ratio does not surpass 50%. Achievements and Tasks Ahead Achievements and Tasks Ahead In April 2013, we embarked on the “Together We Innovate GEMBA Worldwide” three-year, mid-range management plan. Since then, we have In April 2013, we embarked on the “Together We Innovate GEMBA Worldwide” three-year, mid-range management plan. Since then, we have engaged in business that emphasizes three focused efforts: 1) growth strategies based on innovation; 2) growth strategies of existing businesses; engaged in business that emphasizes three focused efforts: 1) growth strategies based on innovation; 2) growth strategies of existing businesses; and 3) structural reforms designed to reinforce the business foundation. and 3) structural reforms designed to reinforce our business foundation. With respect to growth strategies based on innovation, we launched the medium-sized D61PXi-23 intelligent Machine Control (iMC) dozers in North With respect to growth strategies based on innovation, we launched the medium-sized D61PXi-23 intelligent Machine Control (iMC) dozers in North America, Europe and Japan. This model features the world’s ﬁrst automatic blade control as a next-generation product. We also widened its model America, Europe and Japan. This model features the world's ﬁrst automatic blade control as a next-generation product. We also widened its model range. Concerning strategies of existing businesses, by taking advantage of KOMTRAX (Komatsu Machine Tracking System) information about range. Concerning strategies of existing businesses, by taking advantage of KOMTRAX (Komatsu Machine Tracking System) information about machine operations, we worked to strengthen the aftermarket business, which includes the provision of services and sales expansion of strategic machine operations, we worked to strengthen the aftermarket business, which includes the provision of services and sales expansion of strategic parts. parts. With respect to models certiﬁed for new emission regulations, which have become effective in the United States, Europe and Japan since 2011, we With respect to models certiﬁed for new emission regulations, which have become effective in the United States, Europe and Japan since 2011, we continued an aggressive market introduction together with KOMATSU CARE, a service program designed to reduce the total lifecycle costs of these continued an aggressive market introduction together with KOMATSU CARE, a service program designed to reduce the total lifecycle costs of these To All Our Stakeholders models and prolong machine life. In structural reforms designed to reinforce the business foundation, we facilitated activities to cut down electric models and prolong machine life. In structural reforms designed to reinforce our business foundation, we facilitated activities to cut down electric KOMATSU REPORT 2014 power consumption to half at all plants in Japan, including a new factory which will feature dynamic energy-saving and productivity by means of power consumption to half at all plants in Japan, including a new factory which will feature dynamic energy-saving and productivity by means of cutting-edge technologies, at the Awazu Plant in Ishikawa Prefecture, Japan. cutting-edge technologies, at the Awazu Plant in Ishikawa Prefecture, Japan. Looking ahead, we will step up our group-wide efforts to reinforce business models designed to offer comprehensive merits to customers, and strive Looking ahead, we will step up our group-wide efforts to reinforce business models designed to offer comprehensive merits to customers, and strive to expand sales in the entire value chain, which includes not only sales of new equipment but also rental-to-used equipment and retail ﬁnance to expand sales in the entire value chain, which includes not only sales of new equipment but also rental-to-used equipment and retail ﬁnance businesses. At the same time, we will also make continuous efforts to improve selling prices, production costs and the like. businesses. At the same time, we will also make continuous efforts to improve selling prices, production costs and the like. Environmental Conservation Efforts Environmental Conservation Efforts We consider environmental conservation efforts a top management priority of the Komatsu Group. Based on the Komatsu Earth Environment We consider environmental conservation efforts a top management priority of the Komatsu Group. Based on the Komatsu Earth Environment Charter, the Komatsu Group is working to reduce environmental impact in each and every aspect of its business activities. Charter, the Komatsu Group is working to reduce environmental impact in each and every aspect of its business activities. In the area of product development, we are making concerted efforts to not only develop models featuring super fuel economy and low CO2 In the area of product development, we are making concerted efforts to not only develop models featuring super fuel economy and low CO2 emissions in response to the latest emission regulations in Japan, the United States and Europe, but also cut down environmental load in the entire emissions in response to the latest emission regulations in Japan, the United States and Europe, but also cut down environmental load in the entire product lifecycle, for example, by developing iMC dozers capable of dramatically shortening the construction period. product lifecycle, for example, by developing iMC dozers capable of dramatically shortening the construction period. With respect to production, we are promoting the project to cut down power consumption volume to half in all plants in Japan. In May 2014, we With respect to production, we are promoting the project to cut down power consumption volume to half in all plants in Japan. In May 2014, we began operation at a new assembly factory at the Awazu Plant. This factory incorporates dynamic process reforms and cutting-edge, high-efﬁciency began operation at a new assembly factory at the Awazu Plant. This factory incorporates dynamic process reforms and cutting-edge, high-efﬁciency facilities, achieving both improved productivity and outstanding reduction of purchase power consumption. We will continue to implement production facilities, achieving both improved productivity and outstanding reduction of purchase power consumption. We will continue to implement production reforms driven by reduction of power consumption in all other plants in Japan as planned. At the same time, we are also continuing to advocate the reforms driven by reduction of power consumption in all other plants in Japan as planned. At the same time, we are also continuing to advocate the development of a recycling-oriented society and conserve air and water environments as well as biodiversity. development of a recycling-oriented society and conserve air and water environments as well as biodiversity. CSR Efforts CSR Efforts We deﬁne our CSR priorities by understanding where our business activities intersect with our contributions to society, and we specify three areas We deﬁne our CSR priorities by understanding where our business activities intersect with our contributions to society, and we specify three areas of focused efforts on a global scale as follows. of focused efforts on a global scale as follows. ・ Enhancing quality of life: providing products required by society (cid:127) Enhancing quality of life: providing products required by society ・ Developing people (cid:127) Developing people ・ Growing with society (cid:127) Growing with society Through innovations, such as Autonomous Haulage System (AHS) and iMC dozers, we are working to provide realistic solutions by not only Through innovations, such as Autonomous Haulage System (AHS) and iMC dozers, we are working to provide realistic solutions by not only enhancing economy and safety but also responding to social issues, such as labor shortage. In the area of human resource development, we are enhancing economy and safety but also responding to social issues, such as labor shortage. In the area of human resource development, we are not only strengthening our distributors outside of Japan, but also developing people to meet the needs of local communities around the world. To not only strengthening our distributors outside of Japan, but also developing people to meet the needs of local communities around the world. To ensure sustainable growth of society by promoting group-wide efforts, we think about what we can and must do by capitalizing on our strengths built ensure sustainable growth of society by promoting group-wide efforts, we think about what we can and must do by capitalizing on our strengths built on through business, such as reconstruction assistance in the regions destroyed by the Great East Japan Earthquake and tsunami of 2011 as well on through business, such as reconstruction assistance in the regions destroyed by the Great East Japan Earthquake and tsunami of 2011 as well as removal of landmines and community redevelopment in Cambodia and Angola. as removal of landmines and community redevelopment in Cambodia and Angola. Based on the belief that “our corporate value is the total sum of trust given to us by society and all our stakeholders,” we are further strengthening Based on the belief that “our corporate value is the total sum of trust 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. We will also ensure all our corporate governance to ensure sound and transparent management, while improving management efﬁciency. We will also ensure all employees share The KOMATSU Way and continue to constantly address the fundamentals of safety, environmental conservation, compliance and employees share The KOMATSU Way and continue to constantly address the fundamentals of safety, environmental conservation, compliance and business performance. We will also facilitate both the development of corporate strength and the achievement of social responsibility in a well- business performance. We will also facilitate both the development of corporate strength and the achievement of social responsibility in a well- balanced manner. balanced manner. On behalf of the members of the Board, we would like to extend our sincere appreciation to our stakeholders around the world for their support. On behalf of the members of the Board, we would like to extend our sincere appreciation to our stakeholders around the world for their support. July 2014 July 2014 Kunio Noji Kunio Noji Chairman of the Board Chairman of the Board Tetsuji Ohashi Tetsuji Ohashi President and CEO President and CEO KOMATSU REPORT 2014 09 FY2013 Highlights FY2013 Highlights Mid-range Focused Activities Mid-range Focused Activities For Sustainable Growth For Sustainable Growth Consolidated Results Consolidated Results Growth Strategies: Innovation Growth Strategies: Innovation Risk Management Risk Management Environmental Performance Environmental Performance To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders Sources of Growth Sources of Growth Basic Management Principles Basic Management Principles Outline of Operations Outline of Operations Our Strengths Our Strengths Mid-range Management Plan Mid-range Management Plan Growth Strategies: Existing Growth Strategies: Existing Businesses Businesses Structural Reforms (1) Structural Reforms (1) Structural Reforms (2) Structural Reforms (2) Review of FY2013 Operations Review of FY2013 Operations 5-Year Summary 5-Year Summary Construction, Mining & Utility Construction, Mining & Utility Equipment Equipment Industrial Machinery & Others Industrial Machinery & Others Corporate Governance Corporate Governance Environmental Conservation Efforts Environmental Conservation Efforts CSR Efforts CSR Efforts Information Information Corporate Information Corporate Information Download PDF Download PDF Site Map Site Map About KOMATSU REPORT About KOMATSU REPORT Use of the Gidelines Use of the Gidelines Terms and Conditions Terms and Conditions Inquiry Inquiry Site map Site map Copyright © 2014 Komatsu Ltd. All rights reserved Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/message/ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/message/ 1/1 ページ 1/1 ページ To All Our Stakeholders | KOMATSU REPORT 2014 2014/07/10 10:21 KOMATSU REPORT 2014 To All Our Stakeholders To All Our Stakeholders Performance Achievements and Tasks Ahead Environmental Conservation Efforts CSR Efforts Tetsuji Ohashi , President and CEO Kunio Noji , Chairman of the Board Performance For the ﬁscal year under review (April 1, 2013 – March 31, 2014), in the construction, mining and utility equipment business, while demand for mining equipment remained slack, that for construction equipment increased in Japan, China and some other regions. In addition, reﬂecting the Japanese yen’s depreciation, sales increased from the previous ﬁscal year. With respect to the industrial machinery and others business, while sales of sheet-metal and press machines were ﬁrm, total sales declined from the previous ﬁscal year, largely affected by a further decline in sales of wire saws. As a result, consolidated net sales for the year increased by 3.6% from the previous ﬁscal year, to JPY1,953.6 billion. Concerning proﬁts, operating income improved by 13.7% from the previous ﬁscal year, to JPY240.4 billion, supported by the Japanese yen’s depreciation and our continued focus on improving selling prices and production costs, as well as curtailing ﬁxed costs. Operating income ratio was 12.3%, up 1.1 percentage points. Consolidated Business Results for the year Fiscal year ended March 31, 2014 (FY2013) Billions of JPY (except for operating income ratio) Results for Change the year (FY2013/FY2012) Projections for the Fiscal Year 2014 (Announced on April 25, 2014) Fiscal year ending March 31, 2015 (FY2014) Billions of JPY (except for operating income ratio) FY2014 Change (FY2014/FY2013) Net sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies 1,953.6 + 3.6% 240.4 12.3% 242.0 + 13.7% + 1.1 pt + 18.3% Net sales Operating income Operating income ratio Net income attributable to Komatsu Ltd. 159.5 + 26.3% Income before income taxes and equity in earnings of afﬁliated companies 1,880.0 243.0 12.9% 237.0 - 3.8% + 1.0% +0.6 pts - 2.1% Net income attributable to Komatsu Ltd. 154.0 - 3.5% Sales by operation (Based on the amounts before elimination of transactions between operations) Note: Figures are rounded down to the hundred-million JPY. Construction, Mining and Utility Equipment 1,752.2 Industrial Machinery and Others Results for Change the year (FY2013/FY2012) + 4.3% - 3.3% 209.1 (7.7) 1,953.6 + 3.6% Note: Figures are rounded down to the hundred-million JPY. Elimination Total Dividends Annual cash dividends per share: FY2012: JPY 48 FY2013: JPY 58 FY2014: JPY 58 (planned) Dividend Policy ・Concerning cash dividends to our shareholders, we continue to maintain the policy of redistributing proﬁts by considering consolidated business results to strive to continue stable dividends. ・We have set the goal of a consolidated payout ratio of 30% or higher, and maintains the policy of not decreasing dividends as long as a consolidated payout ratio does not surpass 50%. Achievements and Tasks Ahead In April 2013, we embarked on the “Together We Innovate GEMBA Worldwide” three-year, mid-range management plan. Since then, we have engaged in business that emphasizes three focused efforts: 1) growth strategies based on innovation; 2) growth strategies of existing businesses; and 3) structural reforms designed to reinforce the business foundation. With respect to growth strategies based on innovation, we launched the medium-sized D61PXi-23 intelligent Machine Control (iMC) dozers in North America, Europe and Japan. This model features the world’s ﬁrst automatic blade control as a next-generation product. We also widened its model range. Concerning strategies of existing businesses, by taking advantage of KOMTRAX (Komatsu Machine Tracking System) information about machine operations, we worked to strengthen the aftermarket business, which includes the provision of services and sales expansion of strategic parts. With respect to models certiﬁed for new emission regulations, which have become effective in the United States, Europe and Japan since 2011, we continued an aggressive market introduction together with KOMATSU CARE, a service program designed to reduce the total lifecycle costs of these models and prolong machine life. In structural reforms designed to reinforce the business foundation, we facilitated activities to cut down electric power consumption to half at all plants in Japan, including a new factory which will feature dynamic energy-saving and productivity by means of cutting-edge technologies, at the Awazu Plant in Ishikawa Prefecture, Japan. Looking ahead, we will step up our group-wide efforts to reinforce business models designed to offer comprehensive merits to customers, and strive to expand sales in the entire value chain, which includes not only sales of new equipment but also rental-to-used equipment and retail ﬁnance businesses. At the same time, we will also make continuous efforts to improve selling prices, production costs and the like. Environmental Conservation Efforts We consider environmental conservation efforts a top management priority of the Komatsu Group. Based on the Komatsu Earth Environment Charter, the Komatsu Group is working to reduce environmental impact in each and every aspect of its business activities. In the area of product development, we are making concerted efforts to not only develop models featuring super fuel economy and low CO2 emissions in response to the latest emission regulations in Japan, the United States and Europe, but also cut down environmental load in the entire product lifecycle, for example, by developing iMC dozers capable of dramatically shortening the construction period. With respect to production, we are promoting the project to cut down power consumption volume to half in all plants in Japan. In May 2014, we began operation at a new assembly factory at the Awazu Plant. This factory incorporates dynamic process reforms and cutting-edge, high-efﬁciency facilities, achieving both improved productivity and outstanding reduction of purchase power consumption. We will continue to implement production reforms driven by reduction of power consumption in all other plants in Japan as planned. At the same time, we are also continuing to advocate the development of a recycling-oriented society and conserve air and water environments as well as biodiversity. We deﬁne our CSR priorities by understanding where our business activities intersect with our contributions to society, and we specify three areas CSR Efforts of focused efforts on a global scale as follows. ・ Enhancing quality of life: providing products required by society ・ Developing people ・ Growing with society Through innovations, such as Autonomous Haulage System (AHS) and iMC dozers, we are working to provide realistic solutions by not only enhancing economy and safety but also responding to social issues, such as labor shortage. In the area of human resource development, we are not only strengthening our distributors outside of Japan, but also developing people to meet the needs of local communities around the world. To ensure sustainable growth of society by promoting group-wide efforts, we think about what we can and must do by capitalizing on our strengths built on through business, such as reconstruction assistance in the regions destroyed by the Great East Japan Earthquake and tsunami of 2011 as well as removal of landmines and community redevelopment in Cambodia and Angola. Based on the belief that “our corporate value is the total sum of trust 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. We will also ensure all employees share The KOMATSU Way and continue to constantly address the fundamentals of safety, environmental conservation, compliance and business performance. We will also facilitate both the development of corporate strength and the achievement of social responsibility in a well- On behalf of the members of the Board, we would like to extend our sincere appreciation to our stakeholders around the world for their support. balanced manner. July 2014 Kunio Noji Chairman of the Board Tetsuji Ohashi President and CEO FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/message/ 1/1 ページ KOMATSU REPORT 2014 Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan KOMATSU REPORT 2014 10 Basic Management Principles｜KOMATSU REPORT 2014 2014/07/09 12:07 Sources of Growth KOMATSU REPORT 2014 Sources of Growth Basic Management Principles KOMATSU REPORT 2014 Basic Management Principles Management Policy The KOMATSU Way Komatsu's Code of Worldwide Business Conduct Management Policy The cornerstone of Komatsu's management principles is to maximize its corporate value through commitment to Quality and Reliability. We at the Komatsu Group believe our corporate value is the total sum of trust given to us by society and all stakeholders. To enhance this trust, we have not only taken action with full awareness of corporate social responsibility, but also worked to strengthen corporate governance and sharpen manufacturing competitiveness, thereby building on the source of our strengths. By introducing brand management based on this line of thought, we have been promoting efforts to change our way of thinking from the conventional perspective of a company (supplier) to that of customers, thereby further improving group-wide corporate fundamentals and promoting human resource development. Commitment to Quality and Reliability We believe our commitment to Quality and Reliability should not be limited to products and services but also extend to organizations, businesses, employees and all aspects of management. To enhance this Quality and Reliability, we have focused on the following ﬁve management guidelines. To always think about the needs of customers and to strive to provide not only products, services and systems that are safe, environmentally friendly and innovative, but also optimal solutions to their problems. To always engage in self-initiated innovation of technology and management. To promote consolidated management from the global perspective. To contribute to the welfare of the local community as a good corporate citizen. To protect the safety of employees and their families and provide employees with opportunities for self-initiated innovation and achievements. Emphasis on Corporate Governance To improve Quality and Reliability of management, the top management of each Komatsu Group company shall not only make constant efforts toward, but also have full awareness of corporate social responsibility, thereby removing risky, speculative businesses and practicing sound management. Komatsu Group companies also strive to vitalize their Board of Directors, the core organization for corporate governance, and establish their internal control system, thereby working to maintain and improve transparent and sound management. Reinforcement of Manufacturing Competitiveness By Manufacturing Competitiveness, we mean to provide our customers with those products, services and solutions that they highly appreciate. It also requires due considerations on safety and environmental conservation in all processes and become indispensable to our customers. Reinforcement of Manufacturing Competitiveness requires teamwork on two main platforms. First, this teamwork exists within the Komatsu Group, involving relevant departments, such as R&D, procurement, production, marketing, servicing and administration. Second, the same level of teamwork functions throughout the value chain, involving our suppliers, distributors and other business partners. This teamwork demonstrates our Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve workplaces. In this way we continuously embrace the challenge of manufacturing safe and innovative products. Brand Management Through Brand Management, guidelines for marketing and customer relations, we confront, along with our customers, the problems of equipment deployed on their jobsites and propose ideas for improvement, thereby enhancing their reliability (the degree of their dependence on us) and our relationship (the degree of continuously being chosen as their partner). To solve the problems of jobsite operations with our customers, we not only increase our visits to their jobsites and opportunities for communication, but also make their jobsite operations “visible” by means of ICT application. Once problems are identiﬁed, we capitalize on our group-wide resources in an integrated manner to develop solutions. The KOMATSU Way We complied a record of Komatsu's strengths, which our forerunners had built up, fundamental beliefs and mindsets underlying such strengths, as well as patterns of behaviors for practical implementation in the course of Komatsu's growth, based on management policy. Then, we documented them in writing as The KOMATSU Way in 2006. KOMATSU REPORT 2014 The KOMATSU Way describes the values that must be shared by all employees of the Komatsu Group, including top management, and must be 11 passed on to the generations to come at all workplaces. Dissemination of The KOMATSU Way Against the backdrop of a declining number of veteran employees in Japan and a growing number of foreign employees around the world, we implement a wide variety of dissemination and human resource development programs under the leadership of the KOMATSU Way Global Institute in order to distribute The KOMATSU Way among all Komatsu Group companies worldwide. At overseas subsidiaries, local senior managers, who have worked for Komatsu for many years, translated The KOMATSU Way into their native languages. In this manner, we have ensured that it is easy to understand for all employees in addition to a thorough understanding by top management. To reinforce Gemba (workplace) capabilities, the KOMATSU Way Global Institute offers our time-tested TQM (total quality management) training and other courses designed to advance employees' abilities in different specializations, such as proprietary technologies, special skills and management. KOMATSU Way Global Institute in Komatsu City, Ishikawa, Japan Komatsu's Code of Worldwide Business Conduct The Rules of the Business Community are not limited to laws but also include rules which are generally respected in society. Today, each and every employee is expected to fully become aware of corporate social responsibilities and take action to meet, and even surpass, the reliability demands of society. This is becoming an important part of the Rules. In 2001, we devised Komatsu's Code of Worldwide Business Conduct to describe basic rules, policies and stance to be followed anywhere in the world. Since then, we have revised it eight times, updating the latest information about the Rules. On par with The KOMATSU Way, Komatsu's Code of Worldwide Business Conduct provides invaluable guidelines, describing what we should be as a company. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/ 1/1 ページ Basic Management Principles｜KOMATSU REPORT 2014 2014/07/09 12:07 KOMATSU REPORT 2014 Sources of Growth Basic Management Principles Basic Management Principles Management Policy The KOMATSU Way Komatsu's Code of Worldwide Business Conduct Management Policy The cornerstone of Komatsu's management principles is to maximize its corporate value through commitment to Quality and Reliability. We at the Komatsu Group believe our corporate value is the total sum of trust given to us by society and all stakeholders. To enhance this trust, we have not only taken action with full awareness of corporate social responsibility, but also worked to strengthen corporate governance and sharpen manufacturing competitiveness, thereby building on the source of our strengths. By introducing brand management based on this line of thought, we have been promoting efforts to change our way of thinking from the conventional perspective of a company (supplier) to that of customers, thereby further improving group-wide corporate fundamentals and promoting human resource development. Commitment to Quality and Reliability We believe our commitment to Quality and Reliability should not be limited to products and services but also extend to organizations, businesses, employees and all aspects of management. To enhance this Quality and Reliability, we have focused on the following ﬁve management guidelines. To always think about the needs of customers and to strive to provide not only products, services and systems that are safe, environmentally friendly and innovative, but also optimal solutions to their problems. To always engage in self-initiated innovation of technology and management. To promote consolidated management from the global perspective. To contribute to the welfare of the local community as a good corporate citizen. To protect the safety of employees and their families and provide employees with opportunities for self-initiated innovation and achievements. Emphasis on Corporate Governance To improve Quality and Reliability of management, the top management of each Komatsu Group company shall not only make constant efforts toward, but also have full awareness of corporate social responsibility, thereby removing risky, speculative businesses and practicing sound management. Komatsu Group companies also strive to vitalize their Board of Directors, the core organization for corporate governance, and establish their internal control system, thereby working to maintain and improve transparent and sound management. Reinforcement of Manufacturing Competitiveness By Manufacturing Competitiveness, we mean to provide our customers with those products, services and solutions that they highly appreciate. It also requires due considerations on safety and environmental conservation in all processes and become indispensable to our customers. Reinforcement of Manufacturing Competitiveness requires teamwork on two main platforms. First, this teamwork exists within the Komatsu Group, involving relevant departments, such as R&D, procurement, production, marketing, servicing and administration. Second, the same level of teamwork functions throughout the value chain, involving our suppliers, distributors and other business partners. This teamwork demonstrates our Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve workplaces. In this way we continuously embrace the challenge of manufacturing safe and innovative products. Brand Management Through Brand Management, guidelines for marketing and customer relations, we confront, along with our customers, the problems of equipment deployed on their jobsites and propose ideas for improvement, thereby enhancing their reliability (the degree of their dependence on us) and our relationship (the degree of continuously being chosen as their partner). To solve the problems of jobsite operations with our customers, we not only increase our visits to their jobsites and opportunities for communication, Sources of Growth but also make their jobsite operations “visible” by means of ICT application. Once problems are identiﬁed, we capitalize on our group-wide resources in an integrated manner to develop solutions. KOMATSU REPORT 2014 The KOMATSU Way We complied a record of Komatsu's strengths, which our forerunners had built up, fundamental beliefs and mindsets underlying such strengths, as well as patterns of behaviors for practical implementation in the course of Komatsu's growth, based on management policy. Then, we documented them in writing as The KOMATSU Way in 2006. The KOMATSU Way describes the values that must be shared by all employees of the Komatsu Group, including top management, and must be passed on to the generations to come at all workplaces. Dissemination of The KOMATSU Way Against the backdrop of a declining number of veteran employees in Japan and a growing number of foreign employees around the world, we implement a wide variety of dissemination and human resource development programs under the leadership of the KOMATSU Way Global Institute in order to distribute The KOMATSU Way among all Komatsu Group companies worldwide. At overseas subsidiaries, local senior managers, who have worked for Komatsu for many years, translated The KOMATSU Way into their native languages. In this manner, we have ensured that it is easy to understand for all employees in addition to a thorough understanding by top management. To reinforce Gemba (workplace) capabilities, the KOMATSU Way Global Institute offers our time-tested TQM (total quality management) training and other courses designed to advance employees' abilities in different specializations, such as proprietary technologies, special skills and management. KOMATSU Way Global Institute in Komatsu City, Ishikawa, Japan Komatsu's Code of Worldwide Business Conduct The Rules of the Business Community are not limited to laws but also include rules which are generally respected in society. Today, each and every employee is expected to fully become aware of corporate social responsibilities and take action to meet, and even surpass, the reliability demands of society. This is becoming an important part of the Rules. In 2001, we devised Komatsu's Code of Worldwide Business Conduct to describe basic rules, policies and stance to be followed anywhere in the world. Since then, we have revised it eight times, updating the latest information about the Rules. On par with The KOMATSU Way, Komatsu's Code of Worldwide Business Conduct provides invaluable guidelines, describing what we should be as a company. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report KOMATSU REPORT 2014 About KOMATSU REPORT 12 Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/ 1/1 ページ Outline of operations | KOMATSU REPORT 2014 2014/07/09 12:07 Sources of Growth KOMATSU REPORT 2014 Sources of Growth Outline of Operations KOMATSU REPORT 2014 Outline of Operations Business Model at a Glance Business Model at a Glance We utilize a diverse range of resources, such as people, organizations, suppliers, distributors and intellectual property, and engage in a wide variety of business activities. Financial figures reflect those for FY2013. Numbers of facilities, etc. stand as of April 30, 2014. ● Manufacturing Engineering Development Center 【Construction & mining equipment】 Americas Production Production bases Assembly incl. Mother plants Components & parts Materials Total 4 1 3 1 8 Europe CIS 6 4 2 0 8 3 - 4 2 9 3 - 4 2 9 6 4 *7 *1 14 22 9 20 6 48 China Asia Japan Total 【Industrial machinery & others】 Americas China Asia Japan Total Industrial machinery Others Total - - - - - - Capital expenditures (tangible fixed assets): JPY0.4 bn 2 - 2 5 4 9 7 4 11 Europe CIS - - - * Incl. components: casting materials=1 and production=6 Total capital expenditures (tangible fixed assets): JPY17.9 bn　 Sales & service 【Construction & mining equipment】 (No. of host countries: 151) Traditional Markets Strategic Markets No. of distributors Japan N.America Distributors Incl.subsidiaries 17 1 33 2 Europe L.America CIS Middle East 10 - 43 2 25 2 8 - Africa China Asia & Oceania 17 1 15 4 33 1 【Industrial machinery & others】　 Sales bases: 22 in 9 countries ● Parts centers (distribution) : 49 【Aftermarket】 Total 201 13 ● Service support centers (training and support for distributors) : 27 ● Training centers (mechanics) : 20 ● Reman/rebuild centers : 12 　(Remanufacturing and repair of key components, such as engines) ● Retail finance　 ● Rent-to-used equipment business ICT systems ● KOMTRAX-installed machine population: 340,000 units worldwide　 ● KOMTRAX Plus　 ● GPS technologies　 ● Modular Mining Systems, Inc.: MineCARE　 ● Komatsu Forest AB : MaxiFleet, etc. Manufacturing Logistics Sales After-sales Services and Use Recovery and Disassembly ● Production of key components exclusively in Japan and technology innovation　 ● “Built-in” Quality and Reliability of equipment by Mother plants　 ● Flexible cross sourcing of finished products (geographical optimization of production) 【Society】 ● Co-existence with local communities　 ● Biomass power generation　 ● Komatsu-no-mori ● Service support worldwide　 ● Spare parts ( Improvement of next-morning delivery rates)　 ● Proposition of high value-added Strategic Parts　 ● Service contract business　 ● Brand management efforts ( Efforts to improve customers’ jobsite operations, such as fuel-saving machine operation) ● Retail finance business　 ● Rental business　 ● Rent-to-used equipment business　 ● Solution business　 ● Expansion of distributors with zero inventories　● AHS 　● ICT-intensive construction　● KOMTRAX ● Promotion of “Reman,” in which used components (parts) are recovered, remanufactured, and supplied back to the market ● Cutting down electric power consumption to half at all plants in Japan 　(incl. a new super-efficiency assembly factory at the Awazu Plant.) ● Effective utilization of resources ( Zero emissions) ● Reduction of water use　 ● Environmental risk management ● Mitigation of climate change (energy conservation) ● CO² reductions in logistics ● Modal shift for greener logistics ● Improvement of transport efficiency ● Improvement of packing ● Provision of environmentally-friendly products and services ● Establishment and operation of a transaction network for used components (parts) ● Reduction of environmental impact during the product usage stage ● Provision of solutions for customers’ environmental activities ● Promotion of fuel-efficient operation Development 【Construction & mining equipment】 ● Construction Equipment Technical centers(Mother plants) ● Development of components Resources R&D expenses: JPY64.4 bn Construction, mining & utility equipment: JPY56.6 bn Industrial machinery & others: JPY7.8 bn ● Academia-industrial collaboration ● Private-sector industrial collaboration Development Procurement No. of suppliers: 1,200 incl. Midori-kai suppliers: 164 Procurement of Materials Activities ● DANTOTSU products : Featuring unrivaled Safety, Environmental friendliness, Fuel economy and ICT ● “Built-in” engineering advantages by Mother plants and Midori-kai suppliers ● Compliance to emission gas regulations ● Development of hybrid hydraulic excavators ● Research in next-generation mining equipment ● AHS ● ICT-intensive construction ● KOMTRAX ● Ecology & Economy : Low fuel consumption / Reduction of CO² emissions ● LCA design ● Medium-term targets for development of environmental technology Environ- mental protection ● Green procurement FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 13 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/model.html 1/1 ページ Outline of operations | KOMATSU REPORT 2014 2014/07/09 12:07 Our Strengths | KOMATSU REPORT 2014 2014/07/10 17:28 KOMATSU REPORT 2014 Sources of Growth Outline of Operations Outline of Operations Sources of Growth KOMATSU REPORT 2014 Sources of Growth Our Strengths KOMATSU REPORT 2014 Our Strengths Business Model at a Glance Competitive Manufacturing Strengths in Development and Production Strengths in Sales and Service Business Model at a Glance of business activities. We utilize a diverse range of resources, such as people, organizations, suppliers, distributors and intellectual property, and engage in a wide variety We have derived our strengths by working to reinforce corporate governance and competitive manufacturing. Based on this approach, we have introduced brand management in order to change the mindset of Komatsu Group employees from that based on a supplier to that of a customer. This is further strengthening Komatsu Group's corporate muscle and facilitating human resource development. Competitive Manufacturing We deﬁne competitive manufacturing as work not limited to people on the shop ﬂoor but as teamwork among all internal departments, such as R&D, production, sales and product support, as well as all value-chain partners, such as suppliers and distributors. Gemba (Workplace) Capability We deﬁne workplace capability as the capability of each and every employee to improve his/her work spontaneously and continually. We have nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing. Solid Partnership with Suppliers and Distributors We conduct business as we team up with our suppliers and distributors in charge of sales and service activities by sharing values and principles. We have “Midori-kai”, the group of our suppliers in Japan, and regard it as the center of reinforcing collaboration. Midori-kai suppliers are asked to get involved in the development stage of products in order to enhance our product competitiveness. They are also invited to participate in our human resource development programs. We have also organized “Midori-kai” outside of Japan. Strengths in Development and Production In-house Development and Production of Key Components We develop and produce key components, such as engines and hydraulic equipment, including the metal casting process, in Japan where we can capitalize on time-tested competitive manufacturing. In this way, we are well positioned to enhance our product competitiveness by reassessing all processes, including the design stage, when necessary. Further, we supply key components, which incorporate the world's top-level quality, cost and delivery advantages, to our assembly plants around the world. Mother Plant System We position assembly plants equipped with product development capability as Mother plants. When producing new products or making model changes, development and production divisions as well as suppliers team up to “build in” thorough quality, cost and delivery advantages. Mother plants are responsible for Safety, Legal compliance, Quality, Delivery and Cost of Child plants when producing the same models. In addition, Mother plants not only ensure the stable global supply of their products, but also work to transfer competitive manufacturing to Child plants. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Assembly Plants for Construction and Mining Equipment Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 14 Flexible Global Production China and Southeast Asia. We have 22 assembly plants (Mother and Child plants together) worldwide. We assemble the equipment at the best possible plants, chosen especially by considering local market demand, foreign exchange rates and equalization of production load, and cross-sourced ﬁnished products around the world. Except for key components, parts with superior quality and low costs are supplied to assembly plants around the world from Construction and Mining Equipment: Production Bases and Main Models Strengths in Sales and Service Global Sales and Service Networks Global Sales and Service Networks (Distributors) Our network of 201 distributors in 151 countries covers 99% of the countries and regions with demand around the world. For mining equipment, Komatsu and its subsidiaries team up to engage in customer-tailored sales and service activities. ICT Applications: KOMTRAX Komatsu has been setting the pace for implementing ICT applications in the construction and mining equipment industry. The number of KOMTRAX (Komatsu Machine Tracking System)-installed construction equipment has exceeded 340,000 worldwide, and we are utilizing a massive amount of information gained from the KOMTRAX in marketing and service operations. Concerning the use of all ICT-based information, we share it with our customers and distributors. Together we make customers' jobsite operations “visible” and improve their operations, thereby building up a solid relationship with customers. Human Resource Development around the World We are converging efforts to develop human resources centering on 20 training centers and 27 service support centers worldwide. We are also promoting the localization of management by training top management of overseas subsidiaries. Today, seven overseas subsidiaries are managed by those of respective citizenships who have worked for Komatsu over the years. Product Support Bases Zero Inventory Project for Distributors to ﬁnd out retail demand in a timely way around the world. Under this project, we own distributors' ﬁnished products for them so that they can focus on sales and service. In this way we should become able FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/model.html 1/1 ページ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/strength.html 1/1 ページ Our Strengths | KOMATSU REPORT 2014 2014/07/10 17:28 KOMATSU REPORT 2014 Sources of Growth Our Strengths Our Strengths Competitive Manufacturing Strengths in Development and Production Strengths in Sales and Service We have derived our strengths by working to reinforce corporate governance and competitive manufacturing. Based on this approach, we have introduced brand management in order to change the mindset of Komatsu Group employees from that based on a supplier to that of a customer. This is further strengthening Komatsu Group's corporate muscle and facilitating human resource development. Competitive Manufacturing Gemba (Workplace) Capability We deﬁne competitive manufacturing as work not limited to people on the shop ﬂoor but as teamwork among all internal departments, such as R&D, production, sales and product support, as well as all value-chain partners, such as suppliers and distributors. We deﬁne workplace capability as the capability of each and every employee to improve his/her work spontaneously and continually. We have nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing. Solid Partnership with Suppliers and Distributors We conduct business as we team up with our suppliers and distributors in charge of sales and service activities by sharing values and principles. We have “Midori-kai”, the group of our suppliers in Japan, and regard it as the center of reinforcing collaboration. Midori-kai suppliers are asked to get involved in the development stage of products in order to enhance our product competitiveness. They are also invited to participate in our human resource development programs. We have also organized “Midori-kai” outside of Japan. Strengths in Development and Production In-house Development and Production of Key Components We develop and produce key components, such as engines and hydraulic equipment, including the metal casting process, in Japan where we can capitalize on time-tested competitive manufacturing. In this way, we are well positioned to enhance our product competitiveness by reassessing all processes, including the design stage, when necessary. Further, we supply key components, which incorporate the world's top-level quality, cost and delivery advantages, to our assembly plants around the world. Mother Plant System We position assembly plants equipped with product development capability as Mother plants. When producing new products or making model changes, development and production divisions as well as suppliers team up to “build in” thorough quality, cost and delivery advantages. Mother Sources of Growth plants are responsible for Safety, Legal compliance, Quality, Delivery and Cost of Child plants when producing the same models. In addition, Mother KOMATSU REPORT 2014 plants not only ensure the stable global supply of their products, but also work to transfer competitive manufacturing to Child plants. Assembly Plants for Construction and Mining Equipment Flexible Global Production We have 22 assembly plants (Mother and Child plants together) worldwide. We assemble the equipment at the best possible plants, chosen especially by considering local market demand, foreign exchange rates and equalization of production load, and cross-sourced ﬁnished products around the world. Except for key components, parts with superior quality and low costs are supplied to assembly plants around the world from China and Southeast Asia. Construction and Mining Equipment: Production Bases and Main Models Strengths in Sales and Service Global Sales and Service Networks KOMATSU REPORT 2014 Our network of 201 distributors in 151 countries covers 99% of the countries and regions with demand around the world. For mining equipment, 15 Komatsu and its subsidiaries team up to engage in customer-tailored sales and service activities. Global Sales and Service Networks (Distributors) ICT Applications: KOMTRAX Komatsu has been setting the pace for implementing ICT applications in the construction and mining equipment industry. The number of KOMTRAX (Komatsu Machine Tracking System)-installed construction equipment has exceeded 340,000 worldwide, and we are utilizing a massive amount of information gained from the KOMTRAX in marketing and service operations. Concerning the use of all ICT-based information, we share it with our customers and distributors. Together we make customers' jobsite operations “visible” and improve their operations, thereby building up a solid relationship with customers. Human Resource Development around the World We are converging efforts to develop human resources centering on 20 training centers and 27 service support centers worldwide. We are also promoting the localization of management by training top management of overseas subsidiaries. Today, seven overseas subsidiaries are managed by those of respective citizenships who have worked for Komatsu over the years. Product Support Bases Zero Inventory Project for Distributors to ﬁnd out retail demand in a timely way around the world. Under this project, we own distributors' ﬁnished products for them so that they can focus on sales and service. In this way we should become able FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/strength.html 1/1 ページ Our Strengths | KOMATSU REPORT 2014 2014/07/10 17:28 KOMATSU REPORT 2014 Sources of Growth Our Strengths Our Strengths Competitive Manufacturing Strengths in Development and Production Strengths in Sales and Service We have derived our strengths by working to reinforce corporate governance and competitive manufacturing. Based on this approach, we have introduced brand management in order to change the mindset of Komatsu Group employees from that based on a supplier to that of a customer. This is further strengthening Komatsu Group's corporate muscle and facilitating human resource development. Competitive Manufacturing Gemba (Workplace) Capability We deﬁne competitive manufacturing as work not limited to people on the shop ﬂoor but as teamwork among all internal departments, such as R&D, production, sales and product support, as well as all value-chain partners, such as suppliers and distributors. We deﬁne workplace capability as the capability of each and every employee to improve his/her work spontaneously and continually. We have nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing. Solid Partnership with Suppliers and Distributors We conduct business as we team up with our suppliers and distributors in charge of sales and service activities by sharing values and principles. We have “Midori-kai”, the group of our suppliers in Japan, and regard it as the center of reinforcing collaboration. Midori-kai suppliers are asked to get involved in the development stage of products in order to enhance our product competitiveness. They are also invited to participate in our human resource development programs. We have also organized “Midori-kai” outside of Japan. Strengths in Development and Production In-house Development and Production of Key Components We develop and produce key components, such as engines and hydraulic equipment, including the metal casting process, in Japan where we can capitalize on time-tested competitive manufacturing. In this way, we are well positioned to enhance our product competitiveness by reassessing all processes, including the design stage, when necessary. Further, we supply key components, which incorporate the world's top-level quality, cost and delivery advantages, to our assembly plants around the world. Mother Plant System We position assembly plants equipped with product development capability as Mother plants. When producing new products or making model changes, development and production divisions as well as suppliers team up to “build in” thorough quality, cost and delivery advantages. Mother plants are responsible for Safety, Legal compliance, Quality, Delivery and Cost of Child plants when producing the same models. In addition, Mother plants not only ensure the stable global supply of their products, but also work to transfer competitive manufacturing to Child plants. Assembly Plants for Construction and Mining Equipment Sources of Growth KOMATSU REPORT 2014 Strengths in Sales and Service Global Sales and Service Networks Our network of 201 distributors in 151 countries covers 99% of the countries and regions with demand around the world. For mining equipment, Komatsu and its subsidiaries team up to engage in customer-tailored sales and service activities. Global Sales and Service Networks (Distributors) ICT Applications: KOMTRAX Komatsu has been setting the pace for implementing ICT applications in the construction and mining equipment industry. The number of KOMTRAX (Komatsu Machine Tracking System)-installed construction equipment has exceeded 340,000 worldwide, and we are utilizing a massive amount of information gained from the KOMTRAX in marketing and service operations. Concerning the use of all ICT-based information, we share it with our customers and distributors. Together we make customers' jobsite operations “visible” and improve their operations, thereby building up a solid relationship with customers. Human Resource Development around the World We are converging efforts to develop human resources centering on 20 training centers and 27 service support centers worldwide. We are also promoting the localization of management by training top management of overseas subsidiaries. Today, seven overseas subsidiaries are managed by those of respective citizenships who have worked for Komatsu over the years. Product Support Bases Our Strengths | KOMATSU REPORT 2014 2014/07/10 17:28 KOMATSU REPORT 2014 Sources of Growth Our Strengths Our Strengths Competitive Manufacturing Strengths in Development and Production Strengths in Sales and Service We have derived our strengths by working to reinforce corporate governance and competitive manufacturing. Based on this approach, we have introduced brand management in order to change the mindset of Komatsu Group employees from that based on a supplier to that of a customer. This is further strengthening Komatsu Group's corporate muscle and facilitating human resource development. We deﬁne workplace capability as the capability of each and every employee to improve his/her work spontaneously and continually. We have nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing. Solid Partnership with Suppliers and Distributors We conduct business as we team up with our suppliers and distributors in charge of sales and service activities by sharing values and principles. We have “Midori-kai”, the group of our suppliers in Japan, and regard it as the center of reinforcing collaboration. Midori-kai suppliers are asked to get involved in the development stage of products in order to enhance our product competitiveness. They are also invited to participate in our human resource development programs. We have also organized “Midori-kai” outside of Japan. Strengths in Development and Production In-house Development and Production of Key Components We develop and produce key components, such as engines and hydraulic equipment, including the metal casting process, in Japan where we can capitalize on time-tested competitive manufacturing. In this way, we are well positioned to enhance our product competitiveness by reassessing all processes, including the design stage, when necessary. Further, we supply key components, which incorporate the world's top-level quality, cost and delivery advantages, to our assembly plants around the world. Mother Plant System We position assembly plants equipped with product development capability as Mother plants. When producing new products or making model changes, development and production divisions as well as suppliers team up to “build in” thorough quality, cost and delivery advantages. Mother plants are responsible for Safety, Legal compliance, Quality, Delivery and Cost of Child plants when producing the same models. In addition, Mother plants not only ensure the stable global supply of their products, but also work to transfer competitive manufacturing to Child plants. Assembly Plants for Construction and Mining Equipment Flexible Global Production China and Southeast Asia. We have 22 assembly plants (Mother and Child plants together) worldwide. We assemble the equipment at the best possible plants, chosen especially by considering local market demand, foreign exchange rates and equalization of production load, and cross-sourced ﬁnished products around the world. Except for key components, parts with superior quality and low costs are supplied to assembly plants around the world from Construction and Mining Equipment: Production Bases and Main Models Competitive Manufacturing We deﬁne competitive manufacturing as work not limited to people on the shop ﬂoor but as teamwork among all internal departments, such as China and Southeast Asia. R&D, production, sales and product support, as well as all value-chain partners, such as suppliers and distributors. Gemba (Workplace) Capability Construction and Mining Equipment: Production Bases and Main Models Flexible Global Production We have 22 assembly plants (Mother and Child plants together) worldwide. We assemble the equipment at the best possible plants, chosen especially by considering local market demand, foreign exchange rates and equalization of production load, and cross-sourced ﬁnished products around the world. Except for key components, parts with superior quality and low costs are supplied to assembly plants around the world from Strengths in Sales and Service Global Sales and Service Networks Global Sales and Service Networks (Distributors) Our network of 201 distributors in 151 countries covers 99% of the countries and regions with demand around the world. For mining equipment, Komatsu and its subsidiaries team up to engage in customer-tailored sales and service activities. KOMATSU REPORT 2014 16 Zero Inventory Project for Distributors to ﬁnd out retail demand in a timely way around the world. Under this project, we own distributors' ﬁnished products for them so that they can focus on sales and service. In this way we should become able FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines ICT Applications: KOMTRAX Komatsu has been setting the pace for implementing ICT applications in the construction and mining equipment industry. The number of KOMTRAX (Komatsu Machine Tracking System)-installed construction equipment has exceeded 340,000 worldwide, and we are utilizing a massive amount of information gained from the KOMTRAX in marketing and service operations. Concerning the use of all ICT-based information, we share it with our customers and distributors. Together we make customers' jobsite operations “visible” and improve their operations, thereby building up a solid relationship with customers. Human Resource Development around the World We are converging efforts to develop human resources centering on 20 training centers and 27 service support centers worldwide. We are also promoting the localization of management by training top management of overseas subsidiaries. Today, seven overseas subsidiaries are managed Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved by those of respective citizenships who have worked for Komatsu over the years. Product Support Bases http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/strength.html 1/1 ページ Zero Inventory Project for Distributors to ﬁnd out retail demand in a timely way around the world. Under this project, we own distributors' ﬁnished products for them so that they can focus on sales and service. In this way we should become able FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/strength.html 1/1 ページ Our Strengths | KOMATSU REPORT 2014 2014/07/10 17:28 KOMATSU REPORT 2014 Sources of Growth Our Strengths Our Strengths Competitive Manufacturing Strengths in Development and Production Strengths in Sales and Service We have derived our strengths by working to reinforce corporate governance and competitive manufacturing. Based on this approach, we have introduced brand management in order to change the mindset of Komatsu Group employees from that based on a supplier to that of a customer. This is further strengthening Komatsu Group's corporate muscle and facilitating human resource development. Competitive Manufacturing Gemba (Workplace) Capability We deﬁne competitive manufacturing as work not limited to people on the shop ﬂoor but as teamwork among all internal departments, such as R&D, production, sales and product support, as well as all value-chain partners, such as suppliers and distributors. We deﬁne workplace capability as the capability of each and every employee to improve his/her work spontaneously and continually. We have nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing. Solid Partnership with Suppliers and Distributors We conduct business as we team up with our suppliers and distributors in charge of sales and service activities by sharing values and principles. We have “Midori-kai”, the group of our suppliers in Japan, and regard it as the center of reinforcing collaboration. Midori-kai suppliers are asked to get involved in the development stage of products in order to enhance our product competitiveness. They are also invited to participate in our human resource development programs. We have also organized “Midori-kai” outside of Japan. Strengths in Development and Production In-house Development and Production of Key Components We develop and produce key components, such as engines and hydraulic equipment, including the metal casting process, in Japan where we can capitalize on time-tested competitive manufacturing. In this way, we are well positioned to enhance our product competitiveness by reassessing all processes, including the design stage, when necessary. Further, we supply key components, which incorporate the world's top-level quality, cost and delivery advantages, to our assembly plants around the world. Mother Plant System We position assembly plants equipped with product development capability as Mother plants. When producing new products or making model changes, development and production divisions as well as suppliers team up to “build in” thorough quality, cost and delivery advantages. Mother plants are responsible for Safety, Legal compliance, Quality, Delivery and Cost of Child plants when producing the same models. In addition, Mother plants not only ensure the stable global supply of their products, but also work to transfer competitive manufacturing to Child plants. Assembly Plants for Construction and Mining Equipment Flexible Global Production China and Southeast Asia. We have 22 assembly plants (Mother and Child plants together) worldwide. We assemble the equipment at the best possible plants, chosen especially by considering local market demand, foreign exchange rates and equalization of production load, and cross-sourced ﬁnished products around the world. Except for key components, parts with superior quality and low costs are supplied to assembly plants around the world from Construction and Mining Equipment: Production Bases and Main Models Strengths in Sales and Service Global Sales and Service Networks Global Sales and Service Networks (Distributors) Our network of 201 distributors in 151 countries covers 99% of the countries and regions with demand around the world. For mining equipment, Komatsu and its subsidiaries team up to engage in customer-tailored sales and service activities. Sources of Growth KOMATSU REPORT 2014 ICT Applications: KOMTRAX Komatsu has been setting the pace for implementing ICT applications in the construction and mining equipment industry. The number of KOMTRAX (Komatsu Machine Tracking System)-installed construction equipment has exceeded 340,000 worldwide, and we are utilizing a massive amount of information gained from the KOMTRAX in marketing and service operations. Concerning the use of all ICT-based information, we share it with our customers and distributors. Together we make customers' jobsite operations “visible” and improve their operations, thereby building up a solid relationship with customers. Human Resource Development around the World We are converging efforts to develop human resources centering on 20 training centers and 27 service support centers worldwide. We are also promoting the localization of management by training top management of overseas subsidiaries. Today, seven overseas subsidiaries are managed by those of respective citizenships who have worked for Komatsu over the years. Product Support Bases Zero Inventory Project for Distributors Under this project, we own distributors' ﬁnished products for them so that they can focus on sales and service. In this way we should become able to ﬁnd out retail demand in a timely way around the world. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map KOMATSU REPORT 2014 17 About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/strength.html 1/1 ページ Our Strengths | KOMATSU REPORT 2014 2014/07/10 17:28 KOMATSU REPORT 2014 Sources of Growth Our Strengths Our Strengths Competitive Manufacturing Strengths in Development and Production Strengths in Sales and Service We have derived our strengths by working to reinforce corporate governance and competitive manufacturing. Based on this approach, we have introduced brand management in order to change the mindset of Komatsu Group employees from that based on a supplier to that of a customer. This is further strengthening Komatsu Group's corporate muscle and facilitating human resource development. Competitive Manufacturing Gemba (Workplace) Capability We deﬁne competitive manufacturing as work not limited to people on the shop ﬂoor but as teamwork among all internal departments, such as R&D, production, sales and product support, as well as all value-chain partners, such as suppliers and distributors. We deﬁne workplace capability as the capability of each and every employee to improve his/her work spontaneously and continually. We have nurtured this workplace capability through TQM (Total Quality Management) over the years, thereby enhancing competitive manufacturing. Solid Partnership with Suppliers and Distributors We conduct business as we team up with our suppliers and distributors in charge of sales and service activities by sharing values and principles. We have “Midori-kai”, the group of our suppliers in Japan, and regard it as the center of reinforcing collaboration. Midori-kai suppliers are asked to get involved in the development stage of products in order to enhance our product competitiveness. They are also invited to participate in our human resource development programs. We have also organized “Midori-kai” outside of Japan. Strengths in Development and Production In-house Development and Production of Key Components We develop and produce key components, such as engines and hydraulic equipment, including the metal casting process, in Japan where we can capitalize on time-tested competitive manufacturing. In this way, we are well positioned to enhance our product competitiveness by reassessing all processes, including the design stage, when necessary. Further, we supply key components, which incorporate the world's top-level quality, cost and delivery advantages, to our assembly plants around the world. Mother Plant System We position assembly plants equipped with product development capability as Mother plants. When producing new products or making model changes, development and production divisions as well as suppliers team up to “build in” thorough quality, cost and delivery advantages. Mother plants are responsible for Safety, Legal compliance, Quality, Delivery and Cost of Child plants when producing the same models. In addition, Mother plants not only ensure the stable global supply of their products, but also work to transfer competitive manufacturing to Child plants. Assembly Plants for Construction and Mining Equipment Flexible Global Production China and Southeast Asia. We have 22 assembly plants (Mother and Child plants together) worldwide. We assemble the equipment at the best possible plants, chosen especially by considering local market demand, foreign exchange rates and equalization of production load, and cross-sourced ﬁnished products around the world. Except for key components, parts with superior quality and low costs are supplied to assembly plants around the world from Construction and Mining Equipment: Production Bases and Main Models Strengths in Sales and Service Global Sales and Service Networks Global Sales and Service Networks (Distributors) Our network of 201 distributors in 151 countries covers 99% of the countries and regions with demand around the world. For mining equipment, Komatsu and its subsidiaries team up to engage in customer-tailored sales and service activities. Zero Inventory Project for Distributors to ﬁnd out retail demand in a timely way around the world. Under this project, we own distributors' ﬁnished products for them so that they can focus on sales and service. In this way we should become able FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 Sources of Growth KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan KOMATSU REPORT 2014 relationship with customers. Human Resource Development around the World Product Support Bases ICT Applications: KOMTRAX Komatsu has been setting the pace for implementing ICT applications in the construction and mining equipment industry. The number of KOMTRAX (Komatsu Machine Tracking System)-installed construction equipment has exceeded 340,000 worldwide, and we are utilizing a massive amount of information gained from the KOMTRAX in marketing and service operations. Concerning the use of all ICT-based information, we share it with our customers and distributors. Together we make customers' jobsite operations “visible” and improve their operations, thereby building up a solid Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, which started in April 2013 and will continue through March 2016. We are converging efforts to develop human resources centering on 20 training centers and 27 service support centers worldwide. We are also promoting the localization of management by training top management of overseas subsidiaries. Today, seven overseas subsidiaries are managed by those of respective citizenships who have worked for Komatsu over the years. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/strength.html 1/1 ページ of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology Outline of the Plan The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and improve the level of proﬁt redistribution to shareholders. Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group will advance improvement efforts at our respective workplaces around the world. We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global business expansion. Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio at the end of the ﬁscal year) / 2] Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% KOMATSU REPORT 2014 18 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Guidelines for exchange rates Per USD JPY 90-95 Target ﬁgure for FY2015 FY2013 results Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 Focused Activities (1) Growth Strategies Based on Innovation We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. (cid:127)Activities D39PXi iMC dozer Establishment of joint-ownership company for next-generation underground We are developing solutions by using information transmitted from the machines in mining equipment use and are making customers' jobsite operations “visible” through a construction Jointly with General Electric Company of the United States, we established management system and the like. Komatsu GE Mining Systems in April 2014 to develop next-generation underground Related page: Machine Control Constraction equipment mining equipment. (2) Growth Strategies of Existing Businesses In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as buckets, teeth and track shoes, in order to expand proﬁts. In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new products. (cid:127) Activities PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck countries Launched in Japan in May 2014, this new model features prolonged hours of daily Having analyzed how hydraulic excavators are being used in China, we have use, thanks to rapid charging, as well as enhanced water and dust resistance. As a incorporated optimal specs into these modesls to reduce lifecycle costs. result, it can operate on jobsites where conventional electric forklift trucks haven't been able to do so. (3) Structural Reforms to Reinforce Our Business Foundation While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby working to achieve a substantial reduction of production-related ﬁxed costs. Fixed Costs Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories of products and parts on a global scale. To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to secure human and other resources needed for investment for our future growth. (cid:127) Activities Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, which started in April 2013 and will continue through March 2016. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products Sources of Growth KOMATSU REPORT 2014 Outline of the Plan The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and improve the level of proﬁt redistribution to shareholders. Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group will advance improvement efforts at our respective workplaces around the world. We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global business expansion. Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity at the end of the ﬁscal year) / 2] *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Target ﬁgure for FY2015 FY2013 results Guidelines for exchange rates Per USD JPY 90-95 Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 Focused Activities (1) Growth Strategies Based on Innovation We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. (cid:127)Activities D39PXi iMC dozer KOMATSU REPORT 2014 19 Establishment of joint-ownership company for next-generation underground We are developing solutions by using information transmitted from the machines in mining equipment use and are making customers' jobsite operations “visible” through a construction Jointly with General Electric Company of the United States, we established management system and the like. Komatsu GE Mining Systems in April 2014 to develop next-generation underground Related page: Machine Control Constraction equipment mining equipment. (2) Growth Strategies of Existing Businesses In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as buckets, teeth and track shoes, in order to expand proﬁts. In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new products. (cid:127) Activities PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck countries Launched in Japan in May 2014, this new model features prolonged hours of daily Having analyzed how hydraulic excavators are being used in China, we have use, thanks to rapid charging, as well as enhanced water and dust resistance. As a incorporated optimal specs into these modesls to reduce lifecycle costs. result, it can operate on jobsites where conventional electric forklift trucks haven't been able to do so. (3) Structural Reforms to Reinforce Our Business Foundation While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby working to achieve a substantial reduction of production-related ﬁxed costs. Fixed Costs Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories of products and parts on a global scale. To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to secure human and other resources needed for investment for our future growth. (cid:127) Activities Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, which started in April 2013 and will continue through March 2016. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and improve the level of proﬁt redistribution to shareholders. Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group will advance improvement efforts at our respective workplaces around the world. We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global business expansion. Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio at the end of the ﬁscal year) / 2] Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity Target ﬁgure for FY2015 FY2013 results Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Guidelines for exchange rates Per USD JPY 90-95 Sources of Growth Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 KOMATSU REPORT 2014 Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, Outline of the Plan which started in April 2013 and will continue through March 2016. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products Outline of the Plan The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and improve the level of proﬁt redistribution to shareholders. Focused Activities (1) Growth Strategies Based on Innovation We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. will advance improvement efforts at our respective workplaces around the world. (cid:127)Activities We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global D39PXi iMC dozer Establishment of joint-ownership company for next-generation underground We are developing solutions by using information transmitted from the machines in mining equipment use and are making customers' jobsite operations “visible” through a construction Jointly with General Electric Company of the United States, we established management system and the like. Komatsu GE Mining Systems in April 2014 to develop next-generation underground Related page: Machine Control Constraction equipment mining equipment. (2) Growth Strategies of Existing Businesses In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as buckets, teeth and track shoes, in order to expand proﬁts. In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. products. (cid:127) Activities PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck business expansion. Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio at the end of the ﬁscal year) / 2] Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Guidelines for exchange rates Per USD JPY 90-95 Target ﬁgure for FY2015 FY2013 results Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 Focused Activities (1) Growth Strategies Based on Innovation (cid:127)Activities D39PXi iMC dozer Establishment of joint-ownership company for next-generation underground We are developing solutions by using information transmitted from the machines in mining equipment use and are making customers' jobsite operations “visible” through a construction Jointly with General Electric Company of the United States, we established management system and the like. Komatsu GE Mining Systems in April 2014 to develop next-generation underground Related page: Machine Control Constraction equipment mining equipment. (2) Growth Strategies of Existing Businesses In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as buckets, teeth and track shoes, in order to expand proﬁts. In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new products. (cid:127) Activities incorporated optimal specs into these modesls to reduce lifecycle costs. result, it can operate on jobsites where conventional electric forklift trucks haven't been able to do so. (3) Structural Reforms to Reinforce Our Business Foundation While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby working to achieve a substantial reduction of production-related ﬁxed costs. Fixed Costs PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck countries Launched in Japan in May 2014, this new model features prolonged hours of daily Having analyzed how hydraulic excavators are being used in China, we have use, thanks to rapid charging, as well as enhanced water and dust resistance. As a incorporated optimal specs into these modesls to reduce lifecycle costs. result, it can operate on jobsites where conventional electric forklift trucks haven't been able to do so. (cid:127) Activities (3) Structural Reforms to Reinforce Our Business Foundation While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby working to achieve a substantial reduction of production-related ﬁxed costs. Fixed Costs Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories of products and parts on a global scale. To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to secure human and other resources needed for investment for our future growth. Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here of products and parts on a global scale. (cid:127) Activities To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to secure human and other resources needed for investment for our future growth. Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ use, thanks to rapid charging, as well as enhanced water and dust resistance. As a Launched in Japan in May 2014, this new model features prolonged hours of daily Having analyzed how hydraulic excavators are being used in China, we have KOMATSU REPORT 2014 countries 20 Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, which started in April 2013 and will continue through March 2016. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products Outline of the Plan The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and improve the level of proﬁt redistribution to shareholders. Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group will advance improvement efforts at our respective workplaces around the world. We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global business expansion. Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio at the end of the ﬁscal year) / 2] Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Guidelines for exchange rates Per USD JPY 90-95 Target ﬁgure for FY2015 FY2013 results Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 Focused Activities (1) Growth Strategies Based on Innovation We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. (cid:127)Activities D39PXi iMC dozer Establishment of joint-ownership company for next-generation underground We are developing solutions by using information transmitted from the machines in mining equipment use and are making customers' jobsite operations “visible” through a construction Sources of Growth management system and the like. Jointly with General Electric Company of the United States, we established Komatsu GE Mining Systems in April 2014 to develop next-generation underground KOMATSU REPORT 2014 Related page: Machine Control Constraction equipment mining equipment. (2) Growth Strategies of Existing Businesses In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as buckets, teeth and track shoes, in order to expand proﬁts. In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new products. (cid:127) Activities PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck countries Launched in Japan in May 2014, this new model features prolonged hours of daily Having analyzed how hydraulic excavators are being used in China, we have use, thanks to rapid charging, as well as enhanced water and dust resistance. As a incorporated optimal specs into these modesls to reduce lifecycle costs. result, it can operate on jobsites where conventional electric forklift trucks haven't been able to do so. (3) Structural Reforms to Reinforce Our Business Foundation While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby working to achieve a substantial reduction of production-related ﬁxed costs. Fixed Costs KOMATSU REPORT 2014 21 Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories of products and parts on a global scale. To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to secure human and other resources needed for investment for our future growth. (cid:127) Activities Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, which started in April 2013 and will continue through March 2016. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products Mid-range Management Plan | KOMATSU REPORT 2014 2014/07/17 16:05 KOMATSU REPORT 2014 Sources of Growth Mid-range Management Plan Mid-range Management Plan Market Environment Outline of the Plan Focused Activities The Komatsu Group has been conducting business in tune with the “Together We Innovate GEMBA Worldwide” three-year management plan, which started in April 2013 and will continue through March 2016. Market Environment Demand for construction and mining equipment is growing, supported by the business cycle, in some regions of the world. However, we need to improve the level of proﬁt redistribution to shareholders. anticipate that it will remain at a standstill into the near future, due to a delay in demand recovery in emerging countries and a drop in demand for mining equipment against the backdrop of sluggish prices of commodities. In light of dynamic changes in the market, the number of uncertain factors is growing in the short- and medium-term projections. In the long term, however, we are in a growth industry, as we project an increase in demand for construction and mining equipment, supported by growing population and urbanization on a global scale. Demand for Construction and Mining Equipment: 7 Major Products business expansion. Outline of the Plan The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group will advance improvement efforts at our respective workplaces around the world. We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio at the end of the ﬁscal year) / 2] *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Guidelines for exchange rates Per USD JPY 90-95 Target ﬁgure for FY2015 FY2013 results Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 Outline of the Plan The Komatsu Group will continue to focus efforts on the core businesses of construction and mining equipment as well as industrial machinery, promote two growth strategies by capitalizing on the Group's strengths and structural reforms designed to reinforce its business foundation, and improve the level of proﬁt redistribution to shareholders. Effective engagement in focused activities necessarily calls for teamwork of employees with Gemba (workplace) capability, i.e., the vitality of all our employees and organizations plus our ability to continuously improve the workplace. Based on The KOMATSU Way, all of us in the Komatsu Group will advance improvement efforts at our respective workplaces around the world. We are also going to put more efforts on brand management activities, through which we strive to have a thorough understanding of our customers' workplaces and become indispensable to them. By making all these efforts, we are aiming at developing human resources needed for global (cid:127)Activities Focused Activities (1) Growth Strategies Based on Innovation We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. Target ﬁgures for FY2015 FY2013 results 18 - 20% 18 - 20% 0.3 or below 30 - 50% stably 12.3% 12.4% 0.37 35% *1 ROE = Net income attributable to Komatsu Ltd. for the year / [(Komatsu Ltd. shareholders' equity at the beginning + Komatsu Ltd. shareholders' equity *2 Net debt-to-equity ratio = (Interest-bearing debt － Cash and cash equivalents － Time deposits) / Komatsu Ltd. shareholders' equity business expansion. Operating income ratio ROE*¹ Net debt-to-equity ratio*² Consolidated payout ratio at the end of the ﬁscal year) / 2] Guideline on sales JPY2,300 bn +/- JPY200 bn JPY1,953.6 bn Guidelines for exchange rates Per USD JPY 90-95 Per EUR JPY120-125 Per RMB JPY15.0-15.3 JPY99.6 JPY132.8 JPY16.3 Focused Activities (1) Growth Strategies Based on Innovation We will continue to advance our strengths we have built on, such as ICT(Information and Communication Technology), development and production of key components, global sales and service networks, as well as ﬂexible procurement and production, step up our efforts in technology development, and create DANTOTSU(unrivaled) products, DANTOTSU services, and DANTOTSU solutions. Together with our customers and through these DANTOTSU strides, we will speedily innovate their jobsite operations and generate innovation designed to create new value. (cid:127)Activities products. (cid:127) Activities Target ﬁgure for FY2015 FY2013 results We are developing solutions by using information transmitted from the machines in mining equipment D39PXi iMC dozer Establishment of joint-ownership company for next-generation underground use and are making customers' jobsite operations “visible” through a construction Jointly with General Electric Company of the United States, we established management system and the like. Komatsu GE Mining Systems in April 2014 to develop next-generation underground Related page: Machine Control Constraction equipment mining equipment. (2) Growth Strategies of Existing Businesses In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as buckets, teeth and track shoes, in order to expand proﬁts. In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck countries Launched in Japan in May 2014, this new model features prolonged hours of daily Having analyzed how hydraulic excavators are being used in China, we have Sources of Growth incorporated optimal specs into these modesls to reduce lifecycle costs. use, thanks to rapid charging, as well as enhanced water and dust resistance. As a result, it can operate on jobsites where conventional electric forklift trucks haven't KOMATSU REPORT 2014 (2) Growth Strategies of Existing Businesses (3) Structural Reforms to Reinforce Our Business Foundation In our existing businesses, we are taking the fullest advantage of ICT to “visualize” customers' jobsite operations and are implementing quicker While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs delivery of spare parts and service. This is done while expanding businesses throughout the value chain, including the rental-to-used equipment from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of and retail ﬁnance businesses, thereby further improving customer satisfaction. In the spare parts business, we will not only continue to reform electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby ordering/receiving operations and logistics, but also work to accelerate sales in Strategic Markets as well as sales of strategic parts, such as working to achieve a substantial reduction of production-related ﬁxed costs. been able to do so. buckets, teeth and track shoes, in order to expand proﬁts. Fixed Costs In response to new emission control regulations (e.g., Tier 4 Final in the United States) which have been effective in the United States, Europe and Japan since 2014, we are well prepared to combine our strengths of in-house development and production of key components, such as engines, hydraulic equipment and control systems, and cutting-edge technologies, thereby ensuring the smooth development and market introduction of new products. (cid:127) Activities PC200/220-8M0 medium-sized hydraulic excavator for use in emerging New FE25-1 battery-powered forklift truck Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories countries Launched in Japan in May 2014, this new model features prolonged hours of daily worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories Having analyzed how hydraulic excavators are being used in China, we have use, thanks to rapid charging, as well as enhanced water and dust resistance. As a of products and parts on a global scale. incorporated optimal specs into these modesls to reduce lifecycle costs. result, it can operate on jobsites where conventional electric forklift trucks haven't been able to do so. To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to secure human and other resources needed for investment for our future growth. (3) Structural Reforms to Reinforce Our Business Foundation (cid:127) Activities While we have almost doubled consolidated sales for the last 10 years, we have kept ﬁxed costs about ﬂat. Based on our policy of separating costs from growth, we will continue to sustain an appropriate level of ﬁxed costs into the future. Towards the target of cutting down the purchase of electricity to half at all our plants in Japan, we are promoting manufacturing reforms and consolidating or renewing factory buildings, thereby working to achieve a substantial reduction of production-related ﬁxed costs. Fixed Costs Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary Centering on the Global HANSEI Operation Center, we are also working to improve the levels of planning of sales, production and inventories worldwide. At the same time, we are applying the Zero Inventory program to more distributors in order to achieve an appropriate level of inventories of products and parts on a global scale. To facilitate direct linkages between our plants and our customers' jobsites, we are going to reassess our human resources and organizations to FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here secure human and other resources needed for investment for our future growth. Consolidated Results Growth Strategies: Innovation Risk Management (cid:127) Activities Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ KOMATSU REPORT 2014 22 Construction of the new assembly factory completed at the Awazu Plant in Training distributors' service mechanics at the Techno Training Center May 2014. (Komatsu City, Ishikawa Prefecture) Related page: The new assembly factory at the Awazu Plant In April 2014, we established the Department for Promotion of Distributor Human Resources Development to accelerate the training of sales and service distributors around the world. Related page: TQM training at Chinese subsidiary FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Corporate Governance Environmental Conservation Efforts CSR Efforts Social activities: CSR report Financial conditions: Securities Report http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/growth/plan.html 1/2 ページ D39PXi iMC dozer Establishment of joint-ownership company for next-generation underground We are developing solutions by using information transmitted from the machines in mining equipment use and are making customers' jobsite operations “visible” through a construction Jointly with General Electric Company of the United States, we established management system and the like. Komatsu GE Mining Systems in April 2014 to develop next-generation underground Related page: Machine Control Constraction equipment mining equipment. Mid-range Focused Activities Growth Strategies: Innovation ICT-intensive Construction Growth Strategies: Existing Businesses Lifecycle Costs Structural Reforms (1) A New Assembly Factory Begins Operation at the Awazu Plant Structural Reforms (2) Chinese Subsidiary Wins the Deming Prize KOMATSU REPORT 2014 23 KOMATSU REPORT 2014Mid-range Focused Activities Growth Strategies: Innovation ICT-intensive Construction Growth Strategies: Existing Businesses Lifecycle Costs Structural Reforms (1) A New Assembly Factory Begins Operation at the Awazu Plant Structural Reforms (2) Chinese Subsidiary Wins the Deming Prize Mid-range Focused Activities Growth Strategies Based on Innovation ICT-intensive Construction Machine Control Construction Equipment: Improving rough cutting and ﬁnish grading Making the Jobsite Operation “Visible” Working to Develop a New Business Model Machine Control Construction Equipment: Improving rough cutting and ﬁnish grading In June 2013, we launched D61PXi/EXi-23 intelligent Machine Control dozers featuring the world's ﬁrst automatic blade control in North America. We have broadened the model range to four today. We are also planning to introduce Machine Control hydraulic excavators to Japan, Europe and North America this fall. We have already sold over 200 iMC dozers worldwide (as of March 31, 2014), increasing the number of completed jobsites. In Japan, iMC dozers, rented through Komatsu Group rental companies, have completed about 40 jobsites. Capable of automatically controlling the blade from rough cutting to ﬁnish grading, our iMC dozers have a proven record of an outstanding reduction of ground-leveling time. They also enable customers to skip staking. Customers' comments include, “Even when this dozer was rolled, the blade was accurately controlled, which is very difﬁcult even for veteran operators.” “As this dozer required no support worker around it, we were free from worrying about safety.” With this iMC dozer, our work style is changing. Possibilities are unlimited. Making the Jobsite Operation “Visible” KOMATSU REPORT 2014 24 Based on position information from the survey system installed on the iMC dozer as well as machine operating information from KOMTRAX (Komatsu Machine Tracking System), we can ﬁnd out and analyze daily progress on the jobsites. This is the process “visualization.” We can anticipate the future workﬂow of transmitting daily work instructions to construction equipment from the ofﬁce, after receiving information concerning the progress of work from the machines, and planning the next day's work ﬂow, including machine allocation, in the PC in the ofﬁce. We are on the start line of developing a business model of Machine Control construction equipment. As we approach the development of a business model by transcending the conventional framework of a manufacturer of construction equipment, we can see a number of possibilities of novel civil engineering and construction jobsites with Machine Control equipment. To develop such a new business model, it is indispensable for us to look into an open innovation in which we incorporate the latest know-how and technologies through an academic-industrial or private-sector industrial collaboration and integrate them with our technologies. To accelerate our efforts in this direction, we created the Ofﬁce of Chief Technology Ofﬁcer in April 2014. Working to Develop a New Business Model We paid special attention to the importance of ICT to our business many years ago, and have since promoted ICT applications, such as the standardization of KOMTRAX for our construction equipment and the use of KOMTRAX Plus for our mining equipment. By sharing information gained from these systems with distributors and customers, we are making progress in improving lifecycle costs of equipment. As a leading solution with ICT, we have successfully commercialized our Autonomous Haulage System for the ﬁrst time in the world. To enhance customers' productivity and safety through ICT, we are expanding our business domain into customers' jobsites from the conventional domain of equipment per se. We are aggressively advancing ICT applications to construction and mining equipment and making data “visible”. Together with customers, we are working to develop DANTOTSU (unrivaled) solutions with new value for them. KOMATSU REPORT 2014 Growth Strategies Based on Innovation ICT-intensive Construction Machine Control Construction Equipment: Improving rough cutting and ﬁnish grading Making the Jobsite Operation “Visible” Working to Develop a New Business Model Machine Control Construction Equipment: Improving rough cutting and ﬁnish grading In June 2013, we launched D61PXi/EXi-23 intelligent Machine Control dozers featuring the world's ﬁrst automatic blade control in North America. We have broadened the model range to four today. We are also planning to introduce Machine Control hydraulic excavators to Japan, Europe and North America this fall. We have already sold over 200 iMC dozers worldwide (as of March 31, 2014), increasing the number of completed jobsites. In Japan, iMC dozers, rented through Komatsu Group rental companies, have completed about 40 jobsites. Capable of automatically controlling the blade from rough cutting to ﬁnish grading, our iMC dozers have a proven record of an outstanding reduction of ground-leveling time. They also enable customers to skip staking. Customers' comments include, “Even when this dozer was rolled, the blade was accurately controlled, which is very difﬁcult even for veteran operators.” “As this dozer required no support worker around it, we were free from worrying about safety.” With this iMC dozer, our work style is changing. Possibilities are unlimited. Mid-range Focused Activities Making the Jobsite Operation “Visible” Based on position information from the survey system installed on the iMC dozer as well as machine operating information from KOMTRAX (Komatsu Machine Tracking System), we can ﬁnd out and analyze daily progress on the jobsites. This is the process “visualization.” We can anticipate the future workﬂow of transmitting daily work instructions to construction equipment from the ofﬁce, after receiving information concerning the progress of work from the machines, and planning the next day's work ﬂow, including machine allocation, in the PC in the ofﬁce. We are on the start line of developing a business model of Machine Control construction equipment. As we approach the development of a business model by transcending the conventional framework of a manufacturer of construction equipment, we can see a number of possibilities of novel civil engineering and construction jobsites with Machine Control equipment. To develop such a new business model, it is indispensable for us to look into an open innovation in which we incorporate the latest know-how and technologies through an academic-industrial or private-sector industrial collaboration and integrate them with our technologies. To accelerate our efforts in this direction, we created the Ofﬁce of Chief Technology Ofﬁcer in April 2014. Working to Develop a New Business Model We paid special attention to the importance of ICT to our business many years ago, and have since promoted ICT applications, such as the standardization of KOMTRAX for our construction equipment and the use of KOMTRAX Plus for our mining equipment. By sharing information gained from these systems with distributors and customers, we are making progress in improving lifecycle costs of equipment. As a leading solution with ICT, we have successfully commercialized our Autonomous Haulage System for the ﬁrst time in the world. To enhance customers' productivity and safety through ICT, we are expanding our business domain into customers' jobsites from the conventional domain of equipment per se. We are aggressively advancing ICT applications to construction and mining equipment and making data “visible”. Together with customers, we are working to develop DANTOTSU (unrivaled) solutions with new value for them. KOMATSU REPORT 2014 25 KOMATSU REPORT 2014 Growth Strategies Based on Innovation ICT-intensive Construction Machine Control Construction Equipment: Improving rough cutting and ﬁnish grading Making the Jobsite Operation “Visible” Working to Develop a New Business Model Machine Control Construction Equipment: Improving rough cutting and ﬁnish grading In June 2013, we launched D61PXi/EXi-23 intelligent Machine Control dozers featuring the world's ﬁrst automatic blade control in North America. We have broadened the model range to four today. We are also planning to introduce Machine Control hydraulic excavators to Japan, Europe and North America this fall. We have already sold over 200 iMC dozers worldwide (as of March 31, 2014), increasing the number of completed jobsites. In Japan, iMC dozers, rented through Komatsu Group rental companies, have completed about 40 jobsites. Capable of automatically controlling the blade from rough cutting to ﬁnish grading, our iMC dozers have a proven record of an outstanding reduction of ground-leveling time. They also enable customers to skip staking. Customers' comments include, “Even when this dozer was rolled, the blade was accurately controlled, which is very difﬁcult even for veteran operators.” “As this dozer required no support worker around it, we were free from worrying about safety.” With this iMC dozer, our work style is changing. Possibilities are unlimited. Making the Jobsite Operation “Visible” Based on position information from the survey system installed on the iMC dozer as well as machine operating information from KOMTRAX (Komatsu Machine Tracking System), we can ﬁnd out and analyze daily progress on the jobsites. This is the process “visualization.” We can Analyzing Running Costs of Construction and Mining Equipment B-Connect Warranty Program anticipate the future workﬂow of transmitting daily work instructions to construction equipment from the ofﬁce, after receiving information concerning the progress of work from the machines, and planning the next day's work ﬂow, including machine allocation, in the PC in the ofﬁce. Providing High Value-added Aftermarket Part Mid-range Focused Activities Growth Strategies of Existing Businesses Lifecycle Costs We are on the start line of developing a business model of Machine Control construction equipment. As we approach the development of a business model by transcending the conventional framework of a manufacturer of construction equipment, we can see a number of possibilities of novel civil engineering and construction jobsites with Machine Control equipment. To develop such a new business model, it is indispensable for us to look into an open innovation in which we incorporate the latest know-how and technologies through an academic-industrial or private-sector industrial collaboration and integrate them with our technologies. To accelerate our efforts in this direction, we created the Ofﬁce of Chief Technology Ofﬁcer in April 2014. Working to Develop a New Business Model We paid special attention to the importance of ICT to our business many years ago, and have since promoted ICT applications, such as the standardization of KOMTRAX for our construction equipment and the use of KOMTRAX Plus for our mining equipment. By sharing information gained from these systems with distributors and customers, we are making progress in improving lifecycle costs of equipment. As a leading solution with ICT, we have successfully commercialized our Autonomous Haulage System for the ﬁrst time in the world. To enhance customers' productivity and safety through ICT, we are expanding our business domain into customers' jobsites from the conventional domain of equipment per se. We are aggressively advancing ICT applications to construction and mining equipment and making data “visible”. Together with customers, we are working to develop DANTOTSU (unrivaled) solutions with new value for them. Analyzing Running Costs of Construction and Mining Equipment Construction and mining equipment must meet the two most important needs of customers; 1) no downtime, especially that caused by mechanical failure, and 2) larger proﬁts from more work at smaller costs. After purchasing new equipment, customers have to meet lots of expenses while operating their machines until reselling as used equipment or scrapping them. Such expenses include for spare parts, maintenance service, fuel and operators in addition to the equipment itself. These expenses are called lifecycle costs. Lifecycle Costs in Emerging Countries (Conceptual) As lifecycle costs differ depending on the country, region, machine type, way of machine use, etc., it was extremely difﬁcult for us to accurately KOMATSU REPORT 2014 determine them. While working to understand customers' jobsite operations, we are utilizing a massive amount of data transmitted from over 26 340,000 units equipped with KOMTRAX (Komatsu Machine Tracking System) from around the world. We are now better positioned to analyze their lifecycle costs. Thailand: B-Connect Warranty Program We are also developing methods to curtail lifecycle costs. Bangkok Komatsu Sales Co., Ltd. (BKS), our sales afﬁliate in Thailand, commercialized the B-Connect Warranty program, designed to minimize the lifecycle costs of Komatsu equipment, in 2010. By providing periodic service focused on preventive maintenance, we can keep the best possible machine performance, improve utilization rates, and increase their trade-in values. BKS' product support service representatives can learn about customers' jobsite operations and propose ideas to improve their operations. Based on a survey conducted by BKS in the ﬁrst half of FY2013, we have found that, among customers of 20-ton hydraulic excavators, compared to those who had not used the B-Connect Warranty program, 21% more program users continued to buy new Komatsu equipment. Common praise for the program by customers included: “I feel more conﬁdent about machine performance, because I can rely on a long-term coverage, that is, three years or 7,000 hours, whichever comes ﬁrst, and 14 maintenance services which consist of replacement of oil ﬁlters and inspection of the equipment, especially when we are short of workers.” “I am highly satisﬁed with this program, because BKS inspects our equipment every 500 hours by using KOMTRAX and submits the reports of inspection.” “I think the extended warranty period for seven kinds of key components demonstrates Komatsu's conﬁdence in Quality and Reliability, BKS's product support capability and the B-Connect Warranty program. I feel completely safe about our machines and I appreciate this warranty program very much.” During periodic maintenance under the B-Connect Warranty program, BKS's product support service representative reports maintenance ﬁndings to a customer and recommends better use of machines. South Africa: Providing High Value-added Aftermarket Part Komatsu Africa Holdings (Pty) Ltd. (formerly, Komatsu Southern Africa (Pty) Ltd.: KSAf) has been working to reduce lifecycle costs of Komatsu machines at mineral sands operations. At Namakwa Sands, in the north-western part of South Africa, KSAf's customer, Tronox, mines hard mineral sands which consist of jircon for manufacturing refractory materials as well as rutile, a raw material of titanium. Due to the hard ground of the mine, the wear-out rate of their bulldozer's undercarriage was drastic, expanding its lifecycle costs. KSAf recommended the use of dual bushings, which feature better resistance to wear and easy replacement, and successfully improved the lifecycle costs. KSAf has also been improving productivity at Namakwa Sands by using KOMTRAX data. For HM400 articulated dump trucks, they have offered training programs to improve operators' driving skills, based on KOMTRAX data, and have received excellent remarks from their customer. HM400 articulated dump truck at Namakwa Sands Our service mechanics inspecting the wear conditions of D375A's undercarriage Komatsu's service and support offer high value. We welcome Komatsu as a good partner. Mr. Hannes Du Randt, Mining Manager, Namakwa Sands KOMATSU REPORT 2014 Growth Strategies of Existing Businesses Lifecycle Costs Analyzing Running Costs of Construction and Mining Equipment B-Connect Warranty Program Providing High Value-added Aftermarket Part Analyzing Running Costs of Construction and Mining Equipment Construction and mining equipment must meet the two most important needs of customers; 1) no downtime, especially that caused by mechanical failure, and 2) larger proﬁts from more work at smaller costs. Mid-range Focused Activities After purchasing new equipment, customers have to meet lots of expenses while operating their machines until reselling as used equipment or scrapping them. Such expenses include for spare parts, maintenance service, fuel and operators in addition to the equipment itself. These expenses are called lifecycle costs. Lifecycle Costs in Emerging Countries (Conceptual) As lifecycle costs differ depending on the country, region, machine type, way of machine use, etc., it was extremely difﬁcult for us to accurately determine them. While working to understand customers' jobsite operations, we are utilizing a massive amount of data transmitted from over 340,000 units equipped with KOMTRAX (Komatsu Machine Tracking System) from around the world. We are now better positioned to analyze their lifecycle costs. Thailand: B-Connect Warranty Program We are also developing methods to curtail lifecycle costs. Bangkok Komatsu Sales Co., Ltd. (BKS), our sales afﬁliate in Thailand, commercialized the B-Connect Warranty program, designed to minimize the lifecycle costs of Komatsu equipment, in 2010. By providing periodic service focused on preventive maintenance, we can keep the best possible machine performance, improve utilization rates, and increase their trade-in values. BKS' product support service representatives can learn about customers' jobsite operations and propose ideas to improve their operations. Based on a survey conducted by BKS in the ﬁrst half of FY2013, we have found that, among customers of 20-ton hydraulic excavators, compared to those who had not used the B-Connect Warranty program, 21% more program users continued to buy new Komatsu equipment. Common praise for the program by customers included: “I feel more conﬁdent about machine performance, because I can rely on a long-term coverage, that is, three years or 7,000 hours, whichever comes ﬁrst, and 14 maintenance services which consist of replacement of oil ﬁlters and inspection of the equipment, especially when we are short of workers.” “I am highly satisﬁed with this program, because BKS inspects our equipment every 500 hours by using KOMTRAX and submits the reports of inspection.” “I think the extended warranty period for seven kinds of key components demonstrates Komatsu's conﬁdence in Quality and Reliability, BKS's product support capability and the B-Connect Warranty program. I feel completely safe about our machines and I appreciate this warranty program very much.” During periodic maintenance under the B-Connect Warranty program, BKS's product support service representative reports maintenance ﬁndings to a customer and recommends better use of machines. KOMATSU REPORT 2014 27 South Africa: Providing High Value-added Aftermarket Part Komatsu Africa Holdings (Pty) Ltd. (formerly, Komatsu Southern Africa (Pty) Ltd.: KSAf) has been working to reduce lifecycle costs of Komatsu machines at mineral sands operations. At Namakwa Sands, in the north-western part of South Africa, KSAf's customer, Tronox, mines hard mineral sands which consist of jircon for manufacturing refractory materials as well as rutile, a raw material of titanium. Due to the hard ground of the mine, the wear-out rate of their bulldozer's undercarriage was drastic, expanding its lifecycle costs. KSAf recommended the use of dual bushings, which feature better resistance to wear and easy replacement, and successfully improved the lifecycle costs. KSAf has also been improving productivity at Namakwa Sands by using KOMTRAX data. For HM400 articulated dump trucks, they have offered training programs to improve operators' driving skills, based on KOMTRAX data, and have received excellent remarks from their customer. HM400 articulated dump truck at Namakwa Sands Our service mechanics inspecting the wear conditions of D375A's undercarriage Komatsu's service and support offer high value. We welcome Komatsu as a good partner. Mr. Hannes Du Randt, Mining Manager, Namakwa Sands KOMATSU REPORT 2014 Growth Strategies of Existing Businesses Lifecycle Costs Analyzing Running Costs of Construction and Mining Equipment B-Connect Warranty Program Providing High Value-added Aftermarket Part As lifecycle costs differ depending on the country, region, machine type, way of machine use, etc., it was extremely difﬁcult for us to accurately determine them. While working to understand customers' jobsite operations, we are utilizing a massive amount of data transmitted from over 340,000 units equipped with KOMTRAX (Komatsu Machine Tracking System) from around the world. We are now better positioned to analyze their lifecycle costs. Growth Strategies of Existing Businesses Lifecycle Costs Analyzing Running Costs of Construction and Mining Equipment B-Connect Warranty Program Providing High Value-added Aftermarket Part Analyzing Running Costs of Construction and Mining Equipment Construction and mining equipment must meet the two most important needs of customers; 1) no downtime, especially that caused by mechanical failure, and 2) larger proﬁts from more work at smaller costs. After purchasing new equipment, customers have to meet lots of expenses while operating their machines until reselling as used equipment or scrapping them. Such expenses include for spare parts, maintenance service, fuel and operators in addition to the equipment itself. These expenses are called lifecycle costs. Lifecycle Costs in Emerging Countries (Conceptual) Thailand: B-Connect Warranty Program We are also developing methods to curtail lifecycle costs. Bangkok Komatsu Sales Co., Ltd. (BKS), our sales afﬁliate in Thailand, commercialized the B-Connect Warranty program, designed to minimize the lifecycle costs of Komatsu equipment, in 2010. By providing periodic service focused on preventive maintenance, we can keep the best possible machine performance, improve utilization rates, and increase their trade-in values. BKS' product support service representatives can learn about customers' jobsite operations and propose ideas to improve their operations. Based on a survey conducted by BKS in the ﬁrst half of FY2013, we have found that, among customers of 20-ton hydraulic excavators, compared to those who had not used the B-Connect Warranty program, 21% more program users continued to buy new Komatsu equipment. Common praise for the program by customers included: “I feel more conﬁdent about machine performance, because I can rely on a long-term coverage, that is, three years or 7,000 hours, whichever comes ﬁrst, and 14 maintenance services which consist of replacement of oil ﬁlters and inspection of the equipment, especially when we are short of workers.” “I am highly satisﬁed with this program, because BKS inspects our equipment every 500 hours by using KOMTRAX and submits the reports of inspection.” “I think the extended warranty period for seven kinds of key components demonstrates Komatsu's conﬁdence in Quality and Reliability, BKS's product support capability and the B-Connect Warranty program. I feel completely safe about our machines and I appreciate this warranty program very much.” Mid-range Focused Activities During periodic maintenance under the B-Connect Warranty program, BKS's product support service representative reports maintenance ﬁndings to a customer and recommends better use of machines. South Africa: Providing High Value-added Aftermarket Part Komatsu Africa Holdings (Pty) Ltd. (formerly, Komatsu Southern Africa (Pty) Ltd.: KSAf) has been working to reduce lifecycle costs of Komatsu machines at mineral sands operations. At Namakwa Sands, in the north-western part of South Africa, KSAf's customer, Tronox, mines hard mineral sands which consist of jircon for manufacturing refractory materials as well as rutile, a raw material of titanium. Due to the hard ground of the mine, the wear-out rate of their bulldozer's undercarriage was drastic, expanding its lifecycle costs. KSAf recommended the use of dual bushings, which feature better resistance to wear and easy replacement, and successfully improved the lifecycle costs. KSAf has also been improving productivity at Namakwa Sands by using KOMTRAX data. For HM400 articulated dump trucks, they have offered training programs to improve operators' driving skills, based on KOMTRAX data, and have received excellent remarks from their customer. Analyzing Running Costs of Construction and Mining Equipment Construction and mining equipment must meet the two most important needs of customers; 1) no downtime, especially that caused by mechanical failure, and 2) larger proﬁts from more work at smaller costs. After purchasing new equipment, customers have to meet lots of expenses while operating their machines until reselling as used equipment or scrapping them. Such expenses include for spare parts, maintenance service, fuel and operators in addition to the equipment itself. These expenses are called lifecycle costs. Lifecycle Costs in Emerging Countries (Conceptual) As lifecycle costs differ depending on the country, region, machine type, way of machine use, etc., it was extremely difﬁcult for us to accurately determine them. While working to understand customers' jobsite operations, we are utilizing a massive amount of data transmitted from over 340,000 units equipped with KOMTRAX (Komatsu Machine Tracking System) from around the world. We are now better positioned to analyze their lifecycle costs. HM400 articulated dump truck at Namakwa Sands Our service mechanics inspecting the wear conditions of D375A's undercarriage Komatsu's service and support offer high value. We welcome Komatsu as a good partner. Mr. Hannes Du Randt, Mining Manager, Namakwa Sands During periodic maintenance under the B-Connect Warranty program, BKS's product support service representative reports maintenance ﬁndings to a customer and recommends better use of machines. Thailand: B-Connect Warranty Program We are also developing methods to curtail lifecycle costs. Bangkok Komatsu Sales Co., Ltd. (BKS), our sales afﬁliate in Thailand, commercialized the B-Connect Warranty program, designed to minimize the lifecycle costs of Komatsu equipment, in 2010. By providing periodic service focused on preventive maintenance, we can keep the best possible machine performance, improve utilization rates, and increase their trade-in values. BKS' product support service representatives can learn about customers' jobsite operations and propose ideas to improve their operations. Based on a survey conducted by BKS in the ﬁrst half of FY2013, we have found that, among customers of 20-ton hydraulic excavators, compared to those who had not used the B-Connect Warranty program, 21% more program users continued to buy new Komatsu equipment. Common praise for the program by customers included: “I feel more conﬁdent about machine performance, because I can rely on a long-term coverage, that is, three years or 7,000 hours, whichever comes ﬁrst, and 14 maintenance services which consist of replacement of oil ﬁlters and inspection of the equipment, especially when we are short of workers.” “I am highly satisﬁed with this program, because BKS inspects our equipment every 500 hours by using KOMTRAX and submits the reports of inspection.” “I think the extended warranty period for seven kinds of key components demonstrates Komatsu's conﬁdence in Quality and Reliability, BKS's product support capability and the B-Connect Warranty program. I feel completely safe about our machines and I appreciate this warranty program very much.” South Africa: Providing High Value-added Aftermarket Part Komatsu Africa Holdings (Pty) Ltd. (formerly, Komatsu Southern Africa (Pty) Ltd.: KSAf) has been working to reduce lifecycle costs of Komatsu machines at mineral sands operations. At Namakwa Sands, in the north-western part of South Africa, KSAf's customer, Tronox, mines hard mineral sands which consist of jircon for manufacturing refractory materials as well as rutile, a raw material of titanium. Due to the hard ground of the mine, the wear-out rate of their bulldozer's undercarriage was drastic, expanding its lifecycle costs. KSAf recommended the use of dual bushings, which feature better resistance to wear and easy replacement, and successfully improved the lifecycle costs. KSAf has also been improving productivity at Namakwa Sands by using KOMTRAX data. For HM400 articulated dump trucks, they have offered training programs to improve operators' driving skills, based on KOMTRAX data, and have received excellent remarks from their customer. KOMATSU REPORT 2014 28 HM400 articulated dump truck at Namakwa Sands Our service mechanics inspecting the wear conditions of D375A's undercarriage Komatsu's service and support offer high value. We welcome Komatsu as a good partner. Mr. Hannes Du Randt, Mining Manager, Namakwa Sands KOMATSU REPORT 2014 Mid-range Focused Activities Structural Reforms Designed to Reinforce Our Business Foundation A New Assembly Factory Begins Operation at the Awazu Plant - Leading the project to cut down electric power consumption to half at all plants in Japan - Productivity Energy Savings Productivity: Doubling productivity by area by taking full advantage of improvement efforts over the years. There were previously two factories at the Awazu Plant, but they were built over 40 years ago and equipped with many, outdated facilities. Their structure also posed some problems in productivity. As the productivity of assembling is fundamentally determined by parts logistics (preparation of parts), the pillar and ﬂoor structure can also become obstacle. The new assembly factory (shop ﬂoor area: 28,000m ) features a great degree of freedom (ﬂexibility) capable of accommodating production lines 50 years ahead. The wide open space of the shop offers an outstanding degree of freedom when rearranging the ﬂoor layout in the future. It is secured by its innovative pit structure of the entire shop ﬂoor and application of an aircraft hangar structure which has provided a great distance between pillars. Power sources, pipes and auxiliary facilities along the assembly lines are all stored in the pit, which also promotes easy maintenance work and safety of the workers. For the new assembly line for wheel-type construction equipment which began operation in May this year, our assembly experts thoroughly incorporated their improvement measures in the design stage, reducing the line length from 150m to 120m and doubling productivity per ﬂoor area. For the new line for crawler-type models, scheduled to start operations in July this year, the length has also been shortened, from 180m to 130m, enhancing per-space productivity. We adopted the roof design similar to an aircraft hangar, achieving the maximum distance of 32m between pillars, about 4 times longer than the previous An innovative pit for the entire shop ﬂoor of a plant which handles heavy equipment. Flat ﬂoor surface along the lines enables relatively easy assembly factory. In this way, we have successfully eliminated the obstacle of the rearrangement of the lines by removing ﬂoorboards and moving the facilities in pillars in designing assembly lines. the pit. KOMATSU REPORT 2014 29 “ For our young manufacturing engineers who will lead Komatsu into the future, this new factory has offered a great opportunity to transform their ideas for improvement into actual things. ” Interview: Tatsuya Nakaizumi, Project Manager, Awazu Plant Energy Savings: Taking on the challenge of reducing over 90% The new assembly factory uses leading-edge energy-saving facilities and equipment, such as variable LED lights and high-density and high- insulation materials, which should reduce our annual purchase of electric volume by over 90% from the combined volume of the previous two factories. By using the entire pit as an air-conditioning duct, we are achieving stratiﬁed air conditioning limited to workers, another energy-saving measure. Overall Energy-savings and -generation at the Awazu Plant In addition to the new assembly factory, we are working on energy-savings and -generation at the Awazu Plant by taking full advantage of local nature and our strengths. Air Conditioning System with Groundwater We have originally developed an air conditioning system which uses the rich groundwater of the Hakusan mountain range and steadily introduced it to buildings at the Awazu Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power consumption used for air conditioning of all buildings of the entire plant to half by using this system. In collaboration with Kanazawa University, we have also analyzed and ensured the amenity, energy savings and hygienic safety. Biomass Power Generation As part of our assistance to the local forestry industry, we are going to start full-scale biomass power generation by the end of 2014 by using wood from trees thinned from the forest, which are usually discarded. This should result in a signiﬁcant reduction in purchasing electricity. To ensure a stable supply of this thinned wood, we have entered a contract with the Kaga Forestry Association. Air conditioning system with groundwater. By utilizing a high-efﬁciency radiator used in our construction equipment as the heat exchanger, we use groundwater at a constant temperature of 17 Celsius for cooling. In winter, we use heated water discharged from facilities and equipment in the plant. Biomass boiler currently in use. We have also developed an original cutting-type chipper for thinned wood. We are also planning to thoroughly collect waste heat from a biomass power generation system to be introduced soon. Power Generation by Using KELK-made Thermoelectric Modules To exhaustively use waste heat from heat treatment and other processes, we have been testing thermoelectric modules made by KELK Ltd., our subsidiary, for power generation for the last few years. We are planning to use KELK's new thermoelectric units at seven furnaces, partly as their durability test before the end of the current ﬁscal year. To store and reuse power generated at night by the thermoelectric units and biomass power generation system, we are also developing a large-scale power storage system with sealed batteries for Komatsu forklift trucks. Thermoelectric generation system at the Awazu Plant. which takes advantage of Large-scale power storage system with maintenance-free batteries for forklift temperature differences which occur inside of selective machinery. The heat trucks. treatment process is a very harsh environment for thermoelectric units because of drastic changes of temperature. KOMATSU REPORT 2014 Structural Reforms Designed to Reinforce Our Business Foundation A New Assembly Factory Begins Operation at the Awazu Plant - Leading the project to cut down electric power consumption to half at all plants in Japan - Productivity Energy Savings Productivity: Doubling productivity by area by taking full advantage of improvement efforts over the years. There were previously two factories at the Awazu Plant, but they were built over 40 years ago and equipped with many, outdated facilities. Their structure also posed some problems in productivity. As the productivity of assembling is fundamentally determined by parts logistics (preparation of parts), the pillar and ﬂoor structure can also become obstacle. The new assembly factory (shop ﬂoor area: 28,000m ) features a great degree of freedom (ﬂexibility) capable of accommodating production lines 50 years ahead. The wide open space of the shop offers an outstanding degree of freedom when rearranging the ﬂoor layout in the future. It is secured by its innovative pit structure of the entire shop ﬂoor and application of an aircraft hangar structure which has provided a great distance between pillars. Power sources, pipes and auxiliary facilities along the assembly lines are all stored in the pit, which also promotes easy maintenance work and safety of the workers. For the new assembly line for wheel-type construction equipment which began operation in May this year, our assembly experts thoroughly incorporated their improvement measures in the design stage, reducing the line length from 150m to 120m and doubling productivity per ﬂoor area. Mid-range Focused Activities For the new line for crawler-type models, scheduled to start operations in July this year, the length has also been shortened, from 180m to 130m, enhancing per-space productivity. We adopted the roof design similar to an aircraft hangar, achieving the maximum distance of 32m between pillars, about 4 times longer than the previous assembly factory. In this way, we have successfully eliminated the obstacle of the pillars in designing assembly lines. An innovative pit for the entire shop ﬂoor of a plant which handles heavy equipment. Flat ﬂoor surface along the lines enables relatively easy rearrangement of the lines by removing ﬂoorboards and moving the facilities in the pit. “ For our young manufacturing engineers who will lead Komatsu into the future, this new factory has offered a great opportunity to transform their ideas for improvement into actual things. ” Interview: Tatsuya Nakaizumi, Project Manager, Awazu Plant Structural Reforms Designed to Reinforce Our Business Foundation A New Assembly Factory Begins Operation at the Awazu Plant - Leading the project to cut down electric power consumption to half at all plants in Japan - Productivity Energy Savings Productivity: Doubling productivity by area by taking full advantage of improvement efforts over the years. There were previously two factories at the Awazu Plant, but they were built over 40 years ago and equipped with many, outdated facilities. Their structure also posed some problems in productivity. As the productivity of assembling is fundamentally determined by parts logistics (preparation of parts), the pillar and ﬂoor structure can also become obstacle. The new assembly factory (shop ﬂoor area: 28,000m ) features a great degree of freedom (ﬂexibility) capable of accommodating production lines 50 years ahead. The wide open space of the shop offers an outstanding degree of Energy Savings: Taking on the challenge of reducing over 90% freedom when rearranging the ﬂoor layout in the future. It is secured by its innovative pit structure of the entire shop ﬂoor and application of an aircraft hangar structure which has provided a great distance between pillars. Power sources, pipes and auxiliary facilities along the assembly lines The new assembly factory uses leading-edge energy-saving facilities and equipment, such as variable LED lights and high-density and high- are all stored in the pit, which also promotes easy maintenance work and safety of the workers. insulation materials, which should reduce our annual purchase of electric volume by over 90% from the combined volume of the previous two For the new assembly line for wheel-type construction equipment which began operation in May this year, our assembly experts thoroughly incorporated their improvement measures in the design stage, reducing the line length from 150m to 120m and doubling productivity per ﬂoor area. For the new line for crawler-type models, scheduled to start operations in July this year, the length has also been shortened, from 180m to 130m, enhancing per-space productivity. factories. By using the entire pit as an air-conditioning duct, we are achieving stratiﬁed air conditioning limited to workers, another energy-saving measure. Overall Energy-savings and -generation at the Awazu Plant In addition to the new assembly factory, we are working on energy-savings and -generation at the Awazu Plant by taking full advantage of local nature and our strengths. Air Conditioning System with Groundwater We have originally developed an air conditioning system which uses the rich groundwater of the Hakusan mountain range and steadily introduced it to buildings at the Awazu Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power consumption used for air conditioning of all buildings of the entire plant to half by using this system. In collaboration with Kanazawa University, we have also analyzed and ensured the amenity, energy savings and hygienic safety. KOMATSU REPORT 2014 30 Biomass Power Generation As part of our assistance to the local forestry industry, we are going to start full-scale biomass power generation by the end of 2014 by using wood from trees thinned from the forest, which are usually discarded. This should result in a signiﬁcant reduction in purchasing electricity. To ensure a stable supply of this thinned wood, we have entered a contract with the Kaga Forestry Association. Air conditioning system with groundwater. By utilizing a high-efﬁciency radiator used in our construction equipment as the heat exchanger, we use groundwater at a constant temperature of 17 Celsius for cooling. In winter, we use heated water discharged from facilities and equipment in the plant. Biomass boiler currently in use. We have also developed an original cutting-type chipper for thinned wood. We are also planning to thoroughly collect waste heat from a biomass power generation system to be introduced soon. To exhaustively use waste heat from heat treatment and other processes, we have been testing thermoelectric modules made by KELK Ltd., our subsidiary, for power generation for the last few years. We are planning to use KELK's new thermoelectric units at seven furnaces, partly as their durability test before the end of the current ﬁscal year. To store and reuse power generated at night by the thermoelectric units and biomass power generation system, we are also developing a large-scale power storage system with sealed batteries for Komatsu forklift trucks. Energy Savings: Taking on the challenge of reducing over 90% The new assembly factory uses leading-edge energy-saving facilities and equipment, such as variable LED lights and high-density and high- insulation materials, which should reduce our annual purchase of electric volume by over 90% from the combined volume of the previous two factories. By using the entire pit as an air-conditioning duct, we are achieving stratiﬁed air conditioning limited to workers, another energy-saving In addition to the new assembly factory, we are working on energy-savings and -generation at the Awazu Plant by taking full advantage of local Power Generation by Using KELK-made Thermoelectric Modules Air conditioning system with groundwater. By utilizing a high-efﬁciency radiator used in our construction equipment as the heat exchanger, we use groundwater at a constant temperature of 17 Celsius for cooling. In winter, we use heated water discharged from facilities and equipment in the plant. Thermoelectric generation system at the Awazu Plant. which takes advantage of Large-scale power storage system with maintenance-free batteries for forklift temperature differences which occur inside of selective machinery. The heat trucks. treatment process is a very harsh environment for thermoelectric units because of drastic changes of temperature. We adopted the roof design similar to an aircraft hangar, achieving the maximum An innovative pit for the entire shop ﬂoor of a plant which handles heavy distance of 32m between pillars, about 4 times longer than the previous equipment. Flat ﬂoor surface along the lines enables relatively easy assembly factory. In this way, we have successfully eliminated the obstacle of the rearrangement of the lines by removing ﬂoorboards and moving the facilities in pillars in designing assembly lines. the pit. “ For our young manufacturing engineers who will lead Komatsu into the future, this new factory has offered a great opportunity to transform their ideas for improvement into actual things. ” Interview: Tatsuya Nakaizumi, Project Manager, Awazu Plant measure. nature and our strengths. Overall Energy-savings and -generation at the Awazu Plant Air Conditioning System with Groundwater We have originally developed an air conditioning system which uses the rich groundwater of the Hakusan mountain range and steadily introduced it to buildings at the Awazu Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power consumption used for air conditioning of all buildings of the entire plant to half by using this system. In collaboration with Kanazawa University, we have also analyzed and ensured the amenity, energy savings and hygienic safety. Biomass Power Generation As part of our assistance to the local forestry industry, we are going to start full-scale biomass power generation by the end of 2014 by using wood from trees thinned from the forest, which are usually discarded. This should result in a signiﬁcant reduction in purchasing electricity. To ensure a stable supply of this thinned wood, we have entered a contract with the Kaga Forestry Association. Biomass boiler currently in use. We have also developed an original cutting-type chipper for thinned wood. We are also planning to thoroughly collect waste heat from a biomass power generation system to be introduced soon. Power Generation by Using KELK-made Thermoelectric Modules To exhaustively use waste heat from heat treatment and other processes, we have been testing thermoelectric modules made by KELK Ltd., our subsidiary, for power generation for the last few years. We are planning to use KELK's new thermoelectric units at seven furnaces, partly as their durability test before the end of the current ﬁscal year. To store and reuse power generated at night by the thermoelectric units and biomass power generation system, we are also developing a large-scale power storage system with sealed batteries for Komatsu forklift trucks. Thermoelectric generation system at the Awazu Plant. which takes advantage of Large-scale power storage system with maintenance-free batteries for forklift temperature differences which occur inside of selective machinery. The heat trucks. treatment process is a very harsh environment for thermoelectric units because of drastic changes of temperature. KOMATSU REPORT 2014 Structural Reforms Designed to Reinforce Our Business Foundation A New Assembly Factory Begins Operation at the Awazu Plant - Leading the project to cut down electric power consumption to half at all plants in Japan - Productivity Energy Savings Productivity: Doubling productivity by area by taking full advantage of improvement efforts over the years. There were previously two factories at the Awazu Plant, but they were built over 40 years ago and equipped with many, outdated facilities. Their structure also posed some problems in productivity. As the productivity of assembling is fundamentally determined by parts logistics (preparation of parts), the pillar and ﬂoor structure can also become obstacle. The new assembly factory (shop ﬂoor area: 28,000m ) features a great degree of freedom (ﬂexibility) capable of accommodating production lines 50 years ahead. The wide open space of the shop offers an outstanding degree of freedom when rearranging the ﬂoor layout in the future. It is secured by its innovative pit structure of the entire shop ﬂoor and application of an aircraft hangar structure which has provided a great distance between pillars. Power sources, pipes and auxiliary facilities along the assembly lines are all stored in the pit, which also promotes easy maintenance work and safety of the workers. For the new assembly line for wheel-type construction equipment which began operation in May this year, our assembly experts thoroughly incorporated their improvement measures in the design stage, reducing the line length from 150m to 120m and doubling productivity per ﬂoor area. For the new line for crawler-type models, scheduled to start operations in July this year, the length has also been shortened, from 180m to 130m, enhancing per-space productivity. We adopted the roof design similar to an aircraft hangar, achieving the maximum An innovative pit for the entire shop ﬂoor of a plant which handles heavy distance of 32m between pillars, about 4 times longer than the previous equipment. Flat ﬂoor surface along the lines enables relatively easy assembly factory. In this way, we have successfully eliminated the obstacle of the rearrangement of the lines by removing ﬂoorboards and moving the facilities in pillars in designing assembly lines. the pit. “ For our young manufacturing engineers who will lead Komatsu into the future, this new factory has offered a great opportunity to transform their ideas for improvement into actual things. ” Interview: Tatsuya Nakaizumi, Project Manager, Awazu Plant Mid-range Focused Activities Energy Savings: Taking on the challenge of reducing over 90% The new assembly factory uses leading-edge energy-saving facilities and equipment, such as variable LED lights and high-density and high- insulation materials, which should reduce our annual purchase of electric volume by over 90% from the combined volume of the previous two factories. By using the entire pit as an air-conditioning duct, we are achieving stratiﬁed air conditioning limited to workers, another energy-saving measure. Overall Energy-savings and -generation at the Awazu Plant In addition to the new assembly factory, we are working on energy-savings and -generation at the Awazu Plant by taking full advantage of local nature and our strengths. Air Conditioning System with Groundwater We have originally developed an air conditioning system which uses the rich groundwater of the Hakusan mountain range and steadily introduced it to buildings at the Awazu Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power consumption used for air conditioning of all buildings of the entire plant to half by using this system. In collaboration with Kanazawa University, we have also analyzed and ensured the amenity, energy savings and hygienic safety. Biomass Power Generation As part of our assistance to the local forestry industry, we are going to start full-scale biomass power generation by the end of 2014 by using wood from trees thinned from the forest, which are usually discarded. This should result in a signiﬁcant reduction in purchasing electricity. To ensure a stable supply of this thinned wood, we have entered a contract with the Kaga Forestry Association. Air conditioning system with groundwater. By utilizing a high-efﬁciency radiator used in our construction equipment as the heat exchanger, we use groundwater at a constant temperature of 17 Celsius for cooling. In winter, we use heated water discharged from facilities and equipment in the plant. Biomass boiler currently in use. We have also developed an original cutting-type chipper for thinned wood. We are also planning to thoroughly collect waste heat from a biomass power generation system to be introduced soon. Power Generation by Using KELK-made Thermoelectric Modules To exhaustively use waste heat from heat treatment and other processes, we have been testing thermoelectric modules made by KELK Ltd., our KOMATSU REPORT 2014 subsidiary, for power generation for the last few years. We are planning to use KELK's new thermoelectric units at seven furnaces, partly as their 31 durability test before the end of the current ﬁscal year. To store and reuse power generated at night by the thermoelectric units and biomass power generation system, we are also developing a large-scale power storage system with sealed batteries for Komatsu forklift trucks. Thermoelectric generation system at the Awazu Plant. which takes advantage of Large-scale power storage system with maintenance-free batteries for forklift temperature differences which occur inside of selective machinery. The heat trucks. treatment process is a very harsh environment for thermoelectric units because of drastic changes of temperature. KOMATSU REPORT 2014 Structural Reforms Designed to Reinforce Our Business Foundation A New Assembly Factory Begins Operation at the Awazu Plant - Leading the project to cut down electric power consumption to half at all plants in Japan - Productivity Energy Savings Productivity: Doubling productivity by area by taking full advantage of improvement efforts over the years. There were previously two factories at the Awazu Plant, but they were built over 40 years ago and equipped with many, outdated facilities. Their structure also posed some problems in productivity. As the productivity of assembling is fundamentally determined by parts logistics (preparation of parts), the pillar and ﬂoor structure can also become obstacle. The new assembly factory (shop ﬂoor area: 28,000m ) features a great degree of freedom (ﬂexibility) capable of accommodating production lines 50 years ahead. The wide open space of the shop offers an outstanding degree of freedom when rearranging the ﬂoor layout in the future. It is secured by its innovative pit structure of the entire shop ﬂoor and application of an aircraft hangar structure which has provided a great distance between pillars. Power sources, pipes and auxiliary facilities along the assembly lines are all stored in the pit, which also promotes easy maintenance work and safety of the workers. For the new assembly line for wheel-type construction equipment which began operation in May this year, our assembly experts thoroughly incorporated their improvement measures in the design stage, reducing the line length from 150m to 120m and doubling productivity per ﬂoor area. For the new line for crawler-type models, scheduled to start operations in July this year, the length has also been shortened, from 180m to 130m, enhancing per-space productivity. “ For our young manufacturing engineers who will lead Komatsu into the future, this new factory has offered a great opportunity to transform their ideas for improvement into actual things. ” Interview: Tatsuya Nakaizumi, Project Manager, Awazu Plant Energy Savings: Taking on the challenge of reducing over 90% The new assembly factory uses leading-edge energy-saving facilities and equipment, such as variable LED lights and high-density and high- factories. By using the entire pit as an air-conditioning duct, we are achieving stratiﬁed air conditioning limited to workers, another energy-saving measure. Overall Energy-savings and -generation at the Awazu Plant In addition to the new assembly factory, we are working on energy-savings and -generation at the Awazu Plant by taking full advantage of local nature and our strengths. Air Conditioning System with Groundwater We have originally developed an air conditioning system which uses the rich groundwater of the Hakusan mountain range and steadily introduced it to buildings at the Awazu Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power consumption used for air conditioning of all buildings of the entire plant to half by using this system. In collaboration with Kanazawa University, we have also analyzed and ensured the amenity, energy savings and hygienic safety. Biomass Power Generation As part of our assistance to the local forestry industry, we are going to start full-scale biomass power generation by the end of 2014 by using wood from trees thinned from the forest, which are usually discarded. This should result in a signiﬁcant reduction in purchasing electricity. To ensure a stable supply of this thinned wood, we have entered a contract with the Kaga Forestry Association. Air conditioning system with groundwater. By utilizing a high-efﬁciency radiator used in our construction equipment as the heat exchanger, we use groundwater at a constant temperature of 17 Celsius for cooling. In winter, we use heated water discharged from facilities and equipment in the plant. Structural Reforms Designed to Reinforce Our Business Foundation A New Assembly Factory Begins Operation at the Awazu Plant - Leading the project to cut down electric power consumption to half at all plants in Japan - Productivity Energy Savings We adopted the roof design similar to an aircraft hangar, achieving the maximum An innovative pit for the entire shop ﬂoor of a plant which handles heavy distance of 32m between pillars, about 4 times longer than the previous equipment. Flat ﬂoor surface along the lines enables relatively easy assembly factory. In this way, we have successfully eliminated the obstacle of the rearrangement of the lines by removing ﬂoorboards and moving the facilities in pillars in designing assembly lines. the pit. Productivity: Doubling productivity by area by taking full advantage of improvement efforts over the insulation materials, which should reduce our annual purchase of electric volume by over 90% from the combined volume of the previous two years. There were previously two factories at the Awazu Plant, but they were built over 40 years ago and equipped with many, outdated facilities. Their structure also posed some problems in productivity. As the productivity of assembling is fundamentally determined by parts logistics (preparation of parts), the pillar and ﬂoor structure can also become obstacle. The new assembly factory (shop ﬂoor area: 28,000m ) features a great degree of freedom (ﬂexibility) capable of accommodating production lines 50 years ahead. The wide open space of the shop offers an outstanding degree of freedom when rearranging the ﬂoor layout in the future. It is secured by its innovative pit structure of the entire shop ﬂoor and application of an aircraft hangar structure which has provided a great distance between pillars. Power sources, pipes and auxiliary facilities along the assembly lines are all stored in the pit, which also promotes easy maintenance work and safety of the workers. For the new assembly line for wheel-type construction equipment which began operation in May this year, our assembly experts thoroughly incorporated their improvement measures in the design stage, reducing the line length from 150m to 120m and doubling productivity per ﬂoor area. For the new line for crawler-type models, scheduled to start operations in July this year, the length has also been shortened, from 180m to 130m, enhancing per-space productivity. We adopted the roof design similar to an aircraft hangar, achieving the maximum An innovative pit for the entire shop ﬂoor of a plant which handles heavy distance of 32m between pillars, about 4 times longer than the previous equipment. Flat ﬂoor surface along the lines enables relatively easy assembly factory. In this way, we have successfully eliminated the obstacle of the rearrangement of the lines by removing ﬂoorboards and moving the facilities in pillars in designing assembly lines. the pit. “ For our young manufacturing engineers who will lead Komatsu into the future, this new factory has offered a great opportunity to transform their ideas for improvement into actual things. ” Interview: Tatsuya Nakaizumi, Project Manager, Awazu Plant Air Conditioning System with Groundwater We have originally developed an air conditioning system which uses the rich groundwater of the Hakusan mountain range and steadily introduced it to buildings at the Awazu Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power consumption used for air conditioning of all buildings of the entire plant to half by using this system. In collaboration with Kanazawa University, we have also analyzed and ensured the amenity, energy savings and hygienic safety. Biomass Power Generation As part of our assistance to the local forestry industry, we are going to start full-scale biomass power generation by the end of 2014 by using wood from trees thinned from the forest, which are usually discarded. This should result in a signiﬁcant reduction in purchasing electricity. To ensure a stable supply of this thinned wood, we have entered a contract with the Kaga Forestry Association. Air conditioning system with groundwater. By utilizing a high-efﬁciency radiator used in our construction equipment as the heat exchanger, we use groundwater at a constant temperature of 17 Celsius for cooling. In winter, we use heated water discharged from facilities and equipment in the plant. Biomass boiler currently in use. We have also developed an original cutting-type chipper for thinned wood. We are also planning to thoroughly collect waste heat from a biomass power generation system to be introduced soon. Thermoelectric generation system at the Awazu Plant. which takes advantage of Large-scale power storage system with maintenance-free batteries for forklift temperature differences which occur inside of selective machinery. The heat trucks. treatment process is a very harsh environment for thermoelectric units because of drastic changes of temperature. Mid-range Focused Activities Biomass boiler currently in use. We have also developed an original cutting-type chipper for thinned wood. We are also planning to thoroughly collect waste heat from a biomass power generation system to be introduced soon. Energy Savings: Taking on the challenge of reducing over 90% Power Generation by Using KELK-made Thermoelectric Modules The new assembly factory uses leading-edge energy-saving facilities and equipment, such as variable LED lights and high-density and high- subsidiary, for power generation for the last few years. We are planning to use KELK's new thermoelectric units at seven furnaces, partly as their insulation materials, which should reduce our annual purchase of electric volume by over 90% from the combined volume of the previous two durability test before the end of the current ﬁscal year. To store and reuse power generated at night by the thermoelectric units and biomass power factories. By using the entire pit as an air-conditioning duct, we are achieving stratiﬁed air conditioning limited to workers, another energy-saving generation system, we are also developing a large-scale power storage system with sealed batteries for Komatsu forklift trucks. To exhaustively use waste heat from heat treatment and other processes, we have been testing thermoelectric modules made by KELK Ltd., our measure. Overall Energy-savings and -generation at the Awazu Plant In addition to the new assembly factory, we are working on energy-savings and -generation at the Awazu Plant by taking full advantage of local nature and our strengths. Thermoelectric generation system at the Awazu Plant. which takes advantage of temperature differences which occur inside of selective machinery. The heat treatment process is a very harsh environment for thermoelectric units because of drastic changes of temperature. Large-scale power storage system with maintenance-free batteries for forklift trucks. Power Generation by Using KELK-made Thermoelectric Modules To exhaustively use waste heat from heat treatment and other processes, we have been testing thermoelectric modules made by KELK Ltd., our subsidiary, for power generation for the last few years. We are planning to use KELK's new thermoelectric units at seven furnaces, partly as their durability test before the end of the current ﬁscal year. To store and reuse power generated at night by the thermoelectric units and biomass power generation system, we are also developing a large-scale power storage system with sealed batteries for Komatsu forklift trucks. KOMATSU REPORT 2014 32 KOMATSU REPORT 2014 Mid-range Focused Activities Structural Reforms Designed to Reinforce Our Business Foundation Chinese Subsidiary Wins the Deming Prize - Komatsu Shantui Construction Machinery Co., Ltd. - Introducing TQM Achievements We established Komatsu Shantui Construction Machinery Co., Ltd. (KSC) jointly with Shandong Shantui Construction Co., Ltd. in Shandong Province, China in July 1995. KSC has grown into China's leading construction equipment manufacturer, supplying medium-sized hydraulic excavators today. In June 2010, KSC embarked on an all-involved Total Quality Management (TQM)* project, including the president, in order to strengthen its workplace capability, a core of The KOMATSU Way, which calls for continuous, self-determined improvement efforts. To obtain an objective assessment of the results, they took on the challenge of the Deming Prize, an internationally reputed TQM standard, and won the Prize in November 2013. *TQM: Systematic activity designed to help achieve organizational goals by managing the entire organization efﬁciently and effectively to accomplish the objectives of Quality, Cost and Delivery of products and services. Komatsu Shantui Construction Machinery Introducing TQM Many KSC employees had not even heard the term TQM itself before the project began. Therefore, the TQM Division started the project by fostering mutual awareness of problems as a practical method of introducing TQM. Basic Quality Control (QC) education also addressed the KOMATSU REPORT 2014 33 importance of becoming aware of problems. All employees with one full year of employment at KSC enrolled in this program. At the same time, they trained QC instructors who were chosen from all departments. To improve manufacturing skills, they established the Technical Training Center in Jining, where they made focused efforts to train instructors in the areas of assembling, welding, painting and inspection with help from their Mother plant in Osaka. Now that their in-house training is over, these instructors are also training instructors of a Komatsu Group company and their suppliers in Jining. Assembly line for hydraulic excavators at KSC Technical Training Center in Jining Achievements KSC was able to generate more-than-anticipated results in the areas of quality, costs and delivery as a result of developing the TQM-based operation. For example, in the process of solving problems, employees needed to collaborate with other employees engaging in processes before and after their own and solve problems. TQM Division spent a lot of time and effort to anchor an orientation toward customers among all employees, an ultimate end-process. On the shop ﬂoor, all employees thoroughly understood the Three-Gen Principle, i.e., Gemba (actual workplace), Genbutsu (real things) and Genjitsu (real situation). Today, when problems develop, they scientiﬁcally collect data from a multitude of angles to identify the cause(s) in line with the objective(s), and analyze data by applying a variety of tools. An employee explains the quality control system to President of KSC, who plays the role of a Deming Prize assessor. Most importantly, workplace capability, i.e., employees taking the initiative to engage in continuous improvement of respective workplaces, is being rooted at this plant in China. Liu Fangchang, who worked on the TQM project at KSC and became president in April 2013, remembers very clearly the following words of a Japanese expat who was in charge of the project: “Finding no problem is a big problem itself. ” He adds, “His words have been very helpful for me to keep an awareness of potential problems all the time. Unless we face reality with an awareness of problems, we won't be able to identify problems. I also feel that a climate of thinking ﬁrst about the beneﬁts for customers is being anchored at KSC.” Today, KSC is making further efforts to train manufacturing engineering and purchase staffs as well as suppliers by focusing on cost improvement, while receiving instructions from the Osala Plant, their Mother plant. Quality and Reliability in The KOMATSU Way and customer orientation of TQM say the same thing in different words. Liu Fangchang, President, KSC We began the project, when I had no idea about TQM myself. Zhu Lei, Manager, TQM (Total Quality Management) Division, KSC KOMATSU REPORT 2014Structural Reforms Designed to Reinforce Our Business Foundation Chinese Subsidiary Wins the Deming Prize - Komatsu Shantui Construction Machinery Co., Ltd. - Introducing TQM Achievements We established Komatsu Shantui Construction Machinery Co., Ltd. (KSC) jointly with Shandong Shantui Construction Co., Ltd. in Shandong Province, China in July 1995. KSC has grown into China's leading construction equipment manufacturer, supplying medium-sized hydraulic excavators today. November 2013. In June 2010, KSC embarked on an all-involved Total Quality Management (TQM)* project, including the president, in order to strengthen its workplace capability, a core of The KOMATSU Way, which calls for continuous, self-determined improvement efforts. To obtain an objective assessment of the results, they took on the challenge of the Deming Prize, an internationally reputed TQM standard, and won the Prize in *TQM: Systematic activity designed to help achieve organizational goals by managing the entire organization efﬁciently and effectively to accomplish the objectives of Quality, Cost and Delivery of products and services. Structural Reforms Designed to Reinforce Our Business Foundation Chinese Subsidiary Wins the Deming Prize - Komatsu Shantui Construction Machinery Co., Ltd. - Introducing TQM Achievements Mid-range Focused Activities Komatsu Shantui Construction Machinery Introducing TQM Many KSC employees had not even heard the term TQM itself before the project began. Therefore, the TQM Division started the project by fostering mutual awareness of problems as a practical method of introducing TQM. Basic Quality Control (QC) education also addressed the importance of becoming aware of problems. All employees with one full year of employment at KSC enrolled in this program. At the same time, they trained QC instructors who were chosen from all departments. To improve manufacturing skills, they established the Technical Training Center in Jining, where they made focused efforts to train instructors in the areas of assembling, welding, painting and inspection with help from their Mother plant in Osaka. Now that their in-house training is over, these instructors are also training instructors of a Komatsu Group company and their suppliers in Jining. We established Komatsu Shantui Construction Machinery Co., Ltd. (KSC) jointly with Shandong Shantui Construction Co., Ltd. in Shandong Province, China in July 1995. KSC has grown into China's leading construction equipment manufacturer, supplying medium-sized hydraulic Assembly line for hydraulic excavators at KSC Technical Training Center in Jining In June 2010, KSC embarked on an all-involved Total Quality Management (TQM)* project, including the president, in order to strengthen its workplace capability, a core of The KOMATSU Way, which calls for continuous, self-determined improvement efforts. To obtain an objective assessment of the results, they took on the challenge of the Deming Prize, an internationally reputed TQM standard, and won the Prize in Achievements KSC was able to generate more-than-anticipated results in the areas of quality, costs and delivery as a result of developing the TQM-based *TQM: Systematic activity designed to help achieve organizational goals by managing the entire organization efﬁciently and effectively to accomplish the objectives of operation. For example, in the process of solving problems, employees needed to collaborate with other employees engaging in processes before and after their own and solve problems. TQM Division spent a lot of time and effort to anchor an orientation toward customers among all employees, an ultimate end-process. On the shop ﬂoor, all employees thoroughly understood the Three-Gen Principle, i.e., Gemba (actual workplace), Genbutsu (real things) and Genjitsu (real situation). Today, when problems develop, they scientiﬁcally collect data from a multitude of angles to identify the cause(s) in line with the objective(s), and analyze data by applying a variety of tools. An employee explains the quality control system to President of KSC, who plays the role of a Deming Prize assessor. Most importantly, workplace capability, i.e., employees taking the initiative to engage in continuous improvement of respective workplaces, is being rooted at this plant in China. Liu Fangchang, who worked on the TQM project at KSC and became president in April 2013, remembers very clearly the following words of a Japanese expat who was in charge of the project: “Finding no problem is a big problem itself. ” He adds, “His words have been very helpful for me to keep an awareness of potential problems all the time. Unless we face reality with an awareness of problems, we won't be able to identify problems. I also feel that a climate of thinking ﬁrst about the beneﬁts for customers is being anchored at KSC.” Today, KSC is making further efforts to train manufacturing engineering and purchase staffs as well as suppliers by focusing on cost improvement, while receiving instructions from the Osala Plant, their Mother plant. KOMATSU REPORT 2014 34 Quality and Reliability in The KOMATSU Way and customer orientation of TQM say the same thing in different words. Liu Fangchang, President, KSC Assembly line for hydraulic excavators at KSC Technical Training Center in Jining myself. We began the project, when I had no idea about TQM Zhu Lei, Manager, TQM (Total Quality Management) Division, KSC excavators today. November 2013. Quality, Cost and Delivery of products and services. Komatsu Shantui Construction Machinery Introducing TQM Many KSC employees had not even heard the term TQM itself before the project began. Therefore, the TQM Division started the project by fostering mutual awareness of problems as a practical method of introducing TQM. Basic Quality Control (QC) education also addressed the importance of becoming aware of problems. All employees with one full year of employment at KSC enrolled in this program. At the same time, they trained QC instructors who were chosen from all departments. To improve manufacturing skills, they established the Technical Training Center in Jining, where they made focused efforts to train instructors in the areas of assembling, welding, painting and inspection with help from their Mother plant in Osaka. Now that their in-house training is over, these instructors are also training instructors of a Komatsu Group company and their suppliers in Jining. Achievements KSC was able to generate more-than-anticipated results in the areas of quality, costs and delivery as a result of developing the TQM-based operation. For example, in the process of solving problems, employees needed to collaborate with other employees engaging in processes before and after their own and solve problems. TQM Division spent a lot of time and effort to anchor an orientation toward customers among all employees, an ultimate end-process. On the shop ﬂoor, all employees thoroughly understood the Three-Gen Principle, i.e., Gemba (actual workplace), Genbutsu (real things) and Genjitsu (real situation). Today, when problems develop, they scientiﬁcally collect data from a multitude of angles to identify the cause(s) in line with the objective(s), and analyze data by applying a variety of tools. An employee explains the quality control system to President of KSC, who plays the role of a Deming Prize assessor. Most importantly, workplace capability, i.e., employees taking the initiative to engage in continuous improvement of respective workplaces, is being rooted at this plant in China. Liu Fangchang, who worked on the TQM project at KSC and became president in April 2013, remembers very clearly the following words of a Japanese expat who was in charge of the project: “Finding no problem is a big problem itself. ” He adds, “His words have been very helpful for me to keep an awareness of potential problems all the time. Unless we face reality with an awareness of problems, we won't be able to identify problems. I also feel that a climate of thinking ﬁrst about the beneﬁts for customers is being anchored at KSC.” Today, KSC is making further efforts to train manufacturing engineering and purchase staffs as well as suppliers by focusing on cost improvement, while receiving instructions from the Osala Plant, their Mother plant. Quality and Reliability in The KOMATSU Way and customer orientation of TQM say the same thing in different words. Liu Fangchang, President, KSC We began the project, when I had no idea about TQM myself. Zhu Lei, Manager, TQM (Total Quality Management) Division, KSC KOMATSU REPORT 2014Structural Reforms Designed to Reinforce Our Business Foundation Chinese Subsidiary Wins the Deming Prize - Komatsu Shantui Construction Machinery Co., Ltd. - Introducing TQM Achievements We established Komatsu Shantui Construction Machinery Co., Ltd. (KSC) jointly with Shandong Shantui Construction Co., Ltd. in Shandong Province, China in July 1995. KSC has grown into China's leading construction equipment manufacturer, supplying medium-sized hydraulic excavators today. November 2013. In June 2010, KSC embarked on an all-involved Total Quality Management (TQM)* project, including the president, in order to strengthen its workplace capability, a core of The KOMATSU Way, which calls for continuous, self-determined improvement efforts. To obtain an objective assessment of the results, they took on the challenge of the Deming Prize, an internationally reputed TQM standard, and won the Prize in *TQM: Systematic activity designed to help achieve organizational goals by managing the entire organization efﬁciently and effectively to accomplish the objectives of Quality, Cost and Delivery of products and services. Komatsu Shantui Construction Machinery Introducing TQM Many KSC employees had not even heard the term TQM itself before the project began. Therefore, the TQM Division started the project by fostering mutual awareness of problems as a practical method of introducing TQM. Basic Quality Control (QC) education also addressed the importance of becoming aware of problems. All employees with one full year of employment at KSC enrolled in this program. At the same time, they trained QC instructors who were chosen from all departments. To improve manufacturing skills, they established the Technical Training Center in Jining, where they made focused efforts to train instructors in the areas of assembling, welding, painting and inspection with help from their Mother plant in Osaka. Now that their in-house training is over, these instructors are also training instructors of a Komatsu Group company and their suppliers in Jining. Assembly line for hydraulic excavators at KSC Mid-range Focused Activities Technical Training Center in Jining Achievements KSC was able to generate more-than-anticipated results in the areas of quality, costs and delivery as a result of developing the TQM-based operation. For example, in the process of solving problems, employees needed to collaborate with other employees engaging in processes before and after their own and solve problems. TQM Division spent a lot of time and effort to anchor an orientation toward customers among all employees, an ultimate end-process. On the shop ﬂoor, all employees thoroughly understood the Three-Gen Principle, i.e., Gemba (actual workplace), Genbutsu (real things) and Genjitsu (real situation). Today, when problems develop, they scientiﬁcally collect data from a multitude of angles to identify the cause(s) in line with the objective(s), and analyze data by applying a variety of tools. An employee explains the quality control system to President of KSC, who plays the role of a Deming Prize assessor. Most importantly, workplace capability, i.e., employees taking the initiative to engage in continuous improvement of respective workplaces, is being rooted at this plant in China. Liu Fangchang, who worked on the TQM project at KSC and became president in April 2013, remembers very clearly the following words of a Japanese expat who was in charge of the project: “Finding no problem is a big problem itself. ” He adds, “His words have been very helpful for me to keep an awareness of potential problems all the time. Unless we face reality with an awareness of problems, we won't be able to identify problems. I also feel that a climate of thinking ﬁrst about the beneﬁts for customers is being anchored at KSC.” Today, KSC is making further efforts to train manufacturing engineering and purchase staffs as well as suppliers by focusing on cost improvement, while receiving instructions from the Osala Plant, their Mother plant. Quality and Reliability in The KOMATSU Way and customer orientation of TQM say the same thing in different words. Liu Fangchang, President, KSC We began the project, when I had no idea about TQM myself. Zhu Lei, Manager, TQM (Total Quality Management) Division, KSC KOMATSU REPORT 2014 35 KOMATSU REPORT 2014Structural Reforms Designed to Reinforce Our Business Foundation Chinese Subsidiary Wins the Deming Prize - Komatsu Shantui Construction Machinery Co., Ltd. - Introducing TQM Achievements We established Komatsu Shantui Construction Machinery Co., Ltd. (KSC) jointly with Shandong Shantui Construction Co., Ltd. in Shandong Province, China in July 1995. KSC has grown into China's leading construction equipment manufacturer, supplying medium-sized hydraulic excavators today. November 2013. In June 2010, KSC embarked on an all-involved Total Quality Management (TQM)* project, including the president, in order to strengthen its workplace capability, a core of The KOMATSU Way, which calls for continuous, self-determined improvement efforts. To obtain an objective assessment of the results, they took on the challenge of the Deming Prize, an internationally reputed TQM standard, and won the Prize in *TQM: Systematic activity designed to help achieve organizational goals by managing the entire organization efﬁciently and effectively to accomplish the objectives of Quality, Cost and Delivery of products and services. Komatsu Shantui Construction Machinery Introducing TQM Many KSC employees had not even heard the term TQM itself before the project began. Therefore, the TQM Division started the project by fostering mutual awareness of problems as a practical method of introducing TQM. Basic Quality Control (QC) education also addressed the importance of becoming aware of problems. All employees with one full year of employment at KSC enrolled in this program. At the same time, they trained QC instructors who were chosen from all departments. To improve manufacturing skills, they established the Technical Training Center in Jining, where they made focused efforts to train instructors in the areas of assembling, welding, painting and inspection with help from their Mother plant in Osaka. Now that their in-house training is over, these instructors are also training instructors of a Komatsu Group company and their suppliers in Jining. Assembly line for hydraulic excavators at KSC Technical Training Center in Jining Achievements KSC was able to generate more-than-anticipated results in the areas of quality, costs and delivery as a result of developing the TQM-based operation. For example, in the process of solving problems, employees needed to collaborate with other employees engaging in processes before and after their own and solve problems. TQM Division spent a lot of time and effort to anchor an orientation toward customers among all employees, an ultimate end-process. On the shop ﬂoor, all employees thoroughly understood the Three-Gen Principle, i.e., Gemba (actual workplace), Genbutsu (real things) and Genjitsu (real situation). Today, when problems develop, they scientiﬁcally collect data from a multitude of angles to identify the cause(s) in line with the objective(s), and analyze data by applying a variety of tools. An employee explains the quality control system to President of KSC, who plays the role of a Deming Prize assessor. Most importantly, workplace capability, i.e., employees taking the initiative to engage in continuous improvement of respective workplaces, is being rooted at this plant in China. Liu Fangchang, who worked on the TQM project at KSC and became president in April 2013, remembers very clearly the following words of a Japanese expat who was in charge of the project: “Finding no problem is a big problem itself. ” He adds, “His words have been very helpful for me to keep an awareness of potential problems all the time. Unless we face reality with an awareness of problems, we won't be able to identify problems. I also feel that a climate of thinking ﬁrst about the beneﬁts for customers is being anchored at KSC.” Today, KSC is making further efforts to train manufacturing engineering and purchase staffs as well as suppliers by focusing on cost improvement, while receiving instructions from the Osala Plant, their Mother plant. Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Quality and Reliability in The KOMATSU Way and customer orientation of TQM say the same thing in different words. Liu Fangchang, President, KSC We began the project, when I had no idea about TQM myself. Zhu Lei, Manager, TQM (Total Quality Management) Division, KSC KOMATSU REPORT 2014 36 KOMATSU REPORT 20145-year summary | KOMATSU REPORT 2014 2014/07/09 12:09 Review of FY2013 Operations KOMATSU REPORT 2014 Review of FY2013 Operations 5-Year Summary KOMATSU REPORT 2014 5-Year Summary Komatsu Ltd. and Consolidated Subsidiaries Millions of yen (except per share amounts) FY2013 FY2012 FY2011 FY2010 FY2009 For the ﬁscal period Net sales Cost of sales Operating income Operating income ratio Income before income taxes and equity in earnings of afﬁliated companies Net income attributable to Komatsu Ltd. Capital investment At ﬁscal period-end Total assets Working capital Property, plant and equipment Long-term debt－less current maturities Per share data Net income attributable to Komatsu Ltd. per share: Basic Diluted Cash dividends per share* ¥1,953,657 ¥1,884,991 ¥1,981,763 ¥1,843,127 ¥1,431,564 1,393,048 1,377,459 1,440,765 1,343,464 1,101,559 240,495 12.3% 242,056 159,518 179,070 211,602 11.2% 204,603 126,321 136,962 256,343 12.9% 249,609 167,041 122,038 222,929 12.1% 219,809 150,752 97,738 67,035 4.7% 64,979 33,559 96,191 ¥2,651,556 ¥2,517,857 ¥2,320,529 ¥2,149,137 ¥1,959,055 701,201 667,347 311,067 664,480 585,220 343,814 536,662 529,656 312,519 444,384 508,387 291,152 923,843 43.0% 398,375 525,100 356,985 833,975 42.6% Komatsu Ltd. shareholders' equity 1,376,391 1,193,194 1,009,696 As percentage of total assets 51.9% 47.4% 43.5% Komatsu Ltd. shareholders' equity per share 1,443.97 1,252.33 1,060.31 *Cash dividends per share provided above are based on dividends paid each ﬁscal year. ¥ 167.36 ¥ 132.64 ¥ 173.47 ¥ 155.77 ¥ 34.67 167.18 53.00 132.51 45.00 173.32 41.00 155.66 26.00 954.48 34.65 26.00 861.51 FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 37 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/summary/ 1/1 ページ 38 CIS KOMATSU REPORT 2014 East Japan Earthquake and tsunami. In particular, demand in rental companies was strong. As a result, sales advanced from the previous 5-year summary | KOMATSU REPORT 2014 2014/07/09 12:09 Construction, Mining and Utility Equipment | KOMATSU REPORT 2014 2014/07/10 17:33 KOMATSU REPORT 2014 Review of FY2013 Operations 5-Year Summary Review of FY2013 Operations KOMATSU REPORT 2014 FY2013 Highlights Construction, Mining & Utility Equipment KOMATSU REPORT 2014 5-Year Summary Construction, Mining and Utility Equipment Komatsu Ltd. and Consolidated Subsidiaries Millions of yen (except per share amounts) FY2013 FY2012 FY2011 FY2010 FY2009 While demand for mining equipment remained slack in coal and iron ore mines, demand for construction equipment was brisk in Japan, especially against the backdrop of thriving construction investment, and increased steadily in China where it upturned for recovery during the ﬁscal year under review. In addition, as the Japanese yen depreciated against the U.S. dollar, euro and renminbi, sales of construction, mining and utility equipment increased by 4.3% from the previous ﬁscal year, to JPY1,752.2 billion. Segment proﬁt improved by 15.9% to JPY242.1 billion. ¥1,953,657 ¥1,884,991 ¥1,981,763 ¥1,843,127 ¥1,431,564 1,393,048 1,377,459 1,440,765 1,343,464 1,101,559 Sales Segment Proﬁt and Ratio Komatsu Ltd. shareholders' equity 1,376,391 1,193,194 1,009,696 As percentage of total assets 51.9% 47.4% 43.5% Sales by Region for the Fiscal Year ended March 31, 2014 ( To Outside Customers ) Traditional Markets Strategic Markets Japan Latin America Demand for construction equipment advanced, reﬂecting an increase in While demand for equipment declined for use in copper mines in Chile sales as more customers anticipated more stringent emission and Peru, sales increased from the previous ﬁscal year, reﬂecting the regulations for the near future. In addition, there were full-scale start- Japanese yen's depreciation. ups of reconstruction projects in the regions destroyed by the Great For the ﬁscal period Net sales Cost of sales Operating income Operating income ratio Capital investment At ﬁscal period-end Total assets Working capital Income before income taxes and equity in earnings of afﬁliated companies Net income attributable to Komatsu Ltd. Property, plant and equipment Long-term debt－less current maturities Net income attributable to Komatsu Ltd. Per share data per share: Basic Diluted Cash dividends per share* 240,495 12.3% 242,056 159,518 179,070 701,201 667,347 311,067 211,602 11.2% 204,603 126,321 136,962 664,480 585,220 343,814 256,343 12.9% 249,609 167,041 122,038 536,662 529,656 312,519 ¥2,651,556 ¥2,517,857 ¥2,320,529 ¥2,149,137 ¥1,959,055 222,929 12.1% 219,809 150,752 97,738 444,384 508,387 291,152 923,843 43.0% 155.66 26.00 954.48 67,035 4.7% 64,979 33,559 96,191 398,375 525,100 356,985 833,975 42.6% 34.65 26.00 861.51 ¥ 167.36 ¥ 132.64 ¥ 173.47 ¥ 155.77 ¥ 34.67 167.18 53.00 132.51 45.00 173.32 41.00 Komatsu Ltd. shareholders' equity per share 1,443.97 1,252.33 1,060.31 *Cash dividends per share provided above are based on dividends paid each ﬁscal year. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved While renewal demand since FY2012 in the rental industry ran its China course and demand declined for equipment, especially for use in coal mines, demand grew in the housing sector and infrastructure development, such as highway construction. Sales remained about ﬂat While demand remained slack in Germany and Frace, among the major European markets, against the backdrop of the Eurozone crisis, Asia sales increased from the previous ﬁscal year, reﬂecting the Japanese yen's depreciation. ﬁscal year. North America from the previous ﬁscal year. Europe Sales declined from the previous ﬁscal year, adversely impacted by the downturn of demand for equipment for use in gold mines and the energy sector. Demand, which had been sluggish since FY2011, upturned for recovery in April 2013 and increased for the ﬁscal year, albeit with some slowdown after the Chinese New Year in January 2014. Komatsu worked to expand sales of the 20-ton class PC200-8M0 hydraulic excavator with improved performance of fuel economy. As a result, sales improved from the previous ﬁscal year. In Indonesia, the largest market of Southeast Asia, demand for mining and construction equipment dropped, mainly affected by the sluggish international price of thermal coal and the accelerating depreciation of the Indonesian rupiah since August 2013. As a result, sales declined from the previous ﬁscal year. Oceania As demand for mining equipment in iron ore mines and that for construction equipment remained slack, sales declined from the previous ﬁscal year. Middle East Africa As demand for construction equipment grew steadily in some of the Gulf nations, sales advanced from the previous ﬁscal year. Komatsu promoted proactive sales and service activities by effectively utilizing information obtained from the KOMTRAX Plus, Komatsu's mining equipment management system, and made good sales in mines in Namibia, in addition to South Africa. As a result, sales advanced from the previous ﬁscal year. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/summary/ 1/1 ページ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/summary/const.html 1/1 ページ Construction, Mining and Utility Equipment | KOMATSU REPORT 2014 2014/07/10 17:33 KOMATSU REPORT 2014 FY2013 Highlights Construction, Mining & Utility Equipment Construction, Mining and Utility Equipment While demand for mining equipment remained slack in coal and iron ore mines, demand for construction equipment was brisk in Japan, especially against the backdrop of thriving construction investment, and increased steadily in China where it upturned for recovery during the ﬁscal year under review. In addition, as the Japanese yen depreciated against the U.S. dollar, euro and renminbi, sales of construction, mining and utility equipment increased by 4.3% from the previous ﬁscal year, to JPY1,752.2 billion. Segment proﬁt improved by 15.9% to JPY242.1 billion. Sales Segment Proﬁt and Ratio Sales by Region for the Fiscal Year ended March 31, 2014 ( To Outside Customers ) Review of FY2013 Operations KOMATSU REPORT 2014 Traditional Markets Strategic Markets Japan Latin America Demand for construction equipment advanced, reﬂecting an increase in While demand for equipment declined for use in copper mines in Chile sales as more customers anticipated more stringent emission and Peru, sales increased from the previous ﬁscal year, reﬂecting the regulations for the near future. In addition, there were full-scale start- Japanese yen's depreciation. ups of reconstruction projects in the regions destroyed by the Great East Japan Earthquake and tsunami. In particular, demand in rental CIS companies was strong. As a result, sales advanced from the previous ﬁscal year. North America Sales declined from the previous ﬁscal year, adversely impacted by the downturn of demand for equipment for use in gold mines and the energy sector. While renewal demand since FY2012 in the rental industry ran its China course and demand declined for equipment, especially for use in coal mines, demand grew in the housing sector and infrastructure development, such as highway construction. Sales remained about ﬂat from the previous ﬁscal year. Europe Demand, which had been sluggish since FY2011, upturned for recovery in April 2013 and increased for the ﬁscal year, albeit with some slowdown after the Chinese New Year in January 2014. Komatsu worked to expand sales of the 20-ton class PC200-8M0 hydraulic excavator with improved performance of fuel economy. As a result, sales improved from the previous ﬁscal year. While demand remained slack in Germany and Frace, among the major European markets, against the backdrop of the Eurozone crisis, Asia sales increased from the previous ﬁscal year, reﬂecting the Japanese yen's depreciation. In Indonesia, the largest market of Southeast Asia, demand for mining and construction equipment dropped, mainly affected by the sluggish international price of thermal coal and the accelerating depreciation of the Indonesian rupiah since August 2013. As a result, sales declined from the previous ﬁscal year. Oceania As demand for mining equipment in iron ore mines and that for construction equipment remained slack, sales declined from the previous ﬁscal year. Middle East As demand for construction equipment grew steadily in some of the Gulf nations, sales advanced from the previous ﬁscal year. Africa Komatsu promoted proactive sales and service activities by effectively utilizing information obtained from the KOMTRAX Plus, Komatsu's mining equipment management system, and made good sales in mines in Namibia, in addition to South Africa. As a result, sales advanced from the previous ﬁscal year. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth KOMATSU REPORT 2014 39 Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/summary/const.html 1/1 ページ Construction, Mining and Utility Equipment | KOMATSU REPORT 2014 2014/07/10 17:33 KOMATSU REPORT 2014 FY2013 Highlights Construction, Mining & Utility Equipment Construction, Mining and Utility Equipment While demand for mining equipment remained slack in coal and iron ore mines, demand for construction equipment was brisk in Japan, especially against the backdrop of thriving construction investment, and increased steadily in China where it upturned for recovery during the ﬁscal year under review. In addition, as the Japanese yen depreciated against the U.S. dollar, euro and renminbi, sales of construction, mining and utility equipment increased by 4.3% from the previous ﬁscal year, to JPY1,752.2 billion. Segment proﬁt improved by 15.9% to JPY242.1 billion. Sales Segment Proﬁt and Ratio Sales by Region for the Fiscal Year ended March 31, 2014 ( To Outside Customers ) Japan Latin America Demand for construction equipment advanced, reﬂecting an increase in While demand for equipment declined for use in copper mines in Chile sales as more customers anticipated more stringent emission and Peru, sales increased from the previous ﬁscal year, reﬂecting the regulations for the near future. In addition, there were full-scale start- Japanese yen's depreciation. ups of reconstruction projects in the regions destroyed by the Great East Japan Earthquake and tsunami. In particular, demand in rental CIS companies was strong. As a result, sales advanced from the previous Sales declined from the previous ﬁscal year, adversely impacted by the downturn of demand for equipment for use in gold mines and the energy sector. ﬁscal year. North America from the previous ﬁscal year. Europe While renewal demand since FY2012 in the rental industry ran its China course and demand declined for equipment, especially for use in coal mines, demand grew in the housing sector and infrastructure development, such as highway construction. Sales remained about ﬂat While demand remained slack in Germany and Frace, among the major European markets, against the backdrop of the Eurozone crisis, Asia sales increased from the previous ﬁscal year, reﬂecting the Japanese yen's depreciation. Demand, which had been sluggish since FY2011, upturned for recovery in April 2013 and increased for the ﬁscal year, albeit with some slowdown after the Chinese New Year in January 2014. Komatsu worked to expand sales of the 20-ton class PC200-8M0 hydraulic excavator with improved performance of fuel economy. As a result, sales improved from the previous ﬁscal year. In Indonesia, the largest market of Southeast Asia, demand for mining and construction equipment dropped, mainly affected by the sluggish international price of thermal coal and the accelerating depreciation of the Indonesian rupiah since August 2013. As a result, sales declined from the previous ﬁscal year. Oceania previous ﬁscal year. Middle East As demand for mining equipment in iron ore mines and that for construction equipment remained slack, sales declined from the As demand for construction equipment grew steadily in some of the Gulf nations, sales advanced from the previous ﬁscal year. Komatsu promoted proactive sales and service activities by effectively utilizing information obtained from the KOMTRAX Plus, Komatsu's mining equipment management system, and made good sales in mines in Namibia, in addition to South Africa. As a result, sales advanced from the previous ﬁscal year. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/summary/const.html 1/1 ページ Segment Proﬁt and Ratio｜KOMATSU REPORT 2014 2014/07/09 12:10 Review of FY2013 Operations KOMATSU REPORT 2014 FY2013 Highlights Industrial Machinery & Others KOMATSU REPORT 2014 Traditional Markets Strategic Markets Industrial Machinery and Others Sales Segment Proﬁt and Ratio While sales of sheet-metal and press machines remained ﬁrm, mainly within the automobile manufacturing industry, sales of wire saws further declined in particular. As a result, sales of the industrial machinery and others business declined by 3.3% from the previous ﬁscal year, to JPY209.1 billion. Segment proﬁt decreased by 67.2% to JPY2.0 billion. During the year under review, Komatsu realized a loss of JPY 10.8 billion for wire saw inventories. In the business of machine tools, as well as sheet metal and press machines, Komatsu worked to expand sales of strategic products, such as the NTG-4SP grinder, the H1F-2 small AC Servo press and the new KFL Series ﬁber laser cutting machine, all designed to enhance customers' productivity, safety and environmental performance. Africa KFL 2051 ﬁber laser cutting machine FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Review of FY2013 Operations Information KOMATSU REPORT 2014 40 Corporate Information 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/summary/indust.html 1/1 ページ For Sustainable Growth Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts KOMATSU REPORT 2014 41 KOMATSU REPORT 2014For Sustainable Growth Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Risk Management | KOMATSU REPORT 2014 2014/07/10 17:33 For Sustainable Growth KOMATSU REPORT 2014 For Sustainable Growth Risk Management KOMATSU REPORT 2014 Risk Management Basic Principles and System for Risk Management Promoting a Business Continuity Plan Promoting Group-wide Risk Management Strengthening Information Security Business and Other Risks as well as Countermeasures Komatsu recognizes compliance, the environment, product quality, accidents and information security, as risk factors for sustainable growth and is therefore implementing the following countermeasures. Basic Principles and System for Risk Management Komatsu has established the Risk Management Rules to correctly recognize and manage risks, for which the company has appointed personnel in charge of individual risks, further promoting the build-up of a solid foundation for risk management. Komatsu has also established the Risk Management Committee to devise risk management policies of the Komatsu Group, evaluate and follow up risk measures in place, and take control of risks when they surface. The Risk Management Committee regularly reports its reviews and activities to the Board of Directors. When serious risks surface, Komatsu will establish an emergency headquarters and work to minimize damage(s) and implement appropriate measures. Promoting a Business Continuity Plan Komatsu has formulated a business continuity plan (BCP) to carry out major operations without suspension, or restore them after a short suspension, should a disaster or accident occur. At the Head Ofﬁce, we conduct regular drills to ensure that employees are capable of taking appropriate action in the event of a real emergency, assuming the occurrence of an earthquake striking beneath the greater Tokyo metropolitan area. At all our plants, we have been enhancing the seismic strength of their buildings and facilities in addition to developing measures against torrential rainfall in accordance with the plans each plant has formulated. With respect to health risks of employees, we also strive to deepen employees' understanding by providing an action manual on how to prevent and respond to an outbreak of infectious disease, and related education. Promoting Group-wide Risk Management To reinforce the risk management structure across the Group, Komatsu is working to enhance the level of management at each Group company by establishing reporting lines and printing manuals related to risk and through explanatory meetings and study sessions on risk management and BCPs. We are also strengthening our Group-wide system for communications in times of emergency by introducing tools such as an emergency contact and employee safety conﬁrmation system and a wide range two-way radio and by conducting regular drills on using the system and securing communication. Strengthening Information Security With the Information Security Committee at its core, Komatsu is developing a structure for information security for the entire Group. As part of this effort, we have distributed Information Security Guidebook to all employees in order to raise their awareness of information security, and have offered training programs based on this booklet. Additional measures include the establishment of a protective framework for our system to prevent information from being falsiﬁed, destroyed, leaked or lost due to negligence or unauthorized access from outside the company. Moreover, we undertake information security audits to conﬁrm that measures are being effectively implemented, and to discover defects and make the required improvements. Business and Other Risks as well as Countermeasures Komatsu has identiﬁed the following risks as its primary risks based on information currently available to it. 1. Economic and Market Conditions The business environment in which Komatsu operates and the market demand for its products may change substantially as a result of economic and market conditions, which differ from region to region. Changes in the business environment in which Komatsu operates may lead to a decline in KOMATSU REPORT 2014 42 sales, and inefﬁcient inventory levels and/or production capacities, thereby causing Komatsu to record lower proﬁtability and incur additional expenses. As a result, Komatsu's results of operations may be adversely affected. [Countermeasure] Quick grasp on retail market conditions by promoting zero inventories at its distributors. 2. Foreign Currency Exchange Rate Fluctuations A substantial portion of Komatsu's overseas sales is affected by foreign currency exchange rate ﬂuctuations. In general, an appreciation of the Japanese yen against another currency would adversely affect Komatsu's results of operations, while a depreciation of the Japanese yen against another currency would have a favorable impact thereon. In addition, foreign currency exchange rate ﬂuctuations may also affect the comparative prices between products sold by Komatsu and products sold by its foreign competitors in the same market, as well as the cost of materials used in the production of such products. [Countermeasures] 1.Flexible global cross-sourcing 3. Fluctuations in Financial Markets 2. Hedging activities to minimize the effects of short-term foreign exchange rate ﬂuctuations While Komatsu is currently improving the efﬁciency of its assets to reduce its interest-bearing debt and minimizing the adverse effect of interest rate ﬂuctuations by mixing long-term, ﬁxed-interest funds, an increase in interest rates may increase Komatsu's interest expenses and thereby adversely affect Komatsu's results of operations. In addition, ﬂuctuations in the ﬁnancial markets, such as ﬂuctuations in the fair value of marketable securities and interest rates, may also increase the unfunded obligation portion of Komatsu's pension plans or pension liabilities, which may result in an increase in pension expenses. Such an increase in interest expenses and pension expenses may adversely affect Komatsu's results of operations and ﬁnancial condition. 4. Laws and Regulations of Different Countries Komatsu is subject to governmental regulations and approval procedures in the countries in which it operates. If the government of a given country were to introduce new laws and regulations or revise existing laws and regulations relating to customs duties, import and export controls, currency restrictions and other legal requirements, Komatsu may incur expenses in order to comply with such laws and regulations, or its development, production, sales and service operations may be affected adversely by them. With respect to transfer pricing between Komatsu and its afﬁliated companies, Komatsu is careful to comply with applicable taxation laws of Japan and the concerned foreign governments. Nevertheless, it is possible that Komatsu may be viewed by the concerned tax authorities as having used inappropriate pricing. Furthermore, if intergovernmental negotiations were to fail, Komatsu may be charged with double or additional taxation. When facing such an unexpected situation, Komatsu may experience an unfavorable impact on its business results. 5. Environmental Laws and Regulations Komatsu's products and business operations are required to meet increasingly stringent environmental laws and regulations in many countries in which Komatsu operates. To comply with the environmental laws and other related regulations of concerned governments, Komatsu expends a signiﬁcant share of its management resources, such as research and development expenses. If Komatsu is required to incur additional expenses and make additional capital investments due to revised environmental regulations adopted in the future, or if its development, production, sales and service operations are adversely affected by such revised regulations, Komatsu may experience an unfavorable impact on its business results. 6. Product and Quality Liability While Komatsu endeavors to sustain and improve the Quality and Reliability of its operations and products based on stringent standards established internally, Komatsu may face product and quality liability claims or become exposed to other liabilities, if unexpected defects in its products result in recalls or accidents. If the costs for addressing such claims or other liabilities are not covered by Komatsu's existing insurance policies or other protective means, such claims may adversely affect its proﬁts. 7. Alliances and Collaborative Relationships Komatsu has entered into various alliances and collaborative relationships with distributors, suppliers and other companies to reinforce its international competitiveness. Through such arrangements, Komatsu is working to improve its product development, production, sales and service capabilities. However, Komatsu's failure to attain expected results or the termination of such alliances or collaborative relationships may adversely affect Komatsu's results of operations. 8. Procurement, Production and Other Matters Komatsu's procurement of parts and materials for its products is exposed to ﬂuctuations in commodity and energy prices. Price increases in commodities, such as steel materials, as well as energies, such as crude oil and electricity, may increase the production cost of Komatsu's products. In addition, a shortage of product parts and materials, bankruptcies of suppliers or production discontinuation by suppliers of products used by Komatsu may make it difﬁcult for Komatsu to engage in the timely procurement of parts and materials and manufacture of its products, thereby lowering Komatsu's production efﬁciency. With respect to an increase in the cost of production as mainly affected by an increase in the cost of materials, Komatsu mainly strives to reduce other costs and make price adjustments of its products. Komatsu also strives to minimize the effects of possible procurement or manufacturing issues by promoting closer collaboration among its related business divisions. However, if the increase in commodity and energy prices were to exceed Komatsu's expectations or a prolonged shortage of materials and parts were to occur, Komatsu's results of operations may be adversely affected. [Countermeasure] Reinforcement of collaboration with suppliers 9. Information Security, Intellectual Property and Other Matters Komatsu may obtain conﬁdential information concerning its customers and individuals in the normal course of its business. Komatsu also holds conﬁdential business and technological information. Komatsu safeguards such conﬁdential information with the utmost care. To forestall unauthorized access by means of cyber-attacks, tampering, destruction, leakage and losses, Komatsu employs appropriate safety measures, including implementing technological safety measures and strengthening its information management capabilities. However, when its network and information systems crash and/or have problems, such as a leak of conﬁdential information concerning customers and individuals, occur, Komatsu may become liable for damages, or its reputation or its customers' conﬁdence in Komatsu may be adversely affected. In addition, if Komatsu's conﬁdential business and technological information were leaked or misused by a third party, or Komatsu's intellectual properties were infringed upon by a third party, or Komatsu were held liable for infringing on a third party's intellectual property rights, Komatsu's business results may be adversely affected. [Countermeasure] Reinforcement of information security 10. Natural Calamities, Wars, Terrorism, Accidents and Other Matters If natural disasters (such as earthquakes, tsunamis and ﬂoods), epidemics, radioactive contamination, wars, terrorist acts, riots, accidents (such as ﬁres and explosions), unforeseeable criticism or interference by third parties or computer virus infections were to occur in the regions in which Komatsu operates, Komatsu may incur extensive damage to one or more of its facilities that they could not become fully operational within a short period of time. Even if Komatsu's operations were not directly harmed by such events, confusion in logistic and supply networks, shortages in the supply of electric power, gas and other utilities, telecommunication problems and/or problems of supplier's production may continue for a long period of time. Accordingly, if delays or disruption in the procurement of materials and parts, or the production and sales of Komatsu's products and services, or deterioration of the funding environment resulting from confusion on capital markets were to take place as a result of such events, Komatsu's business results may be adversely affected. [Countermeasure] Risk management FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/ 1/1 ページ Risk Management | KOMATSU REPORT 2014 2014/07/10 17:33 KOMATSU REPORT 2014 For Sustainable Growth Risk Management Risk Management Basic Principles and System for Risk Management Promoting a Business Continuity Plan Promoting Group-wide Risk Management Strengthening Information Security Business and Other Risks as well as Countermeasures Komatsu recognizes compliance, the environment, product quality, accidents and information security, as risk factors for sustainable growth and is therefore implementing the following countermeasures. Basic Principles and System for Risk Management Komatsu has established the Risk Management Rules to correctly recognize and manage risks, for which the company has appointed personnel in charge of individual risks, further promoting the build-up of a solid foundation for risk management. Komatsu has also established the Risk Management Committee to devise risk management policies of the Komatsu Group, evaluate and follow up risk measures in place, and take control of risks when they surface. The Risk Management Committee regularly reports its reviews and activities to the Board of Directors. When serious risks surface, Komatsu will establish an emergency headquarters and work to minimize damage(s) and implement appropriate measures. Promoting a Business Continuity Plan Komatsu has formulated a business continuity plan (BCP) to carry out major operations without suspension, or restore them after a short suspension, should a disaster or accident occur. At the Head Ofﬁce, we conduct regular drills to ensure that employees are capable of taking appropriate action in the event of a real emergency, assuming the occurrence of an earthquake striking beneath the greater Tokyo metropolitan area. At all our plants, we have been enhancing the seismic strength of their buildings and facilities in addition to developing measures against torrential rainfall in accordance with the plans each plant has formulated. With respect to health risks of employees, we also strive to deepen employees' understanding by providing an action manual on how to prevent and respond to an outbreak of infectious disease, and related education. Promoting Group-wide Risk Management To reinforce the risk management structure across the Group, Komatsu is working to enhance the level of management at each Group company by establishing reporting lines and printing manuals related to risk and through explanatory meetings and study sessions on risk management and BCPs. We are also strengthening our Group-wide system for communications in times of emergency by introducing tools such as an emergency contact and employee safety conﬁrmation system and a wide range two-way radio and by conducting regular drills on using the system and securing communication. Strengthening Information Security With the Information Security Committee at its core, Komatsu is developing a structure for information security for the entire Group. As part of this effort, we have distributed Information Security Guidebook to all employees in order to raise their awareness of information security, and have offered training programs based on this booklet. Additional measures include the establishment of a protective framework for our system to prevent information from being falsiﬁed, destroyed, leaked or lost due to negligence or unauthorized access from outside the company. Moreover, we For Sustainable Growth undertake information security audits to conﬁrm that measures are being effectively implemented, and to discover defects and make the required improvements. KOMATSU REPORT 2014 Business and Other Risks as well as Countermeasures Komatsu has identiﬁed the following risks as its primary risks based on information currently available to it. 1. Economic and Market Conditions The business environment in which Komatsu operates and the market demand for its products may change substantially as a result of economic and market conditions, which differ from region to region. Changes in the business environment in which Komatsu operates may lead to a decline in sales, and inefﬁcient inventory levels and/or production capacities, thereby causing Komatsu to record lower proﬁtability and incur additional expenses. As a result, Komatsu's results of operations may be adversely affected. [Countermeasure] Quick grasp on retail market conditions by promoting zero inventories at its distributors. 2. Foreign Currency Exchange Rate Fluctuations A substantial portion of Komatsu's overseas sales is affected by foreign currency exchange rate ﬂuctuations. In general, an appreciation of the Japanese yen against another currency would adversely affect Komatsu's results of operations, while a depreciation of the Japanese yen against another currency would have a favorable impact thereon. In addition, foreign currency exchange rate ﬂuctuations may also affect the comparative prices between products sold by Komatsu and products sold by its foreign competitors in the same market, as well as the cost of materials used in the production of such products. [Countermeasures] 1.Flexible global cross-sourcing 2. Hedging activities to minimize the effects of short-term foreign exchange rate ﬂuctuations 3. Fluctuations in Financial Markets While Komatsu is currently improving the efﬁciency of its assets to reduce its interest-bearing debt and minimizing the adverse effect of interest rate ﬂuctuations by mixing long-term, ﬁxed-interest funds, an increase in interest rates may increase Komatsu's interest expenses and thereby adversely affect Komatsu's results of operations. In addition, ﬂuctuations in the ﬁnancial markets, such as ﬂuctuations in the fair value of marketable securities and interest rates, may also increase the unfunded obligation portion of Komatsu's pension plans or pension liabilities, which may result in an increase in pension expenses. Such an increase in interest expenses and pension expenses may adversely affect Komatsu's results of operations and ﬁnancial condition. 4. Laws and Regulations of Different Countries Komatsu is subject to governmental regulations and approval procedures in the countries in which it operates. If the government of a given country were to introduce new laws and regulations or revise existing laws and regulations relating to customs duties, import and export controls, currency restrictions and other legal requirements, Komatsu may incur expenses in order to comply with such laws and regulations, or its development, production, sales and service operations may be affected adversely by them. With respect to transfer pricing between Komatsu and its afﬁliated companies, Komatsu is careful to comply with applicable taxation laws of Japan and the concerned foreign governments. Nevertheless, it is possible that Komatsu may be viewed by the concerned tax authorities as having used inappropriate pricing. Furthermore, if intergovernmental negotiations were to fail, Komatsu may be charged with double or additional taxation. When facing such an unexpected situation, Komatsu may experience an unfavorable impact on its business results. 5. Environmental Laws and Regulations Komatsu's products and business operations are required to meet increasingly stringent environmental laws and regulations in many countries in which Komatsu operates. To comply with the environmental laws and other related regulations of concerned governments, Komatsu expends a signiﬁcant share of its management resources, such as research and development expenses. If Komatsu is required to incur additional expenses and make additional capital investments due to revised environmental regulations adopted in the future, or if its development, production, sales and service operations are adversely affected by such revised regulations, Komatsu may experience an unfavorable impact on its business results. 6. Product and Quality Liability While Komatsu endeavors to sustain and improve the Quality and Reliability of its operations and products based on stringent standards established internally, Komatsu may face product and quality liability claims or become exposed to other liabilities, if unexpected defects in its products result in recalls or accidents. If the costs for addressing such claims or other liabilities are not covered by Komatsu's existing insurance policies or other protective means, such claims may adversely affect its proﬁts. 7. Alliances and Collaborative Relationships Komatsu has entered into various alliances and collaborative relationships with distributors, suppliers and other companies to reinforce its international competitiveness. Through such arrangements, Komatsu is working to improve its product development, production, sales and service capabilities. However, Komatsu's failure to attain expected results or the termination of such alliances or collaborative relationships may adversely KOMATSU REPORT 2014 43 affect Komatsu's results of operations. 8. Procurement, Production and Other Matters Komatsu's procurement of parts and materials for its products is exposed to ﬂuctuations in commodity and energy prices. Price increases in commodities, such as steel materials, as well as energies, such as crude oil and electricity, may increase the production cost of Komatsu's products. In addition, a shortage of product parts and materials, bankruptcies of suppliers or production discontinuation by suppliers of products used by Komatsu may make it difﬁcult for Komatsu to engage in the timely procurement of parts and materials and manufacture of its products, thereby lowering Komatsu's production efﬁciency. With respect to an increase in the cost of production as mainly affected by an increase in the cost of materials, Komatsu mainly strives to reduce other costs and make price adjustments of its products. Komatsu also strives to minimize the effects of possible procurement or manufacturing issues by promoting closer collaboration among its related business divisions. However, if the increase in commodity and energy prices were to exceed Komatsu's expectations or a prolonged shortage of materials and parts were to occur, Komatsu's results of operations may be adversely affected. [Countermeasure] Reinforcement of collaboration with suppliers 9. Information Security, Intellectual Property and Other Matters Komatsu may obtain conﬁdential information concerning its customers and individuals in the normal course of its business. Komatsu also holds conﬁdential business and technological information. Komatsu safeguards such conﬁdential information with the utmost care. To forestall unauthorized access by means of cyber-attacks, tampering, destruction, leakage and losses, Komatsu employs appropriate safety measures, including implementing technological safety measures and strengthening its information management capabilities. However, when its network and information systems crash and/or have problems, such as a leak of conﬁdential information concerning customers and individuals, occur, Komatsu may become liable for damages, or its reputation or its customers' conﬁdence in Komatsu may be adversely affected. In addition, if Komatsu's conﬁdential business and technological information were leaked or misused by a third party, or Komatsu's intellectual properties were infringed upon by a third party, or Komatsu were held liable for infringing on a third party's intellectual property rights, Komatsu's business results may be adversely affected. [Countermeasure] Reinforcement of information security 10. Natural Calamities, Wars, Terrorism, Accidents and Other Matters If natural disasters (such as earthquakes, tsunamis and ﬂoods), epidemics, radioactive contamination, wars, terrorist acts, riots, accidents (such as ﬁres and explosions), unforeseeable criticism or interference by third parties or computer virus infections were to occur in the regions in which Komatsu operates, Komatsu may incur extensive damage to one or more of its facilities that they could not become fully operational within a short period of time. Even if Komatsu's operations were not directly harmed by such events, confusion in logistic and supply networks, shortages in the supply of electric power, gas and other utilities, telecommunication problems and/or problems of supplier's production may continue for a long period of time. Accordingly, if delays or disruption in the procurement of materials and parts, or the production and sales of Komatsu's products and services, or deterioration of the funding environment resulting from confusion on capital markets were to take place as a result of such events, Komatsu's business results may be adversely affected. [Countermeasure] Risk management FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/ 1/1 ページ Risk Management | KOMATSU REPORT 2014 2014/07/10 17:33 KOMATSU REPORT 2014 For Sustainable Growth Risk Management Risk Management Basic Principles and System for Risk Management Promoting a Business Continuity Plan Promoting Group-wide Risk Management Strengthening Information Security Business and Other Risks as well as Countermeasures Komatsu recognizes compliance, the environment, product quality, accidents and information security, as risk factors for sustainable growth and is therefore implementing the following countermeasures. Basic Principles and System for Risk Management Komatsu has established the Risk Management Rules to correctly recognize and manage risks, for which the company has appointed personnel in charge of individual risks, further promoting the build-up of a solid foundation for risk management. Komatsu has also established the Risk Management Committee to devise risk management policies of the Komatsu Group, evaluate and follow up risk measures in place, and take control of risks when they surface. The Risk Management Committee regularly reports its reviews and activities to the Board of Directors. When serious risks surface, Komatsu will establish an emergency headquarters and work to minimize damage(s) and implement appropriate measures. Promoting a Business Continuity Plan Komatsu has formulated a business continuity plan (BCP) to carry out major operations without suspension, or restore them after a short suspension, should a disaster or accident occur. At the Head Ofﬁce, we conduct regular drills to ensure that employees are capable of taking appropriate action in the event of a real emergency, assuming the occurrence of an earthquake striking beneath the greater Tokyo metropolitan area. At all our plants, we have been enhancing the seismic strength of their buildings and facilities in addition to developing measures against torrential rainfall in accordance with the plans each plant has formulated. With respect to health risks of employees, we also strive to deepen employees' understanding by providing an action manual on how to prevent and respond to an outbreak of infectious disease, and related education. Promoting Group-wide Risk Management To reinforce the risk management structure across the Group, Komatsu is working to enhance the level of management at each Group company by establishing reporting lines and printing manuals related to risk and through explanatory meetings and study sessions on risk management and BCPs. We are also strengthening our Group-wide system for communications in times of emergency by introducing tools such as an emergency contact and employee safety conﬁrmation system and a wide range two-way radio and by conducting regular drills on using the system and securing communication. Strengthening Information Security With the Information Security Committee at its core, Komatsu is developing a structure for information security for the entire Group. As part of this effort, we have distributed Information Security Guidebook to all employees in order to raise their awareness of information security, and have offered training programs based on this booklet. Additional measures include the establishment of a protective framework for our system to prevent information from being falsiﬁed, destroyed, leaked or lost due to negligence or unauthorized access from outside the company. Moreover, we undertake information security audits to conﬁrm that measures are being effectively implemented, and to discover defects and make the required improvements. Business and Other Risks as well as Countermeasures Komatsu has identiﬁed the following risks as its primary risks based on information currently available to it. 1. Economic and Market Conditions The business environment in which Komatsu operates and the market demand for its products may change substantially as a result of economic and market conditions, which differ from region to region. Changes in the business environment in which Komatsu operates may lead to a decline in sales, and inefﬁcient inventory levels and/or production capacities, thereby causing Komatsu to record lower proﬁtability and incur additional expenses. As a result, Komatsu's results of operations may be adversely affected. A substantial portion of Komatsu's overseas sales is affected by foreign currency exchange rate ﬂuctuations. In general, an appreciation of the Japanese yen against another currency would adversely affect Komatsu's results of operations, while a depreciation of the Japanese yen against another currency would have a favorable impact thereon. In addition, foreign currency exchange rate ﬂuctuations may also affect the comparative prices between products sold by Komatsu and products sold by its foreign competitors in the same market, as well as the cost of materials used in the production of such products. [Countermeasures] 1.Flexible global cross-sourcing 3. Fluctuations in Financial Markets 2. Hedging activities to minimize the effects of short-term foreign exchange rate ﬂuctuations Risk Management | KOMATSU REPORT 2014 2014/07/10 17:33 KOMATSU REPORT 2014 For Sustainable Growth Risk Management Risk Management Basic Principles and System for Risk Management Promoting a Business Continuity Plan Promoting Group-wide Risk Management Strengthening Information Security Business and Other Risks as well as Countermeasures Basic Principles and System for Risk Management Komatsu has established the Risk Management Rules to correctly recognize and manage risks, for which the company has appointed personnel in charge of individual risks, further promoting the build-up of a solid foundation for risk management. Komatsu has also established the Risk Management Committee to devise risk management policies of the Komatsu Group, evaluate and follow up risk measures in place, and take control of risks when they surface. The Risk Management Committee regularly reports its reviews and activities to the Board of Directors. When serious risks surface, Komatsu will establish an emergency headquarters and work to minimize damage(s) and implement appropriate measures. Komatsu recognizes compliance, the environment, product quality, accidents and information security, as risk factors for sustainable growth and is therefore implementing the following countermeasures. 2. Foreign Currency Exchange Rate Fluctuations [Countermeasure] Quick grasp on retail market conditions by promoting zero inventories at its distributors. Promoting a Business Continuity Plan Komatsu has formulated a business continuity plan (BCP) to carry out major operations without suspension, or restore them after a short suspension, should a disaster or accident occur. At the Head Ofﬁce, we conduct regular drills to ensure that employees are capable of taking appropriate action in the event of a real emergency, assuming the occurrence of an earthquake striking beneath the greater Tokyo metropolitan area. At all our plants, we have been enhancing the seismic strength of their buildings and facilities in addition to developing measures against torrential rainfall in accordance with the plans each plant has formulated. With respect to health risks of employees, we also strive to deepen While Komatsu is currently improving the efﬁciency of its assets to reduce its interest-bearing debt and minimizing the adverse effect of interest rate ﬂuctuations by mixing long-term, ﬁxed-interest funds, an increase in interest rates may increase Komatsu's interest expenses and thereby adversely affect Komatsu's results of operations. In addition, ﬂuctuations in the ﬁnancial markets, such as ﬂuctuations in the fair value of marketable securities and interest rates, may also increase the unfunded obligation portion of Komatsu's pension plans or pension liabilities, which may result in an increase in pension expenses. Such an increase in interest expenses and pension expenses may adversely affect Komatsu's results of operations and ﬁnancial condition. employees' understanding by providing an action manual on how to prevent and respond to an outbreak of infectious disease, and related 4. Laws and Regulations of Different Countries education. Promoting Group-wide Risk Management Komatsu is subject to governmental regulations and approval procedures in the countries in which it operates. If the government of a given country were to introduce new laws and regulations or revise existing laws and regulations relating to customs duties, import and export controls, currency restrictions and other legal requirements, Komatsu may incur expenses in order to comply with such laws and regulations, or its development, production, sales and service operations may be affected adversely by them. With respect to transfer pricing between Komatsu and its afﬁliated companies, Komatsu is careful to comply with applicable taxation laws of Japan and the concerned foreign governments. Nevertheless, it is possible that Komatsu may be viewed by the concerned tax authorities as having used inappropriate pricing. Furthermore, if intergovernmental negotiations were to fail, Komatsu may be charged with double or additional taxation. When facing such an unexpected situation, Komatsu may To reinforce the risk management structure across the Group, Komatsu is working to enhance the level of management at each Group company by establishing reporting lines and printing manuals related to risk and through explanatory meetings and study sessions on risk management and BCPs. We are also strengthening our Group-wide system for communications in times of emergency by introducing tools such as an emergency contact and employee safety conﬁrmation system and a wide range two-way radio and by conducting regular drills on using the system and securing communication. experience an unfavorable impact on its business results. 5. Environmental Laws and Regulations Strengthening Information Security With the Information Security Committee at its core, Komatsu is developing a structure for information security for the entire Group. As part of this effort, we have distributed Information Security Guidebook to all employees in order to raise their awareness of information security, and have offered training programs based on this booklet. Additional measures include the establishment of a protective framework for our system to prevent 6. Product and Quality Liability Komatsu's products and business operations are required to meet increasingly stringent environmental laws and regulations in many countries in which Komatsu operates. To comply with the environmental laws and other related regulations of concerned governments, Komatsu expends a signiﬁcant share of its management resources, such as research and development expenses. If Komatsu is required to incur additional expenses and make additional capital investments due to revised environmental regulations adopted in the future, or if its development, production, sales and service operations are adversely affected by such revised regulations, Komatsu may experience an unfavorable impact on its business results. information from being falsiﬁed, destroyed, leaked or lost due to negligence or unauthorized access from outside the company. Moreover, we undertake information security audits to conﬁrm that measures are being effectively implemented, and to discover defects and make the required improvements. While Komatsu endeavors to sustain and improve the Quality and Reliability of its operations and products based on stringent standards For Sustainable Growth established internally, Komatsu may face product and quality liability claims or become exposed to other liabilities, if unexpected defects in its KOMATSU REPORT 2014 products result in recalls or accidents. If the costs for addressing such claims or other liabilities are not covered by Komatsu's existing insurance policies or other protective means, such claims may adversely affect its proﬁts. Business and Other Risks as well as Countermeasures 7. Alliances and Collaborative Relationships Komatsu has identiﬁed the following risks as its primary risks based on information currently available to it. 1. Economic and Market Conditions The business environment in which Komatsu operates and the market demand for its products may change substantially as a result of economic and market conditions, which differ from region to region. Changes in the business environment in which Komatsu operates may lead to a decline in sales, and inefﬁcient inventory levels and/or production capacities, thereby causing Komatsu to record lower proﬁtability and incur additional expenses. As a result, Komatsu's results of operations may be adversely affected. Komatsu has entered into various alliances and collaborative relationships with distributors, suppliers and other companies to reinforce its international competitiveness. Through such arrangements, Komatsu is working to improve its product development, production, sales and service capabilities. However, Komatsu's failure to attain expected results or the termination of such alliances or collaborative relationships may adversely affect Komatsu's results of operations. 8. Procurement, Production and Other Matters Komatsu's procurement of parts and materials for its products is exposed to ﬂuctuations in commodity and energy prices. Price increases in commodities, such as steel materials, as well as energies, such as crude oil and electricity, may increase the production cost of Komatsu's [Countermeasure] Quick grasp on retail market conditions by promoting zero inventories at its distributors. products. In addition, a shortage of product parts and materials, bankruptcies of suppliers or production discontinuation by suppliers of products 2. Foreign Currency Exchange Rate Fluctuations used by Komatsu may make it difﬁcult for Komatsu to engage in the timely procurement of parts and materials and manufacture of its products, thereby lowering Komatsu's production efﬁciency. With respect to an increase in the cost of production as mainly affected by an increase in the cost A substantial portion of Komatsu's overseas sales is affected by foreign currency exchange rate ﬂuctuations. In general, an appreciation of the of materials, Komatsu mainly strives to reduce other costs and make price adjustments of its products. Komatsu also strives to minimize the effects Japanese yen against another currency would adversely affect Komatsu's results of operations, while a depreciation of the Japanese yen against of possible procurement or manufacturing issues by promoting closer collaboration among its related business divisions. However, if the increase in another currency would have a favorable impact thereon. In addition, foreign currency exchange rate ﬂuctuations may also affect the comparative commodity and energy prices were to exceed Komatsu's expectations or a prolonged shortage of materials and parts were to occur, Komatsu's prices between products sold by Komatsu and products sold by its foreign competitors in the same market, as well as the cost of materials used in results of operations may be adversely affected. the production of such products. [Countermeasures] 1.Flexible global cross-sourcing 3. Fluctuations in Financial Markets 2. Hedging activities to minimize the effects of short-term foreign exchange rate ﬂuctuations [Countermeasure] Reinforcement of collaboration with suppliers 9. Information Security, Intellectual Property and Other Matters Komatsu may obtain conﬁdential information concerning its customers and individuals in the normal course of its business. Komatsu also holds conﬁdential business and technological information. Komatsu safeguards such conﬁdential information with the utmost care. To forestall unauthorized access by means of cyber-attacks, tampering, destruction, leakage and losses, Komatsu employs appropriate safety measures, While Komatsu is currently improving the efﬁciency of its assets to reduce its interest-bearing debt and minimizing the adverse effect of interest rate including implementing technological safety measures and strengthening its information management capabilities. However, when its network and ﬂuctuations by mixing long-term, ﬁxed-interest funds, an increase in interest rates may increase Komatsu's interest expenses and thereby adversely information systems crash and/or have problems, such as a leak of conﬁdential information concerning customers and individuals, occur, Komatsu affect Komatsu's results of operations. In addition, ﬂuctuations in the ﬁnancial markets, such as ﬂuctuations in the fair value of marketable securities may become liable for damages, or its reputation or its customers' conﬁdence in Komatsu may be adversely affected. In addition, if Komatsu's and interest rates, may also increase the unfunded obligation portion of Komatsu's pension plans or pension liabilities, which may result in an conﬁdential business and technological information were leaked or misused by a third party, or Komatsu's intellectual properties were infringed increase in pension expenses. Such an increase in interest expenses and pension expenses may adversely affect Komatsu's results of operations upon by a third party, or Komatsu were held liable for infringing on a third party's intellectual property rights, Komatsu's business results may be adversely affected. [Countermeasure] Reinforcement of information security 10. Natural Calamities, Wars, Terrorism, Accidents and Other Matters If natural disasters (such as earthquakes, tsunamis and ﬂoods), epidemics, radioactive contamination, wars, terrorist acts, riots, accidents (such as ﬁres and explosions), unforeseeable criticism or interference by third parties or computer virus infections were to occur in the regions in which Komatsu operates, Komatsu may incur extensive damage to one or more of its facilities that they could not become fully operational within a short period of time. Even if Komatsu's operations were not directly harmed by such events, confusion in logistic and supply networks, shortages in the supply of electric power, gas and other utilities, telecommunication problems and/or problems of supplier's production may continue for a long period of time. Accordingly, if delays or disruption in the procurement of materials and parts, or the production and sales of Komatsu's products and services, or deterioration of the funding environment resulting from confusion on capital markets were to take place as a result of such events, Komatsu's business results may be adversely affected. [Countermeasure] Risk management FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Review of FY2013 Operations KOMATSU REPORT 2014 Information 44 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines of possible procurement or manufacturing issues by promoting closer collaboration among its related business divisions. However, if the increase in Terms and Conditions Inquiry Site map commodity and energy prices were to exceed Komatsu's expectations or a prolonged shortage of materials and parts were to occur, Komatsu's Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/ 1/1 ページ and ﬁnancial condition. 4. Laws and Regulations of Different Countries Komatsu is subject to governmental regulations and approval procedures in the countries in which it operates. If the government of a given country were to introduce new laws and regulations or revise existing laws and regulations relating to customs duties, import and export controls, currency restrictions and other legal requirements, Komatsu may incur expenses in order to comply with such laws and regulations, or its development, production, sales and service operations may be affected adversely by them. With respect to transfer pricing between Komatsu and its afﬁliated companies, Komatsu is careful to comply with applicable taxation laws of Japan and the concerned foreign governments. Nevertheless, it is possible that Komatsu may be viewed by the concerned tax authorities as having used inappropriate pricing. Furthermore, if intergovernmental negotiations were to fail, Komatsu may be charged with double or additional taxation. When facing such an unexpected situation, Komatsu may experience an unfavorable impact on its business results. 5. Environmental Laws and Regulations Komatsu's products and business operations are required to meet increasingly stringent environmental laws and regulations in many countries in which Komatsu operates. To comply with the environmental laws and other related regulations of concerned governments, Komatsu expends a signiﬁcant share of its management resources, such as research and development expenses. If Komatsu is required to incur additional expenses and make additional capital investments due to revised environmental regulations adopted in the future, or if its development, production, sales and service operations are adversely affected by such revised regulations, Komatsu may experience an unfavorable impact on its business results. 6. Product and Quality Liability While Komatsu endeavors to sustain and improve the Quality and Reliability of its operations and products based on stringent standards established internally, Komatsu may face product and quality liability claims or become exposed to other liabilities, if unexpected defects in its products result in recalls or accidents. If the costs for addressing such claims or other liabilities are not covered by Komatsu's existing insurance policies or other protective means, such claims may adversely affect its proﬁts. 7. Alliances and Collaborative Relationships Komatsu has entered into various alliances and collaborative relationships with distributors, suppliers and other companies to reinforce its international competitiveness. Through such arrangements, Komatsu is working to improve its product development, production, sales and service capabilities. However, Komatsu's failure to attain expected results or the termination of such alliances or collaborative relationships may adversely affect Komatsu's results of operations. 8. Procurement, Production and Other Matters Komatsu's procurement of parts and materials for its products is exposed to ﬂuctuations in commodity and energy prices. Price increases in commodities, such as steel materials, as well as energies, such as crude oil and electricity, may increase the production cost of Komatsu's products. In addition, a shortage of product parts and materials, bankruptcies of suppliers or production discontinuation by suppliers of products used by Komatsu may make it difﬁcult for Komatsu to engage in the timely procurement of parts and materials and manufacture of its products, thereby lowering Komatsu's production efﬁciency. With respect to an increase in the cost of production as mainly affected by an increase in the cost of materials, Komatsu mainly strives to reduce other costs and make price adjustments of its products. Komatsu also strives to minimize the effects results of operations may be adversely affected. [Countermeasure] Reinforcement of collaboration with suppliers 9. Information Security, Intellectual Property and Other Matters Komatsu may obtain conﬁdential information concerning its customers and individuals in the normal course of its business. Komatsu also holds conﬁdential business and technological information. Komatsu safeguards such conﬁdential information with the utmost care. To forestall unauthorized access by means of cyber-attacks, tampering, destruction, leakage and losses, Komatsu employs appropriate safety measures, including implementing technological safety measures and strengthening its information management capabilities. However, when its network and information systems crash and/or have problems, such as a leak of conﬁdential information concerning customers and individuals, occur, Komatsu may become liable for damages, or its reputation or its customers' conﬁdence in Komatsu may be adversely affected. In addition, if Komatsu's conﬁdential business and technological information were leaked or misused by a third party, or Komatsu's intellectual properties were infringed upon by a third party, or Komatsu were held liable for infringing on a third party's intellectual property rights, Komatsu's business results may be adversely affected. [Countermeasure] Reinforcement of information security 10. Natural Calamities, Wars, Terrorism, Accidents and Other Matters If natural disasters (such as earthquakes, tsunamis and ﬂoods), epidemics, radioactive contamination, wars, terrorist acts, riots, accidents (such as ﬁres and explosions), unforeseeable criticism or interference by third parties or computer virus infections were to occur in the regions in which Komatsu operates, Komatsu may incur extensive damage to one or more of its facilities that they could not become fully operational within a short period of time. Even if Komatsu's operations were not directly harmed by such events, confusion in logistic and supply networks, shortages in the supply of electric power, gas and other utilities, telecommunication problems and/or problems of supplier's production may continue for a long period of time. Accordingly, if delays or disruption in the procurement of materials and parts, or the production and sales of Komatsu's products and services, or deterioration of the funding environment resulting from confusion on capital markets were to take place as a result of such events, Komatsu's business results may be adversely affected. [Countermeasure] Risk management FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/ 1/1 ページ Corporate Governance | KOMATSU REPORT 2014 2014/07/10 17:34 For Sustainable Growth KOMATSU REPORT 2014 For Sustainable Growth Corporate Governance KOMATSU REPORT 2014 Corporate Governance Basic Stance Establishment and Improvement of Corporate Governance Corporate Governance of Komatsu Organizational Proﬁle Compliance Basic Stance We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management efﬁciency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations' activities by holding meetings with shareholders and investors. Establishment and Improvement of Corporate Governance In 1999 Komatsu Ltd. introduced the Executive Ofﬁcer System and has been working to separate management decisionmaking and supervisory functions from executive functions to the extent permitted by laws and regulations. At the same time, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a means to supplement executive functions. Corporate Governance of Komatsu Organizational Proﬁle Board of Directors Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team, including Representative Directors. Of the 10 Directors on the Board, three are Outside Directors to ensure transparent and objective management. KOMATSU REPORT 2014 45 Outside Directors ( As of June 18, 2014 ) Name Title Reasons for Selection Kouichi Ikeda Corporate Advisor of Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. Asahi Group Holdings, Ltd. Kouichi Ikeda has considerable insight and rich experience in the business world. Masayuki Oku Chairman of the Board of Sumitomo Mitsui Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Financial Group, Inc. Mr. Masayuki Oku has been active internationally in the ﬁnancial ﬁeld and has Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. work, and has considerable insight and rich experience in international relations. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to the mitigation and avoidance of risk in the Company's global business operations, and to the enhancement of the Company's medium- and long-term corporate value. Therefore, we have elected him as an Outside Director. Mitoji Yabunaka Adviser to the Ministry of Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been Foreign Affairs active in such ﬁelds as international policy coordination and overseas consular Audit & Supervisory Board The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of duties. The Company has also established the Ofﬁce of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. At least half of the ﬁve Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members ( As of June 18, 2014 ) Name Title Reasons for Selection Hiroyuki Kamano Partner (Attorney at law) of Kamano Sogo Having served as an international attorney at law, Mr. Hiroyuki Kamano has rich Law Ofﬁces experience in the ﬁeld of international legal affairs. Using this experience, we Kunihiro Matsuo Attorney at law Having served as Prosecutor-General of the Supreme Public Prosecutors Ofﬁce, expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. and rich experience in the ﬁnance world. Using this insight and experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Hirohide Yamaguchi Chairman of the Advisory Board of Nikko Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi Financial Intelligence, Inc. has been active internationally in the ﬁnancial ﬁeld and has considerable insight Compliance penalized. Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Ofﬁcer in charge of compliance, and establishment of the Compliance Department. Through all of these, the Company works to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/governance.html 1/1 ページ Corporate Governance | KOMATSU REPORT 2014 2014/07/10 17:34 KOMATSU REPORT 2014 For Sustainable Growth Corporate Governance Corporate Governance Basic Stance Establishment and Improvement of Corporate Governance Corporate Governance of Komatsu Organizational Proﬁle Compliance Basic Stance We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management efﬁciency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations' activities by holding meetings with shareholders and investors. Establishment and Improvement of Corporate Governance In 1999 Komatsu Ltd. introduced the Executive Ofﬁcer System and has been working to separate management decisionmaking and supervisory functions from executive functions to the extent permitted by laws and regulations. At the same time, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a means to supplement executive functions. Corporate Governance of Komatsu For Sustainable Growth KOMATSU REPORT 2014 Organizational Proﬁle Board of Directors Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team, including Representative Directors. Of the 10 Directors on the Board, three are Outside Directors to ensure transparent and objective management. Outside Directors ( As of June 18, 2014 ) We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management Name Title Reasons for Selection efﬁciency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management Kouichi Ikeda Corporate Advisor of Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations' activities by Asahi Group Holdings, Ltd. Kouichi Ikeda has considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. Masayuki Oku Chairman of the Board of Sumitomo Mitsui Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Financial Group, Inc. Mr. Masayuki Oku has been active internationally in the ﬁnancial ﬁeld and has considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. Mitoji Yabunaka Adviser to the Ministry of Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been Foreign Affairs active in such ﬁelds as international policy coordination and overseas consular work, and has considerable insight and rich experience in international relations. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to the mitigation and avoidance of risk in the Company's global business operations, and to the enhancement of the Company's medium- and long-term corporate value. Therefore, we have elected him as an Outside Director. Audit & Supervisory Board The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of duties. The Company has also established the Ofﬁce of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. At least half of the ﬁve Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members ( As of June 18, 2014 ) Name Title Reasons for Selection Hiroyuki Kamano Partner (Attorney at law) of Kamano Sogo Having served as an international attorney at law, Mr. Hiroyuki Kamano has rich Law Ofﬁces experience in the ﬁeld of international legal affairs. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Kunihiro Matsuo Attorney at law Having served as Prosecutor-General of the Supreme Public Prosecutors Ofﬁce, Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. KOMATSU REPORT 2014 46 Hirohide Yamaguchi Chairman of the Advisory Board of Nikko Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi Financial Intelligence, Inc. has been active internationally in the ﬁnancial ﬁeld and has considerable insight and rich experience in the ﬁnance world. Using this insight and experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Compliance penalized. Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Ofﬁcer in charge of compliance, and establishment of the Compliance Department. Through all of these, the Company works to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved Corporate Governance | KOMATSU REPORT 2014 2014/07/10 17:34 Basic Stance Establishment and Improvement of Corporate Governance Corporate Governance of Komatsu Organizational Proﬁle Compliance KOMATSU REPORT 2014 For Sustainable Growth Corporate Governance Corporate Governance Basic Stance holding meetings with shareholders and investors. Establishment and Improvement of Corporate Governance In 1999 Komatsu Ltd. introduced the Executive Ofﬁcer System and has been working to separate management decisionmaking and supervisory functions from executive functions to the extent permitted by laws and regulations. At the same time, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a means to supplement executive functions. Corporate Governance of Komatsu Organizational Proﬁle Board of Directors Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team, including Representative Directors. Of the 10 Directors on the Board, three are Outside Directors to ensure transparent and objective management. Outside Directors ( As of June 18, 2014 ) Name Title Reasons for Selection Kouichi Ikeda Corporate Advisor of Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. Asahi Group Holdings, Ltd. Kouichi Ikeda has considerable insight and rich experience in the business world. Masayuki Oku Chairman of the Board of Sumitomo Mitsui Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Financial Group, Inc. Mr. Masayuki Oku has been active internationally in the ﬁnancial ﬁeld and has Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. work, and has considerable insight and rich experience in international relations. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to the mitigation and avoidance of risk in the Company's global business operations, and to the enhancement of the Company's medium- and long-term corporate value. Therefore, we have elected him as an Outside Director. Mitoji Yabunaka Adviser to the Ministry of Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been Foreign Affairs active in such ﬁelds as international policy coordination and overseas consular Audit & Supervisory Board The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of duties. The Company has also established the Ofﬁce of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. At least half of the ﬁve Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members ( As of June 18, 2014 ) Name Title Reasons for Selection Hiroyuki Kamano Partner (Attorney at law) of Kamano Sogo Having served as an international attorney at law, Mr. Hiroyuki Kamano has rich Law Ofﬁces experience in the ﬁeld of international legal affairs. Using this experience, we Kunihiro Matsuo Attorney at law Having served as Prosecutor-General of the Supreme Public Prosecutors Ofﬁce, Hirohide Yamaguchi Chairman of the Advisory Board of Nikko Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi Financial Intelligence, Inc. has been active internationally in the ﬁnancial ﬁeld and has considerable insight Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. and rich experience in the ﬁnance world. Using this insight and experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Compliance penalized. Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Ofﬁcer in charge of compliance, and establishment of the Compliance Department. Through all of these, the Company works to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/governance.html 1/1 ページ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/governance.html 1/1 ページ Corporate Governance｜KOMATSU REPORT 2014 Corporate Governance | KOMATSU REPORT 2014 2014/07/09 12:11 2014/07/10 17:34 KOMATSU REPORT 2014 KOMATSU REPORT 2014 For Sustainable Growth For Sustainable Growth Corporate Governance Corporate Governance Corporate Governance Corporate Governance Basic Stance Basic Stance Establishment and Improvement of Corporate Governance Establishment and Improvement of Corporate Governance Corporate Governance of Komatsu Corporate Governance of Komatsu Organizational Proﬁle Organizational Proﬁle Compliance Compliance Basic Stance Basic Stance We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management improve management efﬁciency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the efﬁciency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management transparency of management for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations' activities by investor relations' activities by holding meetings with shareholders and investors. holding meetings with shareholders and investors. Establishment and Improvement of Corporate Governance Establishment and Improvement of Corporate Governance In 1999 Komatsu Ltd. introduced the Executive Ofﬁcer System and has been working to separate management decisionmaking and supervisory In 1999 Komatsu Ltd. introduced the Executive Ofﬁcer System and has been working to separate management decisionmaking and supervisory functions from executive functions to the extent permitted by laws and regulations. At the sametime, we also limit the Board of Directors to a small functions from executive functions to the extent permitted by laws and regulations. At the same time, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a means to supplement executive functions. means to supplement executive functions. Corporate Governance of Komatsu Corporate Governance of Komatsu Organizational Proﬁle Organizational Proﬁle Board of Directors Board of Directors Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team including Representative Directors. Of the 10 Directors on the Board, three are Outside duties by all members of the executive management team, including Representative Directors. Of the 10 Directors on the Board, three are Outside Directors to ensure transparent and objective management. Directors to ensure transparent and objective management. Outside Directors ( As of June 18, 2014 ) Outside Directors ( As of June 18, 2014 ) Name Name Title Title Reasons for Selection Reasons for Selection Kouichi Ikeda Kouichi Ikeda Corporate Advisor of Corporate Advisor of Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. Asahi Group Holdings, Ltd. Asahi Group Holdings, Ltd. Kouichi Ikeda has considerable insight and rich experience in the business world. Kouichi Ikeda has considerable insight and rich experience in the business world. Masayuki Oku Masayuki Oku Chairman of the Board of Sumitomo Mitsui Chairman of the Board of Sumitomo Mitsui Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Financial Group,Inc. Financial Group, Inc. Mr. Masayuki Oku has been active internationally in the ﬁnancial ﬁeld and has Mr. Masayuki Oku has been active internationally in the ﬁnancial ﬁeld and has Using this insight and experience, his proposals concerning the overall Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. corporate governance. Therefore, we have elected him as an Outside Director. considerable insight and rich experience in the business world. Using this insight considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. have elected him as an Outside Director. work, and has considerable insight and rich experience in international relations. work, and has considerable insight and rich experience in international relations. Using this insight and experience, his proposals concerning the overall Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to the mitigation and management of Komatsu Ltd. are expected to contribute to the mitigation and avoidance of risk in the Company's global business operations, and to the avoidance of risk in the Company's global business operations, and to the Mitoji Yabunaka Mitoji Yabunaka Adviser to the Ministry of Adviser to the Ministry of Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been Foreign Affairs Foreign Affairs active in such ﬁelds as international policy coordination and overseas consular active in such ﬁelds as international policy coordination and overseas consular For Sustainable Growth Audit & Supervisory Board Audit & Supervisory Board enhancement of the Company's medium- and long-term corporate value. Therefore, enhancement of the Company's medium- and long-term corporate value. Therefore, KOMATSU REPORT 2014 we have elected him as an Outside Director. we have elected him as an Outside Director. The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of duties. The Company has also established the Ofﬁce of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. duties. The Company has also established the Ofﬁce of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. At least half of the ﬁve Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. At least half of the ﬁve Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members ( As of June 18, 2014 ) Outside Audit & Supervisory Board Members ( As of June 18, 2014 ) Name Name Title Title Reasons for Selection Reasons for Selection Hiroyuki Kamano Hiroyuki Kamano Partner (Attorney at law) of Kamano Sogo Partner (Attorney at law) of Kamano Sogo Having served as an international attorney at law, Mr. Hiroyuki Kamano has rich Having served as an international attorney at law, Mr. Hiroyuki Kamano has rich Law Ofﬁces Law Ofﬁces experience in the ﬁeld of international legal affairs. Using this experience, we experience in the ﬁeld of international legal affairs. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Audit & Supervisory Board Member. Kunihiro Matsuo Kunihiro Matsuo Attorney at law Attorney at law Having served as Prosecutor-General of the Supreme Public Prosecutors Ofﬁce, Having served as Prosecutor-General of the Supreme Public Prosecutors Ofﬁce, Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. as Outside Audit & Supervisory Board Member. Hirohide Yamaguchi Hirohide Yamaguchi Chairman of the Advisory Board of Nikko Chairman of the Advisory Board of Nikko Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi Financial Intelligence, Inc. Financial Intelligence, Inc. has been active internationally in the ﬁnancial ﬁeld and has considerable insight has been active internationally in the ﬁnancial ﬁeld and has considerable insight and rich experience in the ﬁnance world. Using this insight and experience, we and rich experience in the ﬁnance world. Using this insight and experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Audit & Supervisory Board Member. Compliance Compliance Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Ofﬁcer in charge of compliance, and establishment of the Compliance Department. Through all of these, the Company works to of the Executive Ofﬁcer in charge of compliance, and establishment of the Compliance Department. Through all of these, The Company works to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be penalized. penalized. FY2013 Highlights FY2013 Highlights Mid-range Focused Activities Mid-range Focused Activities For Sustainable Growth For Sustainable Growth For further details, please click here Consolidated Results Consolidated Results Environmental Performance Environmental Performance To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders Sources of Growth Sources of Growth Basic Management Principles Basic Management Principles Outline of Operations Outline of Operations Our Strengths Our Strengths Mid-range Management Plan Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Innovation Growth Strategies: Existing Growth Strategies: Existing Businesses Businesses Structural Reforms (1) Structural Reforms (1) Structural Reforms (2) Structural Reforms (2) Review of FY2013 Operations Review of FY2013 Operations 5-Year Summary 5-Year Summary Construction, Mining & Utility Construction, Mining & Utility Equipment Equipment Industrial Machinery & Others Industrial Machinery & Others Site Map Site Map KOMATSU REPORT 2014 47 About KOMATSU REPORT About KOMATSU REPORT Use of the Gidelines Use of the Gidelines Risk Management Risk Management Corporate Governance Corporate Governance Environmental Conservation Efforts Environmental Conservation Efforts CSR Efforts CSR Efforts Information Information Corporate Information Corporate Information Download PDF Download PDF Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Terms and Conditions Inquiry Inquiry Site map Site map Copyright © 2014 Komatsu Ltd. All rights reserved Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/governance.html http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/governance.html 1/1 ページ 1/1 ページ Corporate Governance｜KOMATSU REPORT 2014 2014/07/09 12:11 KOMATSU REPORT 2014 For Sustainable Growth Corporate Governance Corporate Governance Basic Stance Establishment and Improvement of Corporate Governance Corporate Governance of Komatsu Organizational Proﬁle Compliance Basic Stance We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management efﬁciency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations' activities by holding meetings with shareholders and investors. Establishment and Improvement of Corporate Governance In 1999 Komatsu Ltd. introduced the Executive Ofﬁcer System and has been working to separate management decisionmaking and supervisory functions from executive functions to the extent permitted by laws and regulations. At the sametime, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International AdvisoryBoard (IAB) as a means to supplement executive functions. Corporate Governance of Komatsu Organizational Proﬁle Board of Directors Komatsu Ltd. holds Board of Directors' meetings periodically once or twice every month as a general rule. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team including Representative Directors. Of the 10 Directors on the Board, three are Outside Directors to ensure transparent and objective management. Outside Directors ( As of June 18, 2014 ) Name Title Reasons for Selection Kouichi Ikeda Corporate Advisor of Having served as Representative Director of Asahi Breweries, Ltd. (name then), Mr. Asahi Group Holdings, Ltd. Kouichi Ikeda has considerable insight and rich experience in the business world. Masayuki Oku Chairman of the Board of Sumitomo Mitsui Having served as Representative Director of Sumitomo Mitsui Banking Corporation, Financial Group,Inc. Mr. Masayuki Oku has been active internationally in the ﬁnancial ﬁeld and has Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. considerable insight and rich experience in the business world. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to sustaining and improving the transparency and soundness of management and enhancing corporate governance. Therefore, we have elected him as an Outside Director. work, and has considerable insight and rich experience in international relations. Using this insight and experience, his proposals concerning the overall management of Komatsu Ltd. are expected to contribute to the mitigation and avoidance of risk in the Company's global business operations, and to the enhancement of the Company's medium- and long-term corporate value. Therefore, we have elected him as an Outside Director. Audit & Supervisory Board The Audit & Supervisory Board determines such matters as audit policies and the division of duties among Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends meetings of the Board of Directors and other important meetings, and audits the execution of duties by Directors. Meetings of the Audit & Supervisory Board are in principle held periodically once or twice every month as a general rule, and the Board performs appropriate audits by such means as hearing reports from members of the executive management team on their execution of duties. The Company has also established the Ofﬁce of Corporate Auditors' Staff to assist the Audit & Supervisory Board Members in their duties. At least half of the ﬁve Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members ( As of June 18, 2014 ) Name Title Reasons for Selection Mitoji Yabunaka Adviser to the Ministry of Having served as Vice-Minister of the Foreign Affairs, Mr. Mitoji Yabunaka has been Foreign Affairs active in such ﬁelds as international policy coordination and overseas consular Environment and CSR activities | KOMATSU REPORT 2014 2014/07/10 17:34 For Sustainable Growth KOMATSU REPORT 2014 For Sustainable Growth Environmental Conservation Efforts KOMATSU REPORT 2014 Environmental Conservation Efforts Komatsu's Relationship with Nature Komatsu Earth Environment Charter Komatsu's Relationship with Nature The entire Komatsu Group promotes environmentally friendly activities to realize its vision of “What we can and must do for the environment and sustainable development of society.” In recognition of the fact that our business activities affect the environment on a regional and global level, we have identiﬁed the following four areas Hiroyuki Kamano Partner (Attorney at law) of Kamano Sogo Having served as an international attorney at law, Mr. Hiroyuki Kamano has rich Law Ofﬁces experience in the ﬁeld of international legal affairs. Using this experience, we for our efforts. 1) Climate change Kunihiro Matsuo Attorney at law Having served as Prosecutor-General of the Supreme Public Prosecutors Ofﬁce, 4) Biodiversity 2) Establishment of a sound material-cycle society 3) Conservation of air, water and other natural resources as well as management of chemical substances The Komatsu Group engages in conservation activities across all its business areas on a global scale in line with the Komatsu Earth Environment Charter revised in 2010. expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Mr. Kunihiro Matsuo has rich experience in the legal profession. Using this experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Hirohide Yamaguchi Chairman of the Advisory Board of Nikko Having served as Deputy Governor of the Bank of Japan, Mr. Hirohide Yamaguchi Financial Intelligence, Inc. has been active internationally in the ﬁnancial ﬁeld and has considerable insight and rich experience in the ﬁnance world. Using this insight and experience, we expect him to execute his duties as Outside Audit & Supervisory Board Member from the standpoint of a specialist. Therefore, we have elected him as Outside Audit & Supervisory Board Member. Komatsu Earth Environment Charter Basic Principles 1. Contributions to Realization of a Sustainable Society Mankind must not only promote the further growth of a rich and comfortable society but also pass down this invaluable environment of our planet Earth to future generations in a sound and healthy condition. We, the Komatsu Group, deﬁne our environmental conservation efforts as one of our highest priority management tasks. We endeavor to contribute to the sustainable growth of society by integrating advanced technologies into our environmental conservation efforts throughout all our business activities. This is represented by our hybrid construction equipment which features a substantial reduction of CO2 emissions while in operation and by our competitive manufacturing. 2. Simultaneous Realization of Improved Environmental and Economic Performance We are committed to improving both environmental performance and economic efﬁciency as a group of companies engaging in competitive manufacturing for customer satisfaction. To this end, while working to minimize the environmental impact of our products throughout their lifecycle, from production to scrapping, we constantly take up the challenge of advancing technologies for the development of products that feature good economic performance supported by improved fuel consumption and recyclability. 3. Corporate Social Responsibility Each company of the Komatsu Group promotes environmental conservation by not only complying with the applicable laws and regulation of the concerned host community, region and country, but also by establishing its voluntary standards which consider global and local environmental concerns. Each company of the Group also strives to fulﬁll its corporate social responsibility by actively participating in local environmental conservation programs and thereby promoting close-knit communication with local communities. This is an example of how the FY2013 Highlights Mid-range Focused Activities For Sustainable Growth For further details, please click here companies continue working to remain a company trusted by all Komatsu stakeholders. Social activities: CSR report 1. Basic Stance on Environmental Problems Guideline for Corporate Activity Environmental performance: Environmental Report operations by addressing the following four environmental problems. We, the Komatsu Group, work toward a sustainable society and Earth-friendly environment through our global business 1) Climate change 2) Establishment of a sound material-cycle society KOMATSU REPORT 2014 48 3) Conservation of air, water and other natural resources as well as management of chemical substances 4) Biodiversity 2. Framework of Our Global, Group-wide Environmental Management System To reduce our group-wide environmental impact, the Komatsu Head Ofﬁce as well as the manufacturing facilities and main companies of the Komatsu Group, already with ISO certiﬁcations, will continue working to maintain and improve their environmental management system, while other manufacturing facilities and suppliers will also work to establish their environmental management systems. The Komatsu Environmental Committee develops environmental action plans and common guidelines for the Komatsu Group. Based on these group-wide plans and guidelines, each division or company sets up its own mid- to long-range targets, develops and implements speciﬁc action plans, reviews them regularly and works to continuously improve them. 3. Environmental Education and Communication We, the Komatsu Group, believe that it is important to enhance the environmental awareness of each and every employee and thereby actively promote such education programs for all employees. We will gather environment-related information concerning not only our manufacturing facilities but also other related entities, such as major afﬁliated companies and suppliers, and strive to disclose such information, thereby facilitating proactive communication with all our stakeholders, such as customers, employees, local communities and suppliers, and further expanding the content of environmental communication. FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved Compliance penalized. Komatsu Ltd. has established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. The Company has also established a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Ofﬁcer in charge of compliance, and establishment of the Compliance Department. Through all of these, The Company works to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, the Company has established the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be Consolidated Results Growth Strategies: Innovation Risk Management Financial conditions: Securities Report Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/governance.html 1/1 ページ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/environment.html 1/1 ページ Environment and CSR activities | KOMATSU REPORT 2014 Environment and CSR activities | KOMATSU REPORT 2014 2014/07/10 17:34 2014/07/09 12:11 KOMATSU REPORT 2014 KOMATSU REPORT 2014 For Sustainable Growth For Sustainable Growth Environmental Conservation Efforts Environmental Conservation Efforts Environmental Conservation Efforts Environmental Conservation Efforts Komatsu's Relationship with Nature Komatsu's Relationship with Nature Komatsu Earth Environment Charter Komatsu Earth Environment Charter The entire Komatsu Group promotes environmentally friendly activities to realize its vision of “What we can and must do for the environment and The entire Komatsu Group promotes environmentally friendly activities to realize its vision of “What we can and must do for the environment and In recognition of the fact that our business activities affect the environment on a regional and global level, we have identiﬁed the following four areas In recognition of the fact that our business activities affect the environment on a regional and global level, we have identiﬁed the following four areas Komatsu's Relationship with Nature Komatsu's Relationship with Nature sustainable development of society.” sustainable development of society.” for our efforts. for our efforts. 1）Climate change 1) Climate change 2）Establishment of a sound material-cycle society 2) Establishment of a sound material-cycle society 3) Conservation of air, water and other natural resources as well as management of chemical substances 3）Conservation of air, water and other natural resources as well as management of chemical substances 4) Biodiversity 4）Biodiversity For Sustainable Growth The Komatsu Group engages in conservation activities across all its business areas on a global scale in line with the Komatsu Earth Environment The Komatsu Group engages in conservation activities across all its business areas on a global scale in line with the Komatsu Earth Environment KOMATSU REPORT 2014 Charter revised in 2010. Charter revised in 2010. Komatsu Earth Environment Charter Komatsu Earth Environment Charter Basic Principles Basic Principles 1. Contributions to Realization of a Sustainable Society 1. Contributions to Realization of a Sustainable Society Mankind must not only promote the further growth of a rich and comfortable society but also pass down this Mankind must not only promote the further growth of a rich and comfortable society but also pass down this invaluable environment of our planet Earth to future generations in a sound and healthy condition. We, the Komatsu invaluable environment of our planet Earth to future generations in a sound and healthy condition. We, the Komatsu Group, deﬁne our environmental conservation efforts as one of our highest priority management tasks. We endeavor Group, deﬁne our environmental conservation efforts as one of our highest priority management tasks. We endeavor to contribute to the sustainable growth of society by integrating advanced technologies into our environmental to contribute to the sustainable growth of society by integrating advanced technologies into our environmental conservation efforts throughout all our business activities. This is represented by our hybrid construction equipment conservation efforts throughout all our business activities. This is represented by our hybrid construction equipment which features a substantial reduction of CO2 emissions while in operation and by our competitive manufacturing. which features a substantial reduction of CO2 emissions while in operation and by our competitive manufacturing. 2. Simultaneous Realization of Improved Environmental and Economic Performance 2. Simultaneous Realization of Improved Environmental and Economic Performance We are committed to improving both environmental performance and economic efﬁciency as a group of companies We are committed to improving both environmental performance and economic efﬁciency as a group of companies engaging in competitive manufacturing for customer satisfaction. To this end, while working to minimize the engaging in competitive manufacturing for customer satisfaction. To this end, while working to minimize the environmental impact of our products throughout their lifecycle, from production to scrapping, we constantly take up environmental impact of our products throughout their lifecycle, from production to scrapping, we constantly take up the challenge of advancing technologies for the development of products that feature good economic performance the challenge of advancing technologies for the development of products that feature good economic performance supported by improved fuel consumption and recyclability. supported by improved fuel consumption and recyclability. 3. Corporate Social Responsibility 3. Corporate Social Responsibility Each company of the Komatsu Group promotes environmental conservation by not only complying with the Each company of the Komatsu Group promotes environmental conservation by not only complying with the applicable laws and regulation of the concerned host community, region and country, but also by establishing its applicable laws and regulation of the concerned host community, region and country, but also by establishing its voluntary standards which consider global and local environmental concerns. Each company of the Group also voluntary standards which consider global and local environmental concerns. Each company of the Group also strives to fulﬁll its corporate social responsibility by actively participating in local environmental conservation strives to fulﬁll its corporate social responsibility by actively participating in local environmental conservation programs and thereby promoting close-knit communication with local communities. This is an example of how the programs and thereby promoting close-knit communication with local communities. This is an example of how the companies continue working to remain a company trusted by all Komatsu stakeholders. companies continue working to remain a company trusted by all Komatsu stakeholders. Guideline for Corporate Activity Guideline for Corporate Activity 1. Basic Stance on Environmental Problems 1. Basic Stance on Environmental Problems We, the Komatsu Group, work toward a sustainable society and Earth-friendly environment through our global business We, the Komatsu Group, work toward a sustainable society and Earth-friendly environment through our global business operations by addressing the following four environmental problems. operations by addressing the following four environmental problems. 1) Climate change 1) Climate change 2) Establishment of a sound material-cycle society 2) Establishment of a sound material-cycle society 3) Conservation of air, water and other natural resources as well as management of chemical substances 3) Conservation of air, water and other natural resources as well as management of chemical substances 4) Biodiversity 4) Biodiversity 2. Framework of Our Global, Group-wide Environmental Management System 2. Framework of Our Global, Group-wide Environmental Management System To reduce our group-wide environmental impact, the Komatsu Head Ofﬁce as well as the manufacturing facilities and To reduce our Group-wide environmental impact, the Komatsu Head Ofﬁce as well as the manufacturing facilities main companies of the Komatsu Group, already with ISO certiﬁcations, will continue working to maintain and and main companies of the Komatsu Group, already with ISO certiﬁcations, will continue working to maintain and improve their environmental management system, while other manufacturing facilities and suppliers will also work to improve their environmental management system, while other manufacturing facilities and suppliers will also work to establish their environmental management systems. establish their environmental management systems. The Komatsu Environmental Committee develops environmental action plans and common guidelines for the The Komatsu Environmental Committee develops environmental action plans and common guidelines for the Komatsu Group. Based on these Group-wide plans and guidelines, each division or company sets up its own mid- to Komatsu Group. Based on these group-wide plans and guidelines, each division or company sets up its own mid- to long-range targets, develops and implements speciﬁc action plans, reviews them regularly and works to continuously long-range targets, develops and implements speciﬁc action plans, reviews them regularly and works to continuously improve them. improve them. 3. Environmental Education and Communication 3. Environmental Education and Communication We, the Komatsu Group, believe that it is important to enhance the environmental awareness of each and every We, the Komatsu Group, believe that it is important to enhance the environmental awareness of each and every employee and thereby actively promote such education programs for all employees. employee and thereby actively promote such education programs for all employees. We will gather environment-related information concerning not only our manufacturing facilities but also other We will gather environment-related information concerning not only our manufacturing facilities but also other related entities, such as major afﬁliated companies and suppliers, and strive to disclose such information, thereby related entities, such as major afﬁliated companies and suppliers, and strive to disclose such information, thereby facilitating proactive communication with all our stakeholders, such as customers, employees, local communities and facilitating proactive communication with all our stakeholders, such as customers, employees, local communities and suppliers, and further expanding the content of environmental communication. suppliers, and further expanding the content of environmental communication. KOMATSU REPORT 2014 49 FY2013 Highlights FY2013 Highlights Mid-range Focused Activities Mid-range Focused Activities For Sustainable Growth For Sustainable Growth Consolidated Results Consolidated Results Environmental Performance Environmental Performance To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders To All Our Stakeholders Sources of Growth Sources of Growth Basic Management Principles Basic Management Principles Outline of Operations Outline of Operations Our Strengths Our Strengths Mid-range Management Plan Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Innovation Growth Strategies: Existing Growth Strategies: Existing Businesses Businesses Structural Reforms (1) Structural Reforms (1) Structural Reforms (2) Structural Reforms (2) Review of FY2013 Operations Review of FY2013 Operations 5-Year Summary 5-Year Summary Construction, Mining & Utility Construction, Mining & Utility Equipment Equipment Industrial Machinery & Others Industrial Machinery & Others Risk Management Risk Management Corporate Governance Corporate Governance Environmental Conservation Efforts Environmental Conservation Efforts CSR Efforts CSR Efforts Information Information Corporate Information Corporate Information Download PDF Download PDF Site Map Site Map About KOMATSU REPORT About KOMATSU REPORT Use of the Gidelines Use of the Gidelines For further details, please click here Financial conditions: Securities Report Social activities: CSR report Environmental performance: Environmental Report Terms and Conditions Terms and Conditions Inquiry Inquiry Site map Site map Copyright © 2014 Komatsu Ltd. All rights reserved Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/environment.html http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/environment.html 1/1 ページ 1/1 ページ Corporate Social Responsibility Efforts | KOMATSU REPORT 2014 2014/07/10 17:34 For Sustainable Growth KOMATSU REPORT 2014 For Sustainable Growth Corporate Social Responsibility Efforts KOMATSU REPORT 2014 Corporate Social Responsibility Efforts Relationship between Komatsu Management and CSR Our CSR Areas of Focus and Efforts Relationship between Komatsu Management and CSR Komatsu deﬁnes its CSR activities as "our business activities per se, which we can capitalize on our strengths, and we strive to respond to the demands of society through our core businesses.” Having clearly deﬁned our CSR areas of focus and efforts, we promote our CSR efforts, as we constantly check whether or not our management responds to social expectations and demands and/or understands what CSR priorities should be by engaging in interactive communication with all our stakeholders. In this manner, we would like to enhance the trust given to us by society and drive our sustainable growth. Our CSR Areas of Focus and Efforts We have formulated our CSR areas of focus by internally discussing what we must do in relation to the CSR priorities and incorporating the third- party viewpoints of Business for Social Responsibility (BSR), a U.S.-based NPO. Based on our CSR priorities, we have selected three CSR areas we focus on through our business activities. To implement our CSR efforts on a global scale, we will make sure that all Komatsu Group employees understand our CSR priorities which are designed for the driving force of our CSR efforts on a global scale. 1. Enhancing Quality of Life: Providing products required by society Providing products and services that contribute to infrastructure development and improve the quality of life Improving productivity, safety, and efﬁciency and enhancing energy conservation through the use of Information and Communication Technology (ICT) Improving the environmental efﬁciency of our products at customers' jobsites and of our facilities, such as manufacturing facilities Reducing our impact on the environment throughout the product lifecycle Enhancing safety for society, customers, employees, and business partners 2. Human Resource Development Contributing to human resource development in local communities Enhancing our employees and suppliers through The KOMATSU Way Enhancing our employees and distributors through brand management 3. Growing with Society Engaging in dialogue with our stakeholders KOMATSU REPORT 2014 50 Contributing to local communities where we do business Strengthening our corporate governance and compliance Contributing to society through our core businesses (e.g., disaster relief and activities to remove anti-personnel landmines) Promoting compliance with environmental, labor, and social norms within the Komatsu Group and among business partners FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/csr.html 1/1 ページ Corporate Social Responsibility Efforts | KOMATSU REPORT 2014 2014/07/10 17:34 KOMATSU REPORT 2014 For Sustainable Growth Corporate Social Responsibility Efforts Corporate Social Responsibility Efforts Relationship between Komatsu Management and CSR Our CSR Areas of Focus and Efforts Relationship between Komatsu Management and CSR Komatsu deﬁnes its CSR activities as "our business activities per se, which we can capitalize on our strengths, and we strive to respond to the demands of society through our core businesses.” Having clearly deﬁned our CSR areas of focus and efforts, we promote our CSR efforts, as we constantly check whether or not our management responds to social expectations and demands and/or understands what CSR priorities should be by engaging in interactive communication with all our stakeholders. In this manner, we would like to enhance the trust given to us by society and drive our sustainable growth. For Sustainable Growth KOMATSU REPORT 2014 Our CSR Areas of Focus and Efforts We have formulated our CSR areas of focus by internally discussing what we must do in relation to the CSR priorities and incorporating the third- party viewpoints of Business for Social Responsibility (BSR), a U.S.-based NPO. Based on our CSR priorities, we have selected three CSR areas we focus on through our business activities. To implement our CSR efforts on a global scale, we will make sure that all Komatsu Group employees understand our CSR priorities which are designed for the driving force of our CSR efforts on a global scale. 1. Enhancing Quality of Life: Providing products required by society Providing products and services that contribute to infrastructure development and improve the quality of life Improving productivity, safety, and efﬁciency and enhancing energy conservation through the use of Information and Communication Technology (ICT) Improving the environmental efﬁciency of our products at customers' jobsites and of our facilities, such as manufacturing facilities Reducing our impact on the environment throughout the product lifecycle Enhancing safety for society, customers, employees, and business partners 2. Human Resource Development Contributing to human resource development in local communities Enhancing our employees and suppliers through The KOMATSU Way Enhancing our employees and distributors through brand management 3. Growing with Society Engaging in dialogue with our stakeholders Contributing to society through our core businesses (e.g., disaster relief and activities to remove anti-personnel landmines) Contributing to local communities where we do business Strengthening our corporate governance and compliance Promoting compliance with environmental, labor, and social norms within the Komatsu Group and among business partners FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 51 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/csr.html 1/1 ページ Corporate Social Responsibility Efforts | KOMATSU REPORT 2014 2014/07/10 17:34 KOMATSU REPORT 2014 For Sustainable Growth Corporate Social Responsibility Efforts Corporate Social Responsibility Efforts Relationship between Komatsu Management and CSR Our CSR Areas of Focus and Efforts Relationship between Komatsu Management and CSR Komatsu deﬁnes its CSR activities as "our business activities per se, which we can capitalize on our strengths, and we strive to respond to the demands of society through our core businesses.” Having clearly deﬁned our CSR areas of focus and efforts, we promote our CSR efforts, as we constantly check whether or not our management responds to social expectations and demands and/or understands what CSR priorities should be by engaging in interactive communication with all our stakeholders. In this manner, we would like to enhance the trust given to us by society and drive our sustainable growth. KOMATSU REPORT 2014 Our CSR Areas of Focus and Efforts We have formulated our CSR areas of focus by internally discussing what we must do in relation to the CSR priorities and incorporating the third- party viewpoints of Business for Social Responsibility (BSR), a U.S.-based NPO. Based on our CSR priorities, we have selected three CSR areas we focus on through our business activities. To implement our CSR efforts on a global scale, we will make sure that all Komatsu Group employees understand our CSR priorities which are designed for the driving force of our CSR efforts on a global scale. 1. Enhancing Quality of Life: Providing products required by society Providing products and services that contribute to infrastructure development and improve the quality of life Improving productivity, safety, and efﬁciency and enhancing energy conservation through the use of Information and Improving the environmental efﬁciency of our products at customers' jobsites and of our facilities, such as manufacturing Communication Technology (ICT) facilities Reducing our impact on the environment throughout the product lifecycle Enhancing safety for society, customers, employees, and business partners 2. Human Resource Development Contributing to human resource development in local communities Enhancing our employees and suppliers through The KOMATSU Way Enhancing our employees and distributors through brand management 3. Growing with Society Engaging in dialogue with our stakeholders Contributing to local communities where we do business Strengthening our corporate governance and compliance Contributing to society through our core businesses (e.g., disaster relief and activities to remove anti-personnel landmines) Promoting compliance with environmental, labor, and social norms within the Komatsu Group and among business partners Information Corporate Information FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 52 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/sustainable/csr.html 1/1 ページ Corporete Information | KOMATSU REPORT 2014 2014/07/10 10:23 Information KOMATSU REPORT 2014 Information Corporate Information Corporate Information KOMATSU REPORT 2014 Outline Shareholder Information Major Shareholders Breakdown of Shareholders Stock Prices on the Tokyo Stock Exchange Outline (As of March 31, 2014) Name Head Ofﬁce Komatsu Ltd. 2-3-6 Akasaka, Minato-ku, Tokyo 107-8414, Japan Date of Establishment May 13, 1921 Common Stock Outstanding Consolidated: ¥67,870 million based on U.S. GAAP Non-consolidated: ¥70,120 million Number of Employees Consolidated: 47,208 (Komatsu Ltd. and 143 consolidated subsidiaries) Non-consolidated: 10,217 Shareholder Information Shares of Common Stock Issued and Outstanding 953,752,875 shares (excluding 29,377,385 shares of treasury stock) Number of Shareholders Number of Shares per Trading Unit Securities Code Stock Listings 232,666 100 6301 (Japan) Tokyo Transfer Agent for Common Stock/Management Mitsubishi UFJ Trust and Banking Corporation Institution for Special Account 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan Depositaries (ADRs) The Bank of New York Mellon 101 Barclay Street, New York, NY 10286, U.S.A. Non-U.S. Callers: +1-(201)-680-6825 U.S. Callers: 888-269-2377 (888-BNY-ADRS) URL: http://www.adrbnymellon.com Ticker Symbol: KMTUY Major Shareholders (As of March 31, 2014) Name of Shareholders Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) Taiyo Life Insurance Company Nippon Life Insurance Company State Street Bank and Trust Company (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) Sumitomo Mitsui Banking Corporation The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders (Standing proxy: Sumitomo Mitsui Banking Corporation) JP Morgan Chase Bank 380072 KOMATSU REPORT 2014 53 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) The Bank of New York Mellon SA/NV 10 (Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.) The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) Number of Shares Held Equity Ratio (%) (thousand shares) 38,014 36,118 34,000 29,954 18,519 17,835 16,112 12,797 12,429 12,142 3.86 3.67 3.45 3.04 1.88 1.81 1.63 1.30 1.26 1.23 Notes: 1) Shareholding ratio is calculated by subtracting treasury stock. 2) Although Komatsu Ltd. holds 29,377 thousand shares of treasury stock, it is excluded from the major shareholders listed above. Breakdown of Shareholders (As of March 31, 2014) Stock Prices on the Tokyo Stock Exchange FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/information/ 1/1 ページ Corporete Information | KOMATSU REPORT 2014 2014/07/10 10:23 Transfer Agent for Common Stock/Management Mitsubishi UFJ Trust and Banking Corporation Corporete Information | KOMATSU REPORT 2014 2014/07/10 10:23 KOMATSU REPORT 2014 Information Corporate Information Corporate Information Outline Shareholder Information Major Shareholders Breakdown of Shareholders Stock Prices on the Tokyo Stock Exchange Outline (As of March 31, 2014) Name Head Ofﬁce Komatsu Ltd. 2-3-6 Akasaka, Minato-ku, Tokyo 107-8414, Japan Date of Establishment May 13, 1921 Common Stock Outstanding Consolidated: ¥67,870 million based on U.S. GAAP Number of Employees Consolidated: 47,208 (Komatsu Ltd. and 143 consolidated subsidiaries) Non-consolidated: ¥70,120 million Non-consolidated: 10,217 Shareholder Information Shares of Common Stock Issued and Outstanding 953,752,875 shares (excluding 29,377,385 shares of treasury stock) Number of Shareholders Number of Shares per Trading Unit Securities Code Stock Listings 232,666 100 6301 (Japan) Tokyo Institution for Special Account 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan Depositaries (ADRs) The Bank of New York Mellon Information 101 Barclay Street, New York, NY 10286, U.S.A. Non-U.S. Callers: +1-(201)-680-6825 U.S. Callers: 888-269-2377 (888-BNY-ADRS) URL: http://www.adrbnymellon.com Ticker Symbol: KMTUY KOMATSU REPORT 2014 Major Shareholders (As of March 31, 2014) Name of Shareholders Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) Taiyo Life Insurance Company Nippon Life Insurance Company State Street Bank and Trust Company (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) Sumitomo Mitsui Banking Corporation The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders (Standing proxy: Sumitomo Mitsui Banking Corporation) JP Morgan Chase Bank 380072 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) The Bank of New York Mellon SA/NV 10 (Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.) The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) Number of Shares Held Equity Ratio (%) (thousand shares) 38,014 36,118 34,000 29,954 18,519 17,835 16,112 12,797 12,429 12,142 3.86 3.67 3.45 3.04 1.88 1.81 1.63 1.30 1.26 1.23 Notes: 1) Shareholding ratio is calculated by subtracting treasury stock. 2) Although Komatsu Ltd. holds 29,377 thousand shares of treasury stock, it is excluded from the major shareholders listed above. Breakdown of Shareholders (As of March 31, 2014) Number of Shares Held Equity Ratio (%) (thousand shares) Stock Prices on the Tokyo Stock Exchange KOMATSU REPORT 2014 54 FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 Information Corporate Information Corporate Information Outline Shareholder Information Major Shareholders Breakdown of Shareholders Stock Prices on the Tokyo Stock Exchange Outline (As of March 31, 2014) Name Head Ofﬁce Komatsu Ltd. 2-3-6 Akasaka, Minato-ku, Tokyo 107-8414, Japan Date of Establishment May 13, 1921 Common Stock Outstanding Consolidated: ¥67,870 million based on U.S. GAAP Number of Employees Consolidated: 47,208 (Komatsu Ltd. and 143 consolidated subsidiaries) Non-consolidated: ¥70,120 million Non-consolidated: 10,217 Shareholder Information Shares of Common Stock Issued and Outstanding 953,752,875 shares (excluding 29,377,385 shares of treasury stock) Number of Shareholders Number of Shares per Trading Unit Securities Code Stock Listings 232,666 100 6301 (Japan) Tokyo Transfer Agent for Common Stock/Management Mitsubishi UFJ Trust and Banking Corporation Institution for Special Account 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan Depositaries (ADRs) The Bank of New York Mellon 101 Barclay Street, New York, NY 10286, U.S.A. Non-U.S. Callers: +1-(201)-680-6825 U.S. Callers: 888-269-2377 (888-BNY-ADRS) URL: http://www.adrbnymellon.com Ticker Symbol: KMTUY Major Shareholders (As of March 31, 2014) Name of Shareholders Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) Taiyo Life Insurance Company Nippon Life Insurance Company State Street Bank and Trust Company Sumitomo Mitsui Banking Corporation (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders (Standing proxy: Sumitomo Mitsui Banking Corporation) JP Morgan Chase Bank 380072 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) The Bank of New York Mellon SA/NV 10 (Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.) The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) 38,014 36,118 34,000 29,954 18,519 17,835 16,112 12,797 12,429 12,142 Notes: 1) Shareholding ratio is calculated by subtracting treasury stock. 2) Although Komatsu Ltd. holds 29,377 thousand shares of treasury stock, it is excluded from the major shareholders listed above. Breakdown of Shareholders (As of March 31, 2014) 3.86 3.67 3.45 3.04 1.88 1.81 1.63 1.30 1.26 1.23 Stock Prices on the Tokyo Stock Exchange FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Growth Strategies: Innovation Risk Management Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/information/ 1/1 ページ http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/information/ 1/1 ページ Corporete Information | KOMATSU REPORT 2014 2014/07/10 10:23 KOMATSU REPORT 2014 Information Corporate Information Corporate Information Outline Shareholder Information Major Shareholders Breakdown of Shareholders Stock Prices on the Tokyo Stock Exchange Outline (As of March 31, 2014) Name Head Ofﬁce Komatsu Ltd. 2-3-6 Akasaka, Minato-ku, Tokyo 107-8414, Japan Date of Establishment May 13, 1921 Common Stock Outstanding Consolidated: ¥67,870 million based on U.S. GAAP Number of Employees Consolidated: 47,208 (Komatsu Ltd. and 143 consolidated subsidiaries) Non-consolidated: ¥70,120 million Non-consolidated: 10,217 Shareholder Information Shares of Common Stock Issued and Outstanding 953,752,875 shares (excluding 29,377,385 shares of treasury stock) Number of Shareholders Number of Shares per Trading Unit Securities Code Stock Listings 232,666 100 6301 (Japan) Tokyo Transfer Agent for Common Stock/Management Mitsubishi UFJ Trust and Banking Corporation Institution for Special Account 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan Depositaries (ADRs) The Bank of New York Mellon 101 Barclay Street, New York, NY 10286, U.S.A. Non-U.S. Callers: +1-(201)-680-6825 U.S. Callers: 888-269-2377 (888-BNY-ADRS) URL: http://www.adrbnymellon.com Ticker Symbol: KMTUY Number of Shares Held Equity Ratio (%) (thousand shares) Major Shareholders (As of March 31, 2014) Name of Shareholders Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) Taiyo Life Insurance Company Nippon Life Insurance Company State Street Bank and Trust Company Sumitomo Mitsui Banking Corporation (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders (Standing proxy: Sumitomo Mitsui Banking Corporation) JP Morgan Chase Bank 380072 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) The Bank of New York Mellon SA/NV 10 (Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.) The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division) 38,014 36,118 34,000 29,954 18,519 17,835 16,112 12,797 12,429 12,142 Notes: 1) Shareholding ratio is calculated by subtracting treasury stock. 2) Although Komatsu Ltd. holds 29,377 thousand shares of treasury stock, it is excluded from the major shareholders listed above. Breakdown of Shareholders (As of March 31, 2014) 3.86 3.67 3.45 3.04 1.88 1.81 1.63 1.30 1.26 1.23 Information KOMATSU REPORT 2014 Stock Prices on the Tokyo Stock Exchange FY2013 Highlights Mid-range Focused Activities For Sustainable Growth Consolidated Results Environmental Performance To All Our Stakeholders To All Our Stakeholders Sources of Growth Basic Management Principles Outline of Operations Our Strengths Mid-range Management Plan Growth Strategies: Innovation Growth Strategies: Existing Businesses Structural Reforms (1) Structural Reforms (2) Review of FY2013 Operations 5-Year Summary Construction, Mining & Utility Equipment Industrial Machinery & Others Risk Management Corporate Governance Environmental Conservation Efforts CSR Efforts Information Corporate Information Download PDF Site Map About KOMATSU REPORT Use of the Gidelines Terms and Conditions Inquiry Site map Copyright © 2014 Komatsu Ltd. All rights reserved KOMATSU REPORT 2014 55 http://solovan-dev.jp/komatsu/komatsu_com/CompanyInfo/ir/annual/html/2014/information/ 1/1 ページ KOMATSU 2-3-6, Akasaka, Minato-ku, Tokyo 107- 8414, Japan http://www.komatsu.co.jp/ Corporate Communications Department Phone : +81-3-5561-2616 Fax : +81-3-3505-9662 e-mail : info@komatsu.co.jp

Continue reading text version or see original annual report in PDF format above