Edgar Filing: KOMATSU LTD

Form 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of November 2003

COMMISSION FILE NUMBER: 1-7239

KOMATSU LTD.

(Translation of registrant’s name into English)

3-6 Akasaka 2-chome, Minato-ku, Tokyo, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F X Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

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INFORMATION TO BE INCLUDED IN REPORT

Three company announcements made on November 7, 2003

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KOMATSU LTD. (Registrant)

Date: November 7, 2003	By:	/s/ Kenji Kinoshita
		Kenji Kinoshita Executive Officer

LOGO

Komatsu Ltd.

Corporate Communications Dept.

Tel: +81-(0)3-5561-2616

Date: November 7th, 2003

URL: http://www.komatsu.com/

Interim Results For The Fiscal Year Ending March 31, 2004

Consolidated Financial Highlights

(For the six months ended September 30, 2003 and 2002)

Millions of yen & US dollars

except per share amounts

	2004					2003		Changes Increase		The entire FY2003
	Yen		Dollar			Yen		Yen	(%)	Yen
Net sales	¥	567,671	$	5,114		¥	518,429	49,242	9.5	¥	1,089,804
Operating profit		28,242		254			14,360	13,882	96.7		33,178
Income before income taxes, minority interests and equity in earnings		21,492		194			5,652	15,840	280.3		12,905
Net income		9,410		85			1,858	7,552	406.5		3,009
Net income per share
Basic	¥	9.48		8.5	¢	¥	1.95	7.53		¥	3.09
Diluted	¥	9.36		8.4	¢	¥	1.95	7.41		¥	3.09

Notes:	1	)	Consolidated financial information is prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America.
	2	)	The translation of Japanese yen amounts into US dollar amounts is included solely for convenience and has been made for fiscal 2004 at the rate of ¥111 to $1, the approximate rate of exchange at September 30, 2003.
	3	)	Equity in earnings (losses) of affiliated companies:
				September 30, 2003: September 30, 2002: March 31, 2003:	(598) millions of yen 205 millions of yen (786) millions of yen
	4	)	The numbers of average common shares outstanding were as follows:
				September 30, 2003: September 30, 2002: March 31, 2003:	992,484,365 953,930,723 973,306,865
	5	)	Accounting policies were not changed.
	6	)	Net income per share above is based on the provisions of Statements of Financial Accounting Standards No.128, “Earnings per share”
	7	)	Operating profit stated above is the sum of segment profit. In conforming with Japanese accounting principles, it is obtained by subtracting cost of sales and selling general and administrative expenses from net sales. This amount does not represent consolidated operating profit (loss) under U.S.GAAP.

Financial Position

(As of September 30, 2003 and 2002)

	2004	2003	As of March 31, 2003
Total assets (Millions of yen)	1,300,740	1,301,373	1,306,354
Shareholders’ equity (Millions of yen)	405,479	383,123	395,366
Shareholders’ equity ratio (%)	31.2	29.4	30.3
Shareholders’ equity per share (Yen)	408.57	401.87	398.34

Notes:

1) The numbers of common shares outstanding were below:

		September 30, 2003:		992,446,014
		September 30, 2002:		953,351,618
		March 31, 2003:		992,528,649

Cash Flow

(For the six months ended September 30, 2003 and 2002)

Millions of yen

	2004		2003		The entire FY2003
Net cash provided by operating activities	69,651		10,789		48,257
Net cash used in investing activities	(14,690	)	(27,211	)	(36,018	)
Net cash provided by (used in) financing activities	(33,981	)	27,744		18,846
Cash and cash equivalents, end of period	95,963		56,396		76,152

The Number of Consolidated Subsidiaries and Affiliated Companies Accounted for by the Equity Method

•

Number of consolidated subsidiaries: 126 companies

•

Number of affiliated companies accounted for by the equity method: 47 companies

Changes in group of entities

•

Consolidated subsidiaries

Added:

3 companies

Removed:

2 companies

•

Affiliated Companies accounted for by the equity method

Added:

1 company

Removed:

3 companies

Outlook for FY2004

(From April 1, 2003 to March 31, 2004)

Millions of yen

Net sales

Income before

income taxes

Net income

The entire FY2004

1,160,000

40,000

18,000

Notes:

1) Forecast of net income per share (basic): 18.14 yen

Refer to “Management Performance and Financial Conditions” for preconditions of the projections for FY 2004 above and other related issues.

Operations of the Business Group

(As of September 30, 2003)

Business Categories and Principal Products & Services

Construction and Mining Equipment

Excavating Equipment		Hydraulic excavators, mini excavators, and backhoe loaders

Loading Equipment		Wheel loaders, mini wheel loaders, and skid steer loaders

Grading and Roadbed Preparation Equipment		Bulldozers, motor graders, and vibratory rollers

Hauling Equipment		Off-highway dump trucks, articulated dump tracks, and crawler carriers

Tunneling Machines		Shield machines, tunnel-boring machines, and small-diameter pipe jacking machines (Iron Mole)

Recycling Equipment		Mobile debris crushers, mobile soil recyclers, and mobile tub grinders

Other Equipment		Rough-terrain cranes, reach tower cranes, and railroad maintenance equipment

Engines and Components		Diesel engines, diesel generator sets, and hydraulic equipment

Casting Products		Steel castings and iron castings


Industrial Machinery, Vehicles and Others

Metal forging and Stamping Presses		Large presses, small and medium-sized presses, forging presses, and AC-servo presses

Sheet-Metal Machines and Machine Tools		Press brakes, shears, gatling press centers, laser cutting machines, fine plasma cutting machines, and crank shaft millers

Industrial Vehicles and Logistics		Forklift trucks, packing and transport

Defense Systems		Ammunition and armored personnel carriers

Others		Commercial-use prefabricated structures, and recycling plants


Electronics

Electronic Materials		Silicon wafers and polycrystalline silicon

Communications Equipment and Control Equipment		Network information terminals, LAN peripheral equipment, mobile tracking and communication terminals, and vehicle controllers

Temperature Control Equipment		Thermoelectric modules and manufacturing-related thermoelectric semiconductor devices

LOGO

Management Policy

1. Basic Management Policy

The cornerstone of Komatsu’s management lies in its commitment to Quality and Reliability in order to maximize the corporate value of the Company. This commitment is not limited to delivering safe and innovative products and services which incorporate the viewpoints of customers. Komatsu is continuing its efforts to enhance the Quality and Reliability of all organizations, businesses, employees and management of the entire Komatsu Group. It is the top management task of Komatsu to continue improving the Quality and Reliability of all these year after year.

2. Mid- and Long-Range Management Strategy and Issues Ahead

We anticipate that global demand for construction and mining equipment will continue to grow steadily after having bottomed out in 2001. In addition to recovering demand in North America, the largest market of the world, this growth will be fueled by expanding demand in developing markets such as China, with ongoing infrastructure development at a rapid pace; Russia, with natural resource development; and Southeast Asia, with continued recovery of the economies.

Komatsu has recently started the “Move The World. KOMATSU 5-800” mid-range management plan for the year ending March 31, 2006. Under this plan, we are working to accelerate the recovery speed of our business performance by seizing the opportunities of improving demand with self-driven, aggressive actions, while placing more efforts to reinforce corporate strength. Having defined the goals for return on assets, net debt-to-equity ratio in addition to sales and profits for business growth in the new management plan, we are resolutely determined to further enhance utilization of assets and maintain a sound financial position.

While we are also concerned about such factors as overheating investment in China, volatile political conditions in the Middle East and drastic appreciation of the Japanese yen, there will be no change in what Komatsu has to do. In addition to construction and mining equipment, we have placed “industrial-use machinery,” such as metal-sheet machines and forging presses, forklift trucks and forestry equipment, as Komatsu’s core business. To further solidify the Number One position in Asia and Number Two in the global marketplace for our construction and mining equipment business, we are placing our utmost efforts on the following five management tasks.

To accelerate the implementation of the New Growth Strategy for the Construction and Mining Equipment Business

To reinforce our competitiveness based on the “Spirit of Manufacturers”

To facilitate selective focus on the criteria of technological advantage and profitability

To reinforce our competitive foundation based on technological capabilities and financial position

To further strengthen corporate governance

3. Basic Policy for Dividends

Komatsu works to build a sound and stable financial position and flexible and agile corporate strength. Concerning cash dividends to shareholders, the Company maintains the basic policy of redistributing profits by taking payout ratio into account and reflecting business results, as it secures sufficient internal reserve for reinvestment.

4. Stance on the Lowering of Trading Unit of Shares

Komatsu has a policy to decide on the trading unit of shares of the Company after considering the shareholder composition, liquidity, invested amounts and the like. The Company will continue to study the matter while closely monitoring developments on the stock market.

5. Basic Stance on Corporate Governance and Progress in Implementation

Komatsu has worked to ensure neutrality and soundness of management previously through the Board of Auditors having two external and two internal auditor-members. The Company reorganized the Board of Directors, reducing the number of board members. Under the new organization, board members have been able to discuss selected management issues more thoroughly and effectively for quicker decision-making. At the same time, we invited a director from outside the Komatsu Group to ensure transparency and objectivity of management. The Company increased the number of external directors from one to two in June this year.

Furthermore, the Company is working to ensure that all employees of the Komatsu Group observe “Komatsu’s Code of Worldwide Business Conduct” stipulated and published since 1998, in addition to the laws and regulations.

Komatsu is determined to further strive for not only improvement of management efficiency but also establishment of corporate ethics and assurance of soundness of management in order to maximize the corporate value of the Komatsu Group. And through these efforts, Komatsu will work to become a company which will enjoy the greater trust of shareholders and all other stakeholders.

Management Performance and Financial Conditions

1. Outline of Operations and Business Results

Komatsu Ltd. posted consolidated net sales of ¥567.6 billion (US$5,114 million, at US$1= ¥111) for the interim period ended September 30, 2003, up 9.5% from the previous interim period. Operating profit* advanced 96.7% over the previous interim period, to ¥28.2 billion (US$254 million). Komatsu continued to record improvements in both sales and profits for the interim period under review, following the corresponding interim period a year ago.

Demand for construction and mining equipment bottomed out and took on a note of recovery, beginning in the six-month period under review. While the Chinese market continued to sustain a high rate of growth, demand picked up momentum for recovery in the major markets of North America, Europe and Japan which had suffered from depressed demand for the last few years.

Since October 2001, Komatsu has worked to strengthen its business practices by aggressively engaging in the Reform of Business Structure project which centers on the New Growth Strategy for the Construction and Mining Equipment Business, reduction of fixed costs and substantial cutbacks on production costs. As a result, for the interim period under review, Komatsu further expanded its mainstay business of construction and mining equipment, supported by an improved market environment, compared to the previous interim period, coupled with the added results of its reform efforts.

In the business areas in which we can demonstrate advantages of our superior manufacturing, such as forklift trucks, sheet-metal machines and forging presses, the related companies of the Komatsu Group have introduced to the market in a timely manner, new products with original features. By aggressively undertaking sales and service activities with such products in the center, Komatsu companies continued to expand both sales and profits.

In the electronics business, while Komatsu saw a slow recovery of the semiconductor market, intensified competition resulted in a continuing tough market environment. Even in those conditions, Komatsu’s electronic business further lifted its earnings position with improved results including better performance of the silicon wafer business in Taiwan.

Review of operations is described below. Please be advised that Komatsu has changed the name of “Others” to “Industrial Machinery, Vehicles and Others,” starting in the interim period under review.

(*) Operating profit stated above is the sum of segment profit. In conformity with generally accepted accounting principles of Japan, it is obtained by subtracting cost of sales and selling, general and administrative expenses from net sales. This amount does not represent consolidated operating profit (loss) under U.S.GAAP.

Construction and Mining Equipment

Consolidated net sales of construction and mining equipment for the interim period under review increased 10.1% over the previous interim period, to ¥408.9 billion (US$3,685 million). Of this amount, overseas sales expanded 12.0%, to ¥289.6 billion (US$2,610 million), representing a record-high figure for interim results.

Komatsu continued to aggressively broaden the lineup of the GALEO Series, Komatsu’s new generation of construction and mining equipment. Starting in July 2003, Komatsu also embarked on market introduction of new products with Unique and Unrivaled features. Komatsu launched the MR-2 series minimal rear-swing mini hydraulic excavators as the first campaign for the Unique and Unrivaled products. This series has enjoyed high marks given by customers for their safety and maintainability, and Komatsu received substantially more orders than initially planned for.

In the downstream aftersales markets, Komatsu Used Equipment Corp. continued to advance sales by capturing brisk overseas demand and further expanding its sales channels with the Internet bidding system, which the company developed. Rental companies of the Komatsu Group continued to promote rental of comprehensive equipment and facilities related to civil engineering jobs, while working to optimize assets and strengthen sales capabilities. To help customers cut down their repair and maintenance costs, Komatsu also worked to increase sales of service-contract products such as Komatsu All Support when selling new equipment.

Komatsu’s North American sales for the interim period under review increased over the corresponding period last year against the backdrop of demand upturned after four years, supported by brisk housing starts. Komatsu seized on this opportunity of upturned demand with aggressive sales of GALEO series equipment, including hydraulic excavators and articulated dump trucks. Komatsu also expanded sales of utility equipment such as backhoe loaders. For the mining equipment business, while demand recovery for off-highway dump trucks still remained dull, Komatsu improved sales of equipment slightly from the previous interim period.

Overall European demand for construction and mining equipment during the six-month period under review grew over the previous interim period, as the largest European market of Germany, the United Kingdom, Spain and some other markets sustained a high level of demand. Under such an environment, Komatsu worked to strengthen its European sales organization by consolidating marketing capabilities at Komatsu Europe International N.V. in April this year.

In the Commonwealth of Independent States (CIS) or former Soviet Republics, new demand for equipment increased for use in mines and energy-related projects. Komatsu took advantage of its extensive product offerings, such as dump trucks, bulldozers and pipelayers, and expanded interim sales substantially over the previous interim period. In August this year, Komatsu established the Moscow Branch Office of Komatsu CIS Co. and worked to strengthen operation to capture growing demand for construction equipment for urban use resulting from the progress of the free market economy.

With almost no critical effect of severe acute respiratory syndrome (SARS) on the Chinese market, demand for equipment continued to skyrocket during the six-month period under review. Komatsu Shantui Construction Machinery Co., Ltd. engaged in aggressive production and sales of renewed models of the flagship PC200 hydraulic excavators, and maintained a large market share. In July 2003, Komatsu Shantui celebrated cumulative production and sales of 10,000 units of hydraulic excavators, demonstrating its remarkable growth to Komatsu Group’s largest base for the supply of PC200 hydraulic excavators. As part of its efforts to broaden the product mix, the company also embarked on the production and sales of smaller hydraulic excavators, namely the PC60. In addition, Komatsu continued to carry out aggressive operations including further development of local distributors and expansion of production capacity of a subsidiary, and accomplished a substantial increase of Chinese sales over the previous interim period.

In Southeast Asia and Oceania, Komatsu’s sales for the interim period under review slightly declined from the corresponding period last year, reflecting orders received from a large-lot customer in Indonesia a year ago.

In the Middle East, Komatsu capitalized on steady demand for construction equipment from infrastructure development and other projects by drawing on its strength as a full-line manufacturer, and secured the same level of interim sales as those of the previous interim period.

Industrial Machinery, Vehicles and Others

Consolidated net sales of industrial machinery, vehicles and others grew 11.2% over the previous interim period, to ¥115.3 billion (US$1,039 million) for the six-month period under review.

Komatsu Forklift Co., Ltd. carried out aggressive sales and service activities, centering on the LEO-NXT engine-driven forklift trucks for which the company had secured excellent market response since their market introduction, and achieved growth of sales surpassing that of demand in Japan. With respect to overseas sales, the company’s subsidiary in the United States sustained strong sales, while the company expanded exports to the Middle East and CIS. As a result, consolidated interim sales of Komatsu Forklift improved over those for the corresponding period last year.

Komatsu Industries Corporation accelerated sales of forging presses, centering on Hybrid AC Servo presses for which the company had enjoyed solid trust of customers for their outstanding productivity, energy savings and super low noise. In the area of services, Komatsu Industries focused its efforts to expand the engineering business such as retrofitting and improved earnings. As a result, the company increased both sales and profits for the interim period under review over the previous interim period.

During the six-month period, Komatsu Machinery Corp. expanded sales of not only crankshaft millers and other machine tools for its major customer portfolio of automobile manufacturers, but also manufacturing equipment for liquid crystal displays. As a result, Komatsu Machinery improved its interim results substantially over the corresponding period last year.

Komatsu Zenoah Co.’s agricultural and forestry equipment business, while facing slack demand due to bad weather in Japan, enjoyed positive results of market introduction of products with original features, including a knapsack-type brushcutter that features an outstanding degree of freedom of maneuverability resulting from its innovative engine layout. As a result, Komatsu Zenoah increased interim Japanese sales over the corresponding period last year. The company also expanded overseas sales by successfully capitalizing on strong demand in Europe, China and Southeast Asia and gaining a new distributor in Oceania. As a result, interim sales of the agricultural and forestry equipment business advanced over the corresponding period last year, representing a record-high figure for interim results.

Electronics

Consolidated net sales of the electronics business totaled ¥43.3 billion (US$390 million) for the six-month period under review, at about the same level as the corresponding interim period last year.

Undertaken by Komatsu Electronic Metals Co., Ltd., Komatsu’s silicon wafer business continued to experience difficult market conditions, most notably the intensified market competition, although the market generated a slow recovery of demand. Komatsu Electronic Metals remained committed to production exclusively in Japan and Taiwan. Formosa Komatsu Silicon Corporation, its operation in Taiwan, further improved both sales and profits by expanding its sales channels in Taiwan, China and Southeast Asia and improving the ratio of prime wafers. As a result, Komatsu Electronic Metals sustained consolidated interim sales at about the same level as the corresponding interim period last year, while substantially improving profits. To secure the monthly production of 45,000 pieces of the next-generation mainstream 300mm wafer in the near future, the company continued to make facilities investment within the range of internal cash flow.

Advanced Silicon Materials LLC. (ASiMI), a manufacturing subsidiary of polycrystalline silicon and other products, expanded sales of monosilane gas mainly for use in the production of semiconductors and liquid crystal displays during the interim period under review. While interim sales declined form the six-month period a year ago, ASiMI improved its profit/loss account with the benefits of consolidation of production implemented in March 2002.

During the interim period under review, Komatsu Electronics, Inc. faced continued slack investment in fiber optic telecommunication-related facilities in North America, in particular, and sales of thermoelectric modules remained slack. In the field of semiconductor manufacturing equipment, meanwhile, the company continued its efforts on product development to capture future demand from facilities investment related to 300mm wafers.

2. Conditions of Consolidated Cash Flows

Due to the improved business results and reduced working capital, net cash provided by operating activities totaled to ¥69.6 billion (US$627 million), an increase of ¥58.8 billion (US$530 million) compared with the previous interim period which constituted the payments of early retirement benefits. Net cash used in investing activities amounts to ¥14.6 billion (US$132 million), an increase of ¥12.5 billion (US$113 million) compared with the previous interim period, due to investments in production and sales facilities, and sales of investment securities. Net cash used in financing activities amounts to ¥33.9 billion (US$306 million), a decrease of ¥61.7 billion (US$556 million), compared with the previous interim period, mainly due to the reduction of interest bearing debt. As a result, cash and cash equivalents totaled ¥95.9 billion (US$864 million), up ¥19.8 billion (US$178 million), compared with the entire fiscal 2003.

Trends of Cash Flow Indicators:

As of and for the six months ended September 30, 2003 and 2002.

	2004	2003	The entire FY2003
Shareholders’ equity ratio(%)	31.2	29.4	30.3
Shareholders’ equity ratio at aggregate market value(%)	44.4	30.0	33.1
Years of debt redemption	3.5	24.3	10.9
Interest coverage ratio	9.7	1.5	3.3

Shareholders’ equity ratio: Shareholders’ equity / Total assets

Shareholders’ equity ratio at aggregate market value: Aggregate market value of outstanding shares of common stock/Total assets

Years of debt redemption term: Interest-bearing debt/Net cash provided by operating activities

Interest coverage ratio: Net cash provided by operating activities /Interest expense

3. Outlook for the Rest of Fiscal 2004

There are some factors of concern, such as overheating investments in China, recurrence of SARS, political instability in the Middle East and drastic fluctuations on the foreign exchange market. However, Komatsu expects substantial growth in demand for construction and mining equipment, its mainstay business, in China, CIS and other regions where it can capitalize on its advantages as a full-line equipment manufacturer. In addition, demand is recovering in the major markets of Japan, North America and Europe.

Komatsu achieved more-than-projected profits for the interim period under review. Komatsu is determined to steadfastly implement the “Move The World. KOMATSU 5-800” mid-range management plan which it has just launched, and improve its business performance diligently.

Consolidated and non-consolidated results for fiscal 2004 are projected as follows as of today.

1) Consolidated

Net sales:		¥ 1,160 billion yen (up 6.4%)
Income before income taxes:		¥ 40 billion yen (up 210.0%)
Net income:		¥ 18 billion yen (up 498.2%)

2) Non-consolidated

Net sales:		¥ 400 billion yen (up 6.1%)
Ordinary profit:		¥ 17 billion yen (up 34.6%)
Net income:		¥ 8.5 billion yen (up 143.8%)

Foreign exchange rates are premised at ¥114 to US$1 and ¥130 to EUR1 for fiscal 2004.

Cautionary Statement

The announcement set forth herein contains forward-looking statements which reflect management’s current views with respect to certain future events, including expected financial position, operating results, and business strategies. These statements can be identified by the use of terms such as “will,” “believes,” “should,” “projects” 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.

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 the Company’s principal products, owing to changes in the economic conditions in the Company’s principal markets; changes in exchange rates or the impact of increased competition; unanticipated cost or delays encountered in achieving the Company’s objectives with respect to globalized product sourcing and new Information Technology tools; uncertainties as to the results of the Company’s research and development efforts and its ability to access and protect certain intellectual property rights; and, the impact of regulatory changes and accounting principles and practices.

Condensed Consolidated Balance Sheets

(As of September 30, 2003 and 2002)

Millions of yen

	2004			2003			Changes Increase (Decrease)		As of March 31, 2003
	(A)			(B)			(A)-(B)
Assets
Current assets:
Cash and cash equivalents	¥	95,963		¥	56,396		39,567		¥	76,152
Time deposits		31			682		(651	)		531
Trade notes and accounts receivable		320,046			308,069		11,977			337,401
Inventories		238,193			260,451		(22,258	)		241,722
Other current assets		98,556			102,534		(3,978	)		95,819

Total current assets		752,789			728,132		24,657			751,625

Investments		67,673			63,393		4,280			52,417

Property, plant, and equipment—Less accumulated depreciation		386,139			415,698		(29,559	)		400,087

Other assets		94,139			94,150		(11	)		102,225

Total		1,300,740			1,301,373		(633	)		1,306,354

Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt (including current maturities of long-term debt)		188,359			180,626		7,733			214,292
Trade notes and accounts payable		193,201			176,157		17,044			174,904
Income taxes payable		5,159			4,594		565			6,516
Other current liabilities		120,986			117,851		3,135			118,972

Total current liabilities		507,705			479,228		28,477			514,684

Long-term liabilities		351,049			389,786		(38,737	)		368,101

Minority interests		36,507			49,236		(12,729	)		28,203

Shareholders’ equity:
Common stock		67,870			67,870		—			67,870
Capital surplus		135,683			117,439		18,244			135,686
Retained earnings		234,882			230,155		4,727			228,446
Accumulated other comprehensive income (loss) (*)		(29,251	)		(28,947	)	(304	)		(32,981	)
Treasury stock		(3,705	)		(3,394	)	(311	)		(3,655	)

Total shareholders’ equity—net		405,479			383,123		22,356			395,366

Total	¥	1,300,740		¥	1,301,373		(633	)	¥	1,306,354


	2004			2003			Changes Increase (Decrease)		As of March 31, 2003
(*) Accumulated other comprehensive income (loss):
Foreign currency translation adjustments	¥	(23,600	)	¥	(18,000	)	(5,600	)	¥	(16,929	)
Net unrealized holding gains on securities available for sale		9,765			2,781		6,984			1,263
Pension liability adjustments		(14,649	)		(11,876	)	(2,773	)		(15,478	)
Net unrealized holding gains (losses) on derivative instruments		(767	)		(1,852	)	1,085			(1,837	)

Condensed Consolidated Statements of Income

(For the six months ended September 30, 2003 and 2002)

Millions of yen

	2004			2003			Changes Increase (Decrease)				The entire FY2003
	(A)			(B)			(A)-(B)			%
Revenues
Net sales	¥	567,671		¥	518,429			49,242		9.5	¥	1,089,804
Interest and other income		6,479			7,753			(1,274	)			13,436

Total		574,150			526,182			47,968		9.1		1,103,240

Costs and expenses
Cost of sales		417,144			384,909			32,235				815,557
Selling, general and administrative		122,285			119,160			3,125				241,069
Interest		7,161			7,117			44				14,693
Other		6,068			9,344			(3,276	)			19,016

Total		552,658			520,530			32,128		6.2		1,090,335

Income before income taxes, minority interests, and equity in earnings		21,492			5,652			15,840		280.3		12,905

Income taxes		9,719			2,611			7,108				5,968

Minority interests in (income) of consolidated subsidiaries		(1,765	)		(1,123	)		(642	)			(2,877	)

Equity in earnings (losses) of affiliated companies		(598	)		205			(803	)			(786	)

Income before cumulative effect of change in accounting principle		9,410			2,123			7,287		343.2		3,274

Cumulative effect of change in accounting principle (*Note2)		—			(265	)		265				(265	)

Net income	¥	9,410		¥	1,858		¥	7,552		406.5	¥	3,009

Notes: 1) Comprehensive income (loss) for the six months ended September 30, 2003, 2002 and the entire FY2003 ended March 31, 2003 were 13,140 million yen, (8,696) million yen, and (11,579) million yen respectively.

2) Goodwill impairment charges as of April 1, 2002 from the adoption of SFAS142.

Condensed Consolidated Statements of Cash Flows

(For the six months ended September 30, 2003 and 2002)

Millions of yen

	2004			2003			Changes Increase (Decrease)			The entire FY2003
	(A)			(B)			(A)-(B)
Operating activities
Net income	¥	9,410		¥	1,858		¥	7,552		¥	3,009
Depreciation and amortization		34,356			33,411			945			70,229
Decrease in trade receivables		10,920			32,555			(21,635	)		9,470
Decrease (increase) in inventories		(2,190	)		(706	)		(1,484	)		21,298
Increase (decrease) in trade payables		16,582			(14,182	)		30,764			(20,580	)
Others, net		573			(42,147	)		42,720			(35,169	)

Net cash provided by operating activities		69,651			10,789			58,862			48,257

Investing activities
Capital expenditures		(31,851	)		(39,471	)		7,620			(69,182	)
Proceeds from sales of property		7,771			1,756			6,015			18,627
Others, net		9,390			10,504			(1,114	)		14,537

Net cash used in investing activities		(14,690	)		(27,211	)		12,521			(36,018	)

Financing activities
Increase (decrease) in short—and long-term debt		(30,954	)		31,068			(62,022	)		25,291
Sales (purchase) of treasury stock, net		(49	)		(460	)		411			(721	)
Dividends paid		(2,978	)		(2,864	)		(114	)		(5,724	)

Net cash provided by (used in) financing activities		(33,981	)		27,744			(61,725	)		18,846

Effect of exchange rate change on cash and cash equivalents		(1,169	)		(318	)		(851	)		(325	)

Net increase in cash and cash equivalents		19,811			11,004			8,807			30,760
Cash and cash equivalents, beginning of period		76,152			45,392			30,760			45,392

Cash and cash equivalents, end of period	¥	95,963		¥	56,396		¥	39,567		¥	76,152

Basis of Financial Statements (Consolidated)

1) Changes in group of entities

Consolidated subsidiaries

Added:		Komatsu Deutschland GmbH and other 2 companies
Removed:		2 companies

Affiliated companies accounted for by the equity-method

Added:		1 company
Removed:		3 companies

2) Change of Accounting Policies: None

Business Segment Information

1. Information by Business Unit

(1) Sales and Segment Profit

(For the six months ended September 30, 2003 and 2002)

Millions of yen

	2004					2003						The entire FY2003
	Sales		Segment Profit		Margin %	Sales		Segment Profit (Loss)		Margin %		Sales		Segment Profit (Loss)		Margin %
Construction & Mining Equipment	413,462		24,756		6.0	374,301		13,622		3.6		774,460		28,990		3.7
Industrial Machinery, Vehicles and Others	134,834		5,145		3.8	121,955		2,840		2.3		274,536		8,841		3.2
Electronics	43,431		746		1.7	43,414		(46	)	(0.1	)	85,341		(849	)	(1.0	)
Subtotal	591,727		30,647		5.2	539,670		16,416		3.0		1,134,337		36,982		3.3
Corporate & Elimination	(24,056	)	(2,405	)	—	(21,241	)	(2,056	)	—		(44,533	)	(3,804	)	—
Total	567,671		28,242		5.0	518,429		14,360		2.8		1,089,804		33,178		3.0

Interest and other income			6,479					7,753						13,436
Interest expense			7,161					7,117						14,693
Other expenses			6,068					9,344						19,016
Consolidated income before income taxes, minority interests and equity in earnings (losses)			21,492					5,652						12,905

Notes:		1)		Sales amount of Construction and Mining Equipment, Industrial Machinery, Vehicles and Others and Electronics includes inter-unit transactions of 4,473, 19,488 and 95 millions of yen in 2004, 2,913, 18,265 and 63 millions of yen in 2003 and 6,620, 37,754 and 159 millions of yen in the entire FY2003, respectively.
		2)		Starting in the interim period under review, the name of “Others” has been changed to “Industrial Machinery, Vehicles and Others”.

(2) Assets, Depreciation, and Capital Expenditures

Millions of yen

	2004			2003
	As of Sept. 30, 2003	For the six months ended Sept. 30, 2003		As of Sept. 30, 2002	For the six months ended Sept. 30, 2002
	Assets	Depreciation and Amortization	Capital Expenditures	Assets	Depreciation and Amortization	Capital Expenditures
Construction & Mining Equipment	841,539	21,844	26,041	853,190	21,090	23,568
Industrial Machinery, Vehicles and Others	212,129	4,579	4,178	227,869	3,933	6,223
Electronics	164,022	7,114	7,149	173,414	7,235	5,095
Subtotal	1,217,690	33,537	37,368	1,254,473	32,258	34,886
Corporate & Elimination	83,050	—	—	46,900	—	—
Total	1,300,740	33,537	37,368	1,301,373	32,258	34,886

	The entire FY2003
	As of Mar. 31, 2003	For the fiscal year ended Mar. 31, 2003
	Assets	Depreciation and Amortization	Capital Expenditures
Construction & Mining Equipment	853,644	46,137	50,125
Industrial Machinery, Vehicles and Others	219,687	7,719	9,874
Electronics	165,090	14,966	10,474
Subtotal	1,238,421	68,822	70,473
Corporate & Elimination	67,933	—	—
Total	1,306,354	68,822	70,473

2. Information by Region

(1) Sales and Segment Profit

(For the six months ended September 30, 2003 and 2002)

Millions of yen

	2004					2003					The entire FY2003
	Sales		Segment Profit		Margin %	Sales		Segment Profit		Margin %	Sales		Segment Profit (Loss)		Margin %
Japan	368,054		16,334		4.4	339,091		10,043		3.0	719,835		25,748		3.6
Americas	135,689		1,867		1.4	137,953		107		0.1	268,012		(1,913	)	(0.7	)
Europe	72,269		3,545		4.9	69,550		1,707		2.5	142,405		2,793		2.0
Others	93,487		8,058		8.6	66,051		3,122		4.7	149,614		8,971		6.0
Subtotal	669,499		29,804		4.5	612,645		14,979		2.4	1,279,866		35,599		2.8
Corporate & Elimination	(101,828	)	(1,562	)	—	(94,216	)	(619	)	—	(190,062	)	(2,421	)	—
Total	567,671		28,242		5.0	518,429		14,360		2.8	1,089,804		33,178		3.0

Note:

Sales amount of each region segment includes inter-segment transactions.

(2) Assets

(As of September 30, 2003 and 2002)

Millions of yen

	2004				2003				As of March 31, 2003
	Assets		Ratio (%)		Assets		Ratio (%)		Assets		Ratio (%)
Japan	932,597		71.7		943,187		72.5		930,650		71.2
Americas	301,201		23.2		328,263		25.2		314,605		24.1
Europe	79,652		6.1		87,198		6.7		89,744		6.9
Others	120,944		9.3		112,955		8.7		122,253		9.4
Subtotal	1,434,394		110.3		1,471,603		113.1		1,457,252		111.6
Corporate & Elimination	(133,654	)	(10.3	)	(170,230	)	(13.1	)	(150,898	)	(11.6	)
Total	1,300,740		100.0		1,301,373		100.0		1,306,354		100.0

3. Overseas Sales

(1) For the six months ended September 30, 2003

Millions of yen

	Americas	Europe	Others	Total
Overseas sales	131,336	74,677	135,599	341,612
Consolidated net sales	—	—	—	567,671
Ratio of overseas sales to consolidated net sales (%)	23.1	13.2	23.9	60.2

(2) For the six months ended September 30, 2002

Millions of yen

	Americas	Europe	Others	Total
Overseas sales	128,118	71,728	106,659	306,505
Consolidated net sales	—	—	—	518,429
Ratio of overseas sales to consolidated net sales (%)	24.7	13.8	20.6	59.1

(3) For the fiscal year ended March 31, 2003

Millions of yen

	Americas	Europe	Others	Total
Overseas sales	251,371	145,455	234,978	631,804
Consolidated net sales	—	—	—	1,089,804
Ratio of overseas sales to consolidated net sales (%)	23.1	13.3	21.6	58.0

Notes:	1)	Overseas sales represent the sales of the Company and its consolidated subsidiaries to areas other than Japan.
	2)	Area segments are separated by the geographic proximity. Main countries or areas of each segment above are as follows:
		a) Americas: U.S.A. b) Europe: Germany and U.K. c) Others: China, Australia, and Southeast Asia

Consolidated Sales by Operation

(For the six months ended September 30, 2003 and 2002)

Millions of yen

		2004		2003		Changes Increase (Decrease)				The entire FY2003
		Sales	Ratio (%)	Sales	Ratio (%)	Sales		(%)		Sales	Ratio (%)
Construction & Mining Equipment	Japan	119,309	21.0	112,790	21.8	6,519		5.8		235,851	21.6
	Overseas	289,680	51.0	258,598	49.9	31,082		12.0		531,989	48.9
		408,989	72.0	371,388	71.7	37,601		10.1		767,840	70.5
Industrial Machinery, Vehicles and Others	Japan	83,581	14.7	75,666	14.6	7,915		10.5		177,391	16.3
	Overseas	31,765	5.6	28,024	5.4	3,741		13.3		59,391	5.4
		115,346	20.3	103,690	20.0	11,656		11.2		236,782	21.7
Electronics	Japan	23,169	4.1	23,468	4.5	(299	)	(1.3	)	44,758	4.1
	Overseas	20,167	3.6	19,883	3.8	284		1.4		40,424	3.7
		43,336	7.7	43,351	8.3	(15	)	(0.0	)	85,182	7.8
Total	Japan	226,059	39.8	211,924	40.9	14,135		6.7		458,000	42.0
	Overseas	341,612	60.2	306,505	59.1	35,107		11.5		631,804	58.0
		567,671	100.0	518,429	100.0	49,242		9.5		1,089,804	100.0

Financial Instruments

(As of September 30, 2003 and 2002)

1. Derivative Financial Instruments

Millions of yen

2004

2003

As of March 31, 2003

Contract,
Notional
Amounts

Carrying
Amounts

Estimated
Fair
Value

Contract,
Notional
Amounts

Carrying
Amounts

Estimated
Fair
Value

Contract,
Notional
Amounts

Carrying
Amounts

Estimated
Fair Value

Foreign exchange contracts and option contracts

7,596

663

14,273

(602

)

(602

)

(2,375

)

(1,620

)

(1,620

)

As of Mar 31, 2003

Purchase of foreign currencies

The equivalent of yen 37,770

Sale of foreign currencies

The equivalent of yen 31,262

Option contracts (Purchased)

The equivalent of yen 3,772

Option contracts (Sold)

The equivalent of yen 361

As of Sept 30, 2002

Purchase of foreign currencies

The equivalent of yen 22,968

Sale of foreign currencies

The equivalent of yen 31,985

Option contracts (Purchased)

The equivalent of yen 4,017

Option contracts (Sold)

The equivalent of yen 1,238

As of Sept 30, 2003

Purchase of foreign currencies

The equivalent of yen 24,401

Sale of foreign currencies

The equivalent of yen 28,587

Option contracts (Purchased)

The equivalent of yen 3,411

Interest rate swap, currency swap and Interest rate cap agreements

226,611

1,570

261,766

(4,706

)

(4,706

)

245,973

(3,706

)

(3,706

)

Note: Contract, notional amounts of forward exchange contracts are net amounts (“sale” minus “purchase”).

2. Marketable Securities

(As of September 30, 2003 and 2002)

Millions of yen

	2004	2003	As of March 31, 2003
Investment Securities available for sale
Marketable equity securities
Cost	17,858	23,171	12,602
Fair value	36,028	29,751	16,474
Unrealized holding gains, net	18,170	6,580	3,872
Marketable debt securities
Cost	10	1,407	10
Fair value	10	1,407	10
Unrealized holding gains, net	0	0	0

Financial Highlights of the Parent Company

The following financial information is prepared based on the non-consolidated financial results of the parent company in accordance with generally accepted accounting principles and practices in Japan.

(For the six months ended September 30, 2003 and 2002)

Millions of yen & US dollars

except per share amounts

	2004					2003		Changes (2004-2003) Increase (Decrease)			The entire FY 2003
	Yen		Dollar			Yen		Yen		(%)	Yen
Net sales	¥	190,864	$	1,720			174,491		16,373	9.4	¥	376,912
Japan		91,173		821			86,877		4,296	4.9		198,788
Overseas		99,691		898			87,613		12,077	13.8		178,124
Operating profit		8,738		79			2,548		6,190	242.9		11,259
Ordinary profit		9,956		90			4,864		5,091	104.7		12,634
Net income		5,266		47			4,426		840	19.0		3,486
Net income per share
Basic	¥	5.31		4.8	¢	¥	4.64	¥	0.67		¥	3.50

Notes:

1) The translation of Japanese yen amounts into United States dollar amounts is included solely for convenience and has been made for 2004 at the rate of ¥ 111 to $1, the approximate rate of exchange at September 30, 2003.

2) The numbers of average common shares outstanding were as follows:

•

September 30, 2003: 992,484,365

•

September 30, 2002: 953,930,723

•

March 31, 2003: 973,306,865

Dividends

(For the six months ended September 30, 2003 and 2002)

	2004	2003
Cash dividends per share (Yen)
Interim (six months)	3.00	3.00
Annual (twelve months)	—	6.00

Financial Position

(As of September 30, 2003 and 2002)

	2004	2003	As of March 31, 2003
Total assets (¥ million)	735,497	676,642	718,869
Shareholders’ equity (¥ million)	454,444	419,515	444,344
Equity ratio (%)	61.8	62.0	61.8
Shareholders’ equity per share (Yen)	457.90	440.04	447.61

Note:

The numbers of common shares outstanding were below:

•

September 30, 2003: 992,446,014

•

September 30, 2002: 953,351,618

•

March 31, 2003: 992,528,649

Sales by Operation

(For the six months ended September 30, 2003 and 2002)

Millions of yen

		2004		2003		Changes (2004 - 2003) Increase (Decrease)		The entire FY2003
		Sales	Ratio (%)	Sales	Ratio (%)	Sales	(%)	Sales	Ratio (%)
Construction & Mining Equipment	Japan	71,514	37.5	68,960	39.5	2,554	3.7	146,614	38.9
	Overseas	94,714	49.6	83,746	48.0	10,967	13.1	169,024	44.8
		166,229	87.1	152,707	87.5	13,522	8.9	315,639	83.7
Industrial Machinery, Vehicles and Others	Japan	19,658	10.3	17,916	10.3	1,741	9.7	52,174	13.8
	Overseas	4,976	2.6	3,866	2.2	1,109	28.7	9,099	2.4
		24,634	12.9	21,783	12.5	2,851	13.1	61,273	16.3
Total	Japan	91,173	47.8	86,877	49.8	4,296	4.9	198,788	52.7
	Overseas	99,691	52.2	87,613	50.2	12,077	13.8	178,124	47.3
		190,864	100.0	174,491	100.0	16,373	9.4	376,912	100.0

Outlook for FY2004

(From April 1, 2003 to March 31, 2004)

Millions of yen

		Net Sales		Ordinary Income		Net Income
The entire FY2004		400,000		17,000		8,500

(end)

For Immediate Release

Komatsu Ltd.

Corporate Communications Dept.

Tel: +81-(0)3-5561-2616

Date: November 7th, 2003

URL: http://www.komatsu.com/

Komatsu Revises Projections for Fiscal 2004

In view of its recent business performance and other factors, Komatsu Ltd. has revised the projections for fiscal 2004 (April 1, 2003 – March 31, 2004), which the Company announced on May 7, 2003 when it disclosed the business results for fiscal 2003, ended March 31, 2003. New revisions are presented below.

1. Reasons for the Revisions

For the mainstay business of construction and mining equipment, demand took on a note of recovery sooner than initially projected in the major markets of North America, Europe and Japan. In addition, demand for equipment is also expanding at a rate faster than earlier projected in China where infrastructure development is in full swing as well as in CIS where many resource and energy development projects are under way. Having built a lean and strong structure by carrying out the Reform of Business Structure project for the last few years, Komatsu is taking these market developments as a great opportunity to boost profits.

Based on these reasons above, Komatsu has revised both consolidated and non-consolidated business results for fiscal 2004, ending March 31, 2004, upward as follows.

2. New Revisions for Fiscal 2004

1) Consolidated

Millions of yen

	Previous Projection (A)	New projection (B)	Change		Results for fiscal 2003*
	Previous Projection (A)	New projection (B)	(B-A)	(%)	Results for fiscal 2003*
Net sales	1,115,000	1,160,000	45,000	4.0	1,089,804
Income before taxes	28,000	40,000	12,000	42.9	12,905
Net income	11,000	18,000	7,000	63.6	3,009

*For reference only

2) Non-consolidated

Millions of yen

	Previous projection (A)	New projection (B)	Change		Results for fiscal 2003*
	Previous projection (A)	New projection (B)	(B-A)	(%)	Results for fiscal 2003*
Net sales	360,000	400,000	40,000	11.1	376,912
Ordinary profit	11,000	17,000	6,000	54.5	12,634
Net income	6,000	8,500	2,500	41.7	3,486

*For reference only

3. Results for the Interim Period of Fiscal 2004

The results for the interim period of fiscal 2004 (April 1, 2003 – September 30, 2003) in comparison with the previous projection announced on May 7, 2003 are shown below.

1) Consolidated

Millions of yen

	Previous projection (A)	Results (B)	Change		Interim results for fiscal 2003*
	Previous projection (A)	Results (B)	(B-A)	(%)	Interim results for fiscal 2003*
Net sales	540,000	567,671	27,671	5.1	518,429
Income before taxes	11,000	21,492	10,492	95.4	5,652
Net income	3,000	9,410	6,410	213.7	1,858

*For reference only

2) Non-consolidated

Millions of yen

	Previous projection (A)	Results (B)	Change		Interim results for fiscal 2003*
	Previous projection (A)	Results (B)	(B-A)	(%)	Interim results for fiscal 2003*
Net sales	170,000	190,864	20,864	12.3	174,491
Ordinary profit	6,000	9,956	3,956	65.9	4,864
Net income	3,000	5,266	2,266	75.5	4,426

*For reference only

(end)

For Immediate Release

Komatsu Ltd.

Corporate Communications Dept.

Tel: +81-(0)3-5561-2616

Date: November 7th, 2003

URL: http://www.komatsu.com/

KOMATSU Launches the Mid-Range Management Plan

“Move The World. KOMATSU 5-800”

Komatsu has recently embarked on the “Move The World. KOMATSU 5-800” mid-range management plan for the year ending March 31, 2006. With “Move The World,” we express our firm determination to “move” the hearts of our customers around the world, as each and every employee of the Komatsu Group remains committed in Quality and Reliability and provides products and services that customers are happy to own. By doing so, we will work to accomplish record-high operating income of ¥800 Oku (Japanese denomination for 100 million) or ¥80 billion for the fiscal 2006 ending March 31, 2006. The number “5” means that we are going to achieve ROA of 5%.

Goals of the “Move The World. KOMATSU 5-800” Plan (Consolidated)

		Fiscal Year 2006
Net sales		¥1,250 billon
Operating profit		¥80 billion
R O A		5.0%
Net Debt-to Equity Ratio		Below one

Note:

Operating profit stated above is the sum of segment profit. In conformity with Japanese accounting principles, operating income is obtained by subtracting cost of sales and selling, general and administrative expenses from net sales.

ROA = Pre-tax income / ((Total assets at the beginning of the year + Total assets at the end of the year) / 2)

Net DER = (Interest-bearing debt – Cash and time deposits) / Shareholders’ equity

Basic Stance for the “Move The World. KOMATSU 5-800” Plan

Komatsu had faced tough conditions for the past few years, represented by prolonged downturn of the world economies. Under such an environment, since October 2001, Komatsu has worked to strengthen its business practices by aggressively carrying out the Reform of Business Structure project, which centers on the New Growth Strategy for the Construction and Mining Equipment Business, reduction of fixed costs and substantial cutbacks on production costs. As a result, Komatsu made the first step for a V-shaped recovery of its business performance for the previous fiscal year.

We have set a clear management goal to renew our record-high operating income of ¥78.7 billion for the fiscal year ended December 31, 1982. To accelerate the recovery speed of our business performance, we will seize the opportunities of improving market conditions with self-driven, decisive actions, as we push forward the Reform of Business Structure project, which has generated successful results. All Komatsu Group employees worldwide, including top management, are resolutely determined to work with speed on above tasks and strive to accomplish management goals.

To accomplish the above management goals, we have identified two concepts, i.e., implementation of management in speed and realization of a business structure for high profitability. We will establish a corporate strength capable of meeting changes in the business environment promptly and accurately across the board, from management decision-making to everyday work for each and every employee. We will also continue our efforts to reform our business structure (by reducing fixed and production costs, etc.), facilitate efficient utilization of assets and further strengthen earnings power.

Management Strategy

In addition to construction and mining equipment, we have placed “industrial-use machinery,” such as metal-sheet machines and forging presses, forklift trucks and forestry equipment, as Komatsu’s core business, in which we can demonstrate advantages of our superior manufacturing. In the “Move The World. KOMATSU 5-800” mid-range management plan, there will be no change in what Komatsu has to do. We are placing our utmost efforts on the following five management tasks.

1) To accelerate the implementation of the New Growth Strategy for the Construction and Mining Equipment Business

Demand for construction and mining equipment has entered a recovery phase in North America, the largest in the world. We also anticipate that demand for our equipment will continue to grow steadily in a mid-range in developing markets such as China, Russia, Southeast Asia and the Middle East, where Komatsu has enjoyed a strong market position.

Against this backdrop, we are going to reinforce our product and regional strategies and demonstrate the advantages of our extensive international networks as a full-line manufacturer in order to enhance our global market position further.

In Japan, we are accelerating the development of new IT-based, world’s pacesetting business models to expand our business in the downstream markets of rental and used equipment, parts and service, as we take advantage of a rich stock of Komatsu machines owned and used by our customers.

2) To reinforce our competitiveness based on the “Spirit of Manufacturers”

Manufacturing is the source of Komatsu’s competitiveness. We will further promote our successful reform efforts based on the “Spirit of Manufacturers” commitment. We will converge our efforts to develop Unique and Unrivaled products, achieve the top cost-competitive level in each region of the world where we operate, and build on our unique manufacturing technologies.

3) To facilitate selective focus on the criteria of technological advantage and profitability

We will further promote our selective focus by evaluating all business operations of the Komatsu Group by the criteria of progress of differentiation based on technological advantages and above-the-average profitability of the respective industries which they belong to.

For research, which is the key for innovation, we have shifted our R&D force to the fields of construction and mining equipment from electronics, strengthening our technological capabilities in the core business.

4) To reinforce our competitive foundation based on technological capabilities and financial position

The basics of competitiveness are technological capabilities (future-leading and today’s forefront technologies), strong financial structure and flexible and agile organization and groups with the spirit of challenge held by employees.

We will continue to reinforce our competitive foundation by keeping a specified level of investment in our R&D operation, making our financial structure lean and strong and introducing systems and programs to encourage employees to demonstrate their spirit of challenge.

5) To further strengthen corporate governance

While ensuring neutrality, soundness, transparency and objectivity of management in addition to effectiveness, Komatsu is also going to establish corporate ethics and engage in environmental conservation and safety management even more seriously than before. We are working to maximize the corporate value of the Komatsu Group and make Komatsu a company that will enjoy the greater trust of shareholders and all other stakeholders.

The cornerstone of Komatsu’s management lies in its commitment to Quality and Reliability in order to maximize the corporate value of the Company. This commitment is not limited to delivering safe and innovative products and services which incorporate the viewpoints of customers. It is our most important task to constantly enhance the Quality and Reliability, in a broader sense of the term, of all organizations, businesses, employees and management of the entire Group.

As we push forward the “Move The World. KOMATSU 5-800” mid-range management plan, we remain committed to further enhancing the Quality and Reliability of management and the corporate value of the Company.

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