Hitachi Construction Machinery


Explanatory Meeting for Second Quarter Ended September 30, 2011 Outline of Answers to Main Questions

Q: What were factors behind the earnings in the 2nd Quarter that outperformed the previously announced forecast in every profit item?

A: While the sales underperformed the forecast due to the decrease in demand in China and the appreciation of the yen, the operating income, ordinary income and net income all outperformed the previously announced forecast thanks to the strong performance of the high-margin parts and services business and the decrease in costs.

Q: What is your outlook for the future demand for hydraulic excavators in China?

A: The demand in China is basically slowing due to their government’s financial tightening policy etc. Our latest outlook for the demand indicates a decrease of 20% from that of the previous year down to 89,000 units. As for the timing of recovery in demand, we believe, at this point, the recovery will start in or around next spring although it also depends on their government’s financial easing.

Q: When the demand for hydraulic excavators is decreasing in China, what are the demand trends in other regions?

A: With some exceptions, the demand in other regions remains solid. Especially in Southeast Asia, Russia and CIS, Japan and North America, we expect the demand to exceed that of the previous year.

Q: What is the situation regarding orders for mining machinery?

A: The mining-related demand remains solid. We are receiving many orders for ultra-large hydraulic excavators and mining dump trucks and also have a backlog of orders for a year ahead or so.

Q: Despite the appreciation of the yen and the decrease in demand in China, your latest forecast for earnings has not changed from the previously announced numbers. Are they realistic and feasible?

A: Products we had planned for China are being sold to other stronger markets. In addition, among other efforts, we continue to improve sales prices in each region, decrease the costs of materials and reduce expenses. We also continue to focus on the high-margin parts and services business and thus aim to achieve the financial targets for the full year.

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