Hitachi Construction Machinery

Global

Explanatory Meeting for the Second Quarter Ended September 30, 2013 Outline of Answers to Main Questions

Q: While the mining market remains severe, the year-on-year decreasing ratio of mining demand forecasted by your company is lower than that of competitors. What are the reasons for the difference? And at this moment in time, what is the percentage of the confirmed orders in the sales forecast for the 2nd half of FY 2013? Also, in the current backlog of orders, what are the ratios of each mineral?

A: We think the difference is due to the categorization of the product family and class that we see as mining demand. Our company categorizes two products as mining machineries; over 100t machine weight class ultra-large hydraulic excavators, and over 150t net payload class dump trucks. We estimate that the decreasing ratio of the demand of other products including under 150t class dump truck and large-sized wheel loader is large. About 70% of the sales forecasts for the 2nd half of FY 2013 are confirmed orders. The ratios of each mineral in the current backlog of orders are: Coal: about 30%, Iron-ore: about 30%, and Gold & Copper: about 10%, respectively.

Q: The environment of the mining market has been changing significantly. Are you planning to carry out further downsizing of business, such as restructuring?

A: Although the mining market has been weaker compared to the middle of the previous fiscal year, since we are promoting the actions to enter into a new market and enhance product lineup and mining machinery support, we have no plan to downsize the current manpower and assets.

Q: In the domestic market, what is the condition behind the increase in crane demand?

A: Demand for cranes increases as the number of building works increases along with the progress of rehabilitation work.

Q: How large is the impact caused by foreign exchange rate fluctuations on net sales?

A: The actual amount for the 1st half of FY 2013 was 42 billion yen, and we expect about 64 billion yen for the full year of FY 2013.

A: The profit growth ratio is larger than that of net sales in both periods from the 1st quarter to the second quarter, and from the 1st half of the year to the second half of the year. What would be the reason for this?

A: Because the profit growth ratio of HCM Japan has been increasing on a quarterly basis as the result of structure improvement that we conducted for domestic operation, and the other reason is that we have been gradually seeing the effect of cost reduction.

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