Hitachi Construction Machinery

Global

Explanatory Meeting for the Year Ended March 31, 2014 Outline of Answes to Main Questions

Q: How do you view the mining machinery operation? The Demand outlook for mining machinery in FY2014 seems to be at the same level with the previous year. However, the net sales outlook of Hitachi Construction Machinery in FY2014 suggests an increase to ¥135 billion as compared to FY2013 result of ¥126.8 billion. Please tell us about the background of the presented sales plan.

A: The market remains adverse due to the downturn in resource prices, and we anticipated that the demand would be at the same level as the previous fiscal year. On the other hand, in accordance with the FY2014 plan of the Company, we are earnestly striving to expand sales of the full line-up of dump trucks. Also, we have an order backlog of approximately 30% in ultra-large hydraulic excavators and a backlog of approximately 50% in dump trucks, including the orders with originally scheduled deliveries in FY2013. These order backlogs are incorporated to the presented sales plan.

Q: Demand in March, after the Chinese New Year, decreased year-on-year, and there is a sense of deceleration. Now that FY2014 has started, how do you view the situation in April?

A: Since the beginning of 2014, demands have slowed down, particularly affected by the face that local government-related projects have been cancelled or postponed due to the change in the government’s policy putting more emphasis on “reform than growth.” We expect that the demand in FY2014 will be almost at the same level as the previous year and estimate that the demand in April will also be at the same level year-on-year.

Q: What would be the degree of foreign exchange sensitivity?

A: For the foreign exchange sensitivity on operating income in FY2014, we expect a fluctuation of 1 yen in USD to have an impact of ¥1.5 billion and ¥400 million in EUR, and a fluctuation of ¥0.1 in RMB is expected to have a ¥700 million impact.

Q: Regarding comparison of consolidated profit & loss in the FY2013 result, “Others (Mix Account)” turned out to be negative ¥15 billion. Please tell us the breakdown of this number.

A: “Others (Mix Account)” consists of declined profits of approximately ¥8.5 billion affected by a decrease in the mining operation constituent ratio, ¥3 billion affected by a decrease in the sales constituent ratio of the Americas, and the rest caused by the difference in models and regions that brought profits in the relevant fiscal year.

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