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October 25, 2017
© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.
Regional Market Environments and Projections
Business Result for the Second Quarter ended September 30, 2017
Executive Vice President and Executive Officer Yasushi Ochiai
Hitachi Construction Machinery Co., Ltd.
2
10 14 23 28
40 31
24 23 24 26 15
23
27 25
27 31
30 35 34 37
10
13
19 24
24 27
26 25 26
27
29
40
48 44
36 32
32 41 43
43
15
28
38 39
34
32
24
19 20 20
73
111
70
42 50
30
19
30 39
42
151
230 225
202
211
183
155
173
185
194
0
25
50
75
100
125
150
175
200
225
250
'09 '10 '11 '12 '13 14 '15 '16 '17 '17
(K Units)
Global Demand Trend for Hydraulic Excavators ＊Estimates by HCM , Excluding Chinese manufacturer
(Distributing, copying, or forwarding prohibited)
Emerging Countries 2017：54% (Y-o-Y Change:+2%)
*Emerging Countries: China, Asia/Oceania, and others
1
FY
Japan
Western Europe
North America
Asia Oceania
Others
Total
China
Previous Outlook
Present Outlook
'16 '17
Previous
Outlook
'17 Present
Outlook
+12% +7% +12%
+58% +29% +39% Russia, CIS,
E Europe +23% +14% +15%
Africa +13% -12% -12% Middle East -45% +3% +3%
Latin America -15% -2% -2%
-18% +0% +0% India +44% +16% +16%
Indonesia +36% +14% +29% Others +16% -5% -10%
+28% +5% +5%
-4% +5% +9%
+17% -5% +3%
-4% +4% +13%
China
N America
W Europe
Japan
Total
Others
Asia & Oceania
Year-on-Year Change
3
-150%
-100%
-50%
0%
50%
100%
150%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
-150%
-100%
-50%
0%
50%
100%
150%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q-40%
-20%
0%
20%
40%
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
2
-150%
-100%
-50%
0%
50%
100%
150%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
◇While public investment and housing investment decreased, capital investment has recovered. ◇Regarding demand for construction machinery from April to September 2017, demand for hydraulic
excavators and wheel loaders significantly increased (41% and 31% y-o-y, respectively). This was, driven by last-minute demands in anticipation of the new emissions regulations.
<Japan>
(K units) (K units)
Market Environment: Housing/Public Spending and Capex (y-o-y)
Demand Trend for Hydraulic Excavators Demand Trend for Wheel Loaders
(K units) Demand Trend for Mini Excavators
*Estimates by HCM
*Estimates by HCM *Estimates by HCM
New housing starts (number of houses)
Capex （Orders for machinery, excluding foreign demands)
Public spending （Public work orders）
*Source: MLIT, Cabinet Office, and Construction
Surety Company
4
-1%
0%
1%
2%
CY12/1Q
2Q
3Q
4Q
CY13/1Q
2Q
3Q
4Q
CY14/1Q
2Q
3Q
4Q
CY15/1Q
2Q
3Q
4Q
CY16/1Q
2Q
3Q
4Q
CY17/1Q
2Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
3
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
◇GDP showed solid growth throughout the Euro zone. ◇Demand for hydraulic excavators and wheel loaders remained brisk. Demand for mini excavators
significantly increased (20% y-o-y), mainly in the UK and Italy.
<Europe>
*Source: IMF, etc
(K units) (K units)
(K units)
Demand Trend for Hydraulic Excavators Demand Trend for Wheel Loaders
Demand Trend for Mini Excavators GDP Growth Rate in Major Countries (y-o-y)
*Estimates by HCM
*Estimates by HCM *Estimates by HCM
France
UK
Germany
Italy
Others
UK
Germany
France
EUR zone
France
UK
Germany
Italy
Others
France
UK
Germany
Italy
Others
5
Oil exchange
0 hour
500 1000 1500
Oil exchange
Proposal for preventive maintenance based on oil error
Customer
To be launched in Europe and Australia in October 2017
• Reduction of machine down time
(improved machine availability)
• Reduction of life cycle cost
(failures of components are mostly caused by oil)
Customer benefits
New service "ConSite OIL" has been launched.
24-7 monitoring by oil sensor
"Direct" sensing of oil error
Engine oil
HCM Dealer
Industry first
Hydraulic oil
Equipped with oil- monitoring sensor
Occurrence of error
Timing and data of oil exchange can be
grasped.
During normal operation
4
Patent pending
Failure prediction of engine and hydraulic components
《Topic》
6
75%
100%
125%
150%
CY
12
/1
Q
2Q
3Q
4Q
CY
13
/1
Q
2Q
3Q
4Q
CY
14
/1
Q
2Q
3Q
4Q
CY
15
/1
Q
2Q
3Q
4Q
CY
16
/1
Q
2Q
3Q
4Q
CY
17
/1
Q
2Q
3Q
Residential Non-residential State & local
0
5
10
15
20
FY12/1Q
2Q
3Q
4Q
FY13/1Q
2Q
3Q
4Q
FY14/1Q
2Q
3Q
4Q
FY15/1Q
2Q
3Q
4Q
FY16/1Q
2Q
3Q
4Q
FY17/1Q
2Q
-100%
-50%
0%
50%
100%
0
5
10
15
20
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
-100%
-50%
0%
50%
100%
-10%
-5%
0%
5%
10%
0
500
1000
1500
2000
CY
12
/1
Q
2Q
3Q
4Q
CY
13
1Q
2Q
3Q
4Q
CY
14
/1
Q
2Q
3Q
4Q
CY
15
/1
Q
2Q
3Q
4Q
CY
16
/1
Q
2Q
3Q
4Q
CY
17
/1
Q
2Q
3Q
＊Bureau of Economic Census, US Census Bureau
＊Bureau of Economic Census, US Census Bureau
5
◇Housing starts remained brisk, and residential construction spending continuously increased. ◇Demand for hydraulic/mini excavators continuously increased (13% and 14% y-o-y, respectively).
<North America>
(K units) (K units)
(K units) Demand Trend for Mini Excavators
Demand Trend for Hydraulic Excavators
Construction Spending in US (y-o-y)
GDP Growth Rate, Housing Starts in US
*Estimates by HCM
*Estimates by HCM
GDP (y-o-y/Right axis)
（Seasonally adjusted）
Housing starts (Left axis)
7
0
10
20
30
40
50
60
70
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
-150%
-100%
-50%
0%
50%
100%
150%
＊当社推定
0%
10%
20%
30%
40%
CY
11
/1
Q2
Q3
Q4
QC
Y1
2/1
Q2
Q3
Q4
QC
Y1
3/1
Q2
Q3
Q4
QC
Y1
4/1
Q2
Q3
Q4
QC
Y1
5/1
Q2
Q3
Q4
QC
Y1
6/1
Q2
Q3
Q4
QC
Y1
7/1
Q2
Q3
Q
0
5
10
15
20
（％）
Domestic
Foreign
（千台）
North China 226%/237%/229%/202%
North West 89%/72%/150%/128%
South West 82%/105%/110%/72%
North East 2%/114%/146%/153%
South Middle China 64%/97%/101%/92%
East China 103%/124%/162%/99%
Total China 83%/109%/132%/102%
FY16 3Q/4Q FY17 1Q/2Q
(6.8%) (5.5 %)
20t and below
20t over
～6t
20t
10～15t
21～29t
30～39t
40t～
6～10t
6
＊当社推定
◇The GDP growth rate from April to September 2017 remained stable at around 6.8%. ◇Significant increase in demand for hydraulic excavator continued (2.2 times y-o-y), mainly due to
increased public investment.
0%
20%
40%
60%
80%
100%
FY14
1H 2H
FY15
1Q 2Q 3Q 4Q
FY16
1Q 2Q 3Q 4Q
FY17
1Q 2Q
<China>
GDP and Fixed Asset Investment
Demand Trend for Hydraulic Excavators
Quarterly Demand for Hydraulic Excavators by Region (y-o-y)
Demand Composition by Class for Mini Excavators and Hydraulic Excavators
*Estimates by HCM Foreign manufactures
only
*Estimates by HCM Y-o-y comparison data is limited to foreign manufactures only
＊National Bureau of Statistics of China
(y-o-y)
GDP (Right axis)
Fixed Asset Investment (y-o-y) (Left axis)
*Foreign manufactures only
*Estimates by HCM
8
0
5
10
15
4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月 4月 5月 6月 7月 8月 9月
-80%
-40%
0%
40%
80%
120%
160%
200%
240%
280%
0
1
2
3
4
5
6
7
8
9
4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月
【Chinese New Year】
Feb 8, 2016
Jan 28, 2017
Feb 16, 2018
FY2015 Actual
7
y-o-y
FY2016 Actual
-15% +58% +83% +109%
FY2017 (Forecast)
+132%
* Actual result (From April to September)
+102%
<(Supplementary Information) China>
FY2015 FY2016 FY2017
Monthly Demand Trend for Hydraulic Excavators (Compared to the same month in the previous year)
(K units) (Foreign Manufactures only)
*Estimates by HCM
Demand Trend for Hydraulic Excavators (y-o-y) *Estimates by HCM
(K units) (Foreign Manufactures only)
Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.
Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep.
9
0
2
4
6
8
10
FY
12
/1
Q2
Q3
Q4
QFY
13
/1
Q2
Q3
Q4
QFY
14
/1
Q2
Q3
Q4
QFY
15
/1
Q2
Q3
Q4
QFY
16
/1
Q2
Q3
Q4
QFY
17
/1
Q2
Q
-200%
-150%
-100%
-50%
0%
50%
0
1
2
3
4
5FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
-150%
-100%
-50%
0%
50%
100%
150%
8
-10
-5
0
5
10
15
20
CY
12
/1
Q
2Q
3Q
4Q
CY
13
/1
Q
2Q
3Q
4Q
CY
14
/1
Q
2Q
3Q
4Q
CY
15
/1
Q
2Q
3Q
4Q
CY
16
/1
Q
2Q
3Q
4Q
CY
17
/1
Q
2Q
(％)
◇Demand for hydraulic excavator significantly increased in Indonesia, Malaysia and Australia. Despite a decrease in Thailand, demand has increased in the entire Asia Pacific region (21% y-o-y).
◇Demand for hydraulic excavator increased in India (16% y-o-y), mainly for infrastructure investments, such as railways and roads.
<Asia, Oceania, and India>
*Estimates by HCM
Demand Trend for Hydraulic Excavators in Asia & Oceania
(K units) *Source: IMF, etc
GDP Growth Rate in Major Countries (y-o-y)
*Estimates by HCM
(K units)
Demand Trend for Hydraulic Excavators in India
* Calculation criteria for GDP growth rate in India was revised in CY2013 2Q
Thailand
Malaysia
Singapore
Indonesia
Australia
ＮＺ
Others
Malaysia Indonesia India
Singapore
Thailand
10
■Tata Hitachi Company Overview
Company name: Tata Hitachi Construction Machinery
Company Private Limited
Revenue in India: Approximately ¥ 48.6 billion (based on FY2016 HCM consolidated results)
Number of employees: 2,052 (as of March 31, 2017)
Number of manufacturing bases: 3
HCM is participating in the Japan-India Public-Private Partnership Project "Manufacturing Skill Transfer Promotion Programme."
With the certification of the METI, we will promote the Japan-India Institute
for Manufacturing (*JIM) initiatives to cultivate human resources capable of
playing a central role in India’s manufacturing sites, at educational facilities
within the Dharwad Works premises owned by Tata Hitachi.
*JIM：Japan-India Institute for Manufacturing
<The Dharwad factory of Tata Hitachi, the planned venue for the JIM project>
9 《Topic》
11
0
1
2
3
4
5
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
-100%
0%
100%
200%
-100%
-50%
0%
50%
100%
0
1
2
3
4
5
FY
12
/1
Q
2Q
3Q
4Q
FY
13
/1
Q
2Q
3Q
4Q
FY
14
/1
Q
2Q
3Q
4Q
FY
15
/1
Q
2Q
3Q
4Q
FY
16
/1
Q
2Q
3Q
4Q
FY
17
/1
Q
2Q
0.01
0.014
0.018
0.022
0.026
0.03
0.034
0.038
0
5
10
15
20
30
55
80
105
130
Demand Trend for Hydraulic Excavators in the Middle East (US$)
Price Trend of Crude Oil and Natural Gas (US$)
(K units)
Demand Trend for Hydraulic Excavators in Russia
10
<IMF forecast as of July>
*Created by HCM , the source from IMF HP
FY12 FY13 FY14 FY15 FY16 FY17
◇In Russia, demand increased, underpinned by revival of crude oil prices. ◇In the Middle East, demand continuously decreased, mainly around the Gulf countries.
Foreign Exchange Rate of the Ruble
FY12 FY13 FY14 FY15 FY16 FY17
<Russia and the Middle East>
Against US$
Against EUR€
*Estimates by HCM *Ex-Works base *Incl. Local manufacturing
*According to HCM’s research
*Estimates by HCM *Ex-Works base (Turkey: retail-prices base)
(K units)
Crude Oil （Left axis）
Natural Gas (Right axis)
UAE
Saudi Arabia
Turkey
Others
12 11
-100%
-50%
0%
50%
100%
-
500
1,000
1,500
2,000
2,500
3,000
FY12 FY13 FY14 FY15 FY16 FY17
DT(over 150t)(Left axis)
SH(over 100t)(Left axis)
y-o-y (Right axis)
(Units)
Ultra-large Excavator (over 100t), Truck (over 150t)
(Units)
estimate *According to HCM’s research
0
500
1,000
1,500
2,000
2,500
3,000
FY12 FY13 FY14 FY15 FY16 FY17
Central and South America
North America
Europe Russia CIS
Oceania
Asia
Africa and Middle East
◇ After four consecutive years of demand decrease (y-o-y) , demand finally turned upward, and we expect an increase of around 40% y-o-y. Demand by product has increased as follows (y-o-y basis): 100t excavators by 50%, over 200t excavators by 20% and, trucks by 40%.
◇ Regarding demand by region, demand in Russia, Asia, and North and Central America has been brisk
<Mining Machinery>
Demand by product Demand by region
estimate
13
0%
100%
200%
300%
400%
500%
600%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY11 FY12 FY13 FY14 FY15 FY16 FY17
BB Ratio (Dump Truck, over 150t)
0%
100%
200%
300%
400%
500%
600%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY11 FY12 FY13 FY14 FY15 FY16 FY17
BB Ratio (Ultra-large Hydraulic Excavator, over 100t)
* Book-to-Bill(BB)Ratio = Bookings (Orders received)/Billings (Value of shipment)
Non-consolidated basis (average of 6 months)
12 <(Supplementary Information) BB Ratio>
14
© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.
For further inquiries:
ＥＮＤ
[Cautionary Statement]
This material 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 expected financial position, operating results, and business strategies. 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, changes in the economic conditions in the Company’s principal markets; changes in demand for the Company’s products, changes in exchange rates, and the impact of regulatory changes and accounting principles and practices.
Public Relations Strategy office
TEL : 03-5826-8152 FAX : 03-5826-8209
Hitachi Construction Machinery Co., Ltd
