Management Overview

0

April 25, 2019

Trend of Financial results

[Billion yen]

[Billion yen]

2,000.0

Orders Received Net Sales

120.0

Operating

FY2018

Income

Forecast in April

1,693.6

1,608.0

1,700.0

1,700.0

1,541.0

1,518.8

1,574.21,585.9

1,500.0

1,594.7

1,348.7

1,000.0

500.0

0.0

FY2015

FY2016

FY2017

FY2018

FY2019

Assumed

Forecast

exchange

118.99

108.98

110.62

110.77

110.00

rates

(USD)

MTBP2016

959

Operating Income:75.0

(9.4%)

ROIC:8.0%

90.0

72.0

640

(6.7%)

559 (4.5%)

60.0459 (3.9%)

(5.0%)

30.0

0.0

FY2015

FY2016

FY2017

FY2018

FY2019

Forecast

118.99

108.98

110.62

110.77

110.00

MTBP2016

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2

Rolling Stock Business Restructuring Committee

- Discussion Results

Reasons for recording losses in Rolling Stock Business

Inadequate risk recognition at bidding and insufficient cost, design, and quality management are the main factors

M9

Projects

in Japan

Other Projects

in U.S.

Planned cost reduction cannot be achieved based on a decrease in the final amount of delivered train cars.

Increase in material costs due to unachieved cost reduction target and rising prices of procured products.

Excessive time to agree on the specification interpretation with the customer, causing process delays.

Unachieved cost reduction target.

Higher material costs than expected.

Difference in specification interpretation with customers.

Wiring installation defects found in project for WMATA*, and required repairs of the delivered cars. (Due to work procedures and training)

*Washington Metropolitan Area Transit Authority

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4

Rolling Stock Business Restructuring Committee

- Discussion Results

Restructuring business voluntarily by executing the following policies:

Policy①

Strengthen Project Management

Policy②

Reform Quality Management System

Emphasis on quality over quantity

Japan

While maintaining an strong competitive environment among rolling stock manufacturers, we will

receive orders at the appropriate price by maintaining and strengthening non-price

competitiveness utilizing technology.

Supply high-value-added key components.

Policy③

North

Develop business focused on customers whom we can demonstrate our superiority based on past

America

delivery results. (NY subway etc.)

Promotion of new business such as track monitoring business utilizing IoT technology.

Asia

While a large number of Asian yen loan projects are expected based on the promotion of railway

infrastructure exports by Japanese government, dealing mainly with low risk yen loan projects and

securing profitability.

Compre

Expansion of stock-type business with strength in increasing number of delivered cars.

hensive

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5

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Kawasaki Heavy Industries Ltd. published this content on 25 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 25 April 2019 04:42:11 UTC