Komatsu : Semi-annual Report FY2025

(Translation)

This document has been translated from the Japanese original for the convenience of overseas stakeholders. In the event of any discrepancy between this document and the Japanese original, the original shall prevail.

Semi-annual Report

From April 1, 2025 to September 30, 2025 (First Half of the 157thFiscal Year)

KOMATSU LTD.

First Half of the 157thFiscal Year (from April 1, 2025 to September 30, 2025)

Semi-annual Report

Certain References and Information:

1. This is an English translation of the Semi-annual Securities Report ("Hanki Hokokusho") filed via the Electronic Disclosure for Investors' Network ("EDINET") system as set forth in Article 27-30-2 of the Financial Instruments and Exchange Act of Japan. Komatsu Ltd. filed its Semi-annual Securities Report for the six months ended September 30, 2025 with the Director-General of the Kanto Local Finance Bureau on November 13, 2025. The Semi-annual Securities Report contains, among other information, Interim Consolidated Financial Statements for the six months ended September 30, 2025. Material information in the Semi-annual Securities Report, other than the Interim Consolidated Financial Statements, has already been reported by Komatsu Ltd. in its press release dated October 29, 2025. Attached is an English translation of Interim Consolidated Financial Statements for the six months ended September 30, 2025.

2. In this report, Komatsu Ltd. is hereinafter referred to as the "Company" and together with its consolidated subsidiaries as "Komatsu."

Cautionary Statement with respect to forward-looking statements:

This report 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. These statements can be identified by the use of terms such as "will," "believes," "should," "projects," "plans," "expects" and similar terms and expressions that identify future events or expectations. Actual results may differ materially from those projected, and the events and results of such forward-looking assumptions cannot be assured. Any forward-looking statements speak only as of the date of this report, and the Company assumes no duty to update such statements.

Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are not limited to, unanticipated changes in demand for Komatsu's principal products, owing to changes in the economic conditions in Komatsu's principal markets; changes in exchange rates or the impact of increased competition; unanticipated costs or delays encountered in achieving Komatsu's objectives with respect to globalized product sourcing and new information technology tools; uncertainties as to the results of Komatsu's research and development efforts and its ability to access and protect certain intellectual property rights; the impact of regulatory changes and accounting principles and practices; and the introduction, success and timing of business initiatives and strategies.

Financial Information

1. Basis of preparation of the interim consolidated financial statements

   The interim consolidated financial statements of the Company are prepared in accordance with the accounting principles generally accepted in the United States of America, pursuant to Paragraph 6, Supplementary Provisions of the "Cabinet Office Ordinance for Partial Revision of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements," the Ordinance of the Cabinet Office No. 11 of 2002.

   In addition, the Company falls under the category of a company listed in the upper column of Item 1 of the table in Article 24-5, Paragraph 1 of the Financial Instruments and Exchange Act of Japan, and has prepared its Type 1 interim consolidated financial statements in accordance with the provisions of Part 1 and Part 3 of the "Regulations Concerning the Terminology, Forms and Preparation Method of Consolidated Financial Statements" the Ordinance of the Ministry of Finance No. 28 of 1976.

2. Audit certification

Pursuant to Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act of Japan, the interim consolidated financial statements for the interim consolidated accounting period (from April 1, 2025 to September 30, 2025) were reviewed by KPMG AZSA LLC.

Interim Consolidated Financial Statements

Consolidated Balance Sheets (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries as of September 30, 2025 and March 31, 2025

September 30, 2025 March 31, 2025

Assets	Millions of yen	Ratio (%)	Millions of yen	Ratio (%)
Current assets
Cash and cash equivalents (Note 16)	¥ 345,199		¥ 385,569
Trade notes and accounts receivable, net (Notes 3, 10 and 16)	1,261,328		1,274,209
Inventories (Note 4)	1,579,351		1,406,658
Other current assets (Notes 15, 16 and 17)	244,209		231,867
Total current assets	3,430,087	57.9	3,298,303	57.1
Long-term trade receivables, net (Notes 3, 10 and 16)	804,749	13.6	808,324	14.0
Investments
Investments in and advances to affiliated companies	81,159		81,167
Investment securities (Note 5)	10,961		10,636
Other	2,245		3,623
Total investments	94,365	1.6	95,426	1.7
Property, plant and equipment - less accumulated depreciation of ¥1,116,944 million at September 30, 2025 and ¥1,099,376 million at March 31, 2025	925,601	15.6	914,283	15.8
Operating lease right-of-use assets	70,452	1.2	67,684	1.2
Goodwill	249,028	4.2	245,833	4.3

Other intangible assets

- less accumulated amortization (Note 6)

166,923 2.8 169,953 2.9

Deferred income taxes and other assets (Notes 15, 16 and 17)		181,299	3.1		173,717	3.0
Total assets	¥	5,922,504	100.0	¥	5,773,523	100.0

September 30, 2025 March 31, 2025

Liabilities and Equity	Millions of yen	Ratio (%)	Millions of yen	Ratio (%)
Current liabilities
Short-term debt (Note 16)	¥ 489,519		¥ 376,326
Current maturities of long-term debt (Note 16)	191,115		278,082
Trade notes, bills and accounts payable (Notes 7 and 16)	303,203		334,929
Income taxes payable	65,505		87,525
Current operating lease liabilities	20,808		19,392
Other current liabilities (Notes 10, 15, 16 and 17)	572,838		553,106
Total current liabilities	1,642,988	27.7	1,649,360	28.6
Long-term liabilities
Long-term debt (Note 16)	595,402		496,189
Liability for pension and retirement benefits	69,811		68,900
Long-term operating lease liabilities	51,883		50,713
Deferred income taxes and other liabilities (Notes 10, 15, 16 and 17)	175,328		163,508
Total long-term liabilities	892,424	15.1	779,310	13.5
Total liabilities	2,535,412	42.8	2,428,670	42.1
Commitments and contingent liabilities (Note 14)
Equity
Komatsu Ltd. shareholders' equity
Common stock:
Authorized 3,955,000,000 shares
Issued 950,953,120 shares
Outstanding 907,941,217 shares at September 30, 2025 and 922,847,599 shares at March 31, 2025	70,317		70,336
Capital surplus	136,443		136,525
Retained earnings:
Appropriated for legal reserve	49,496		49,421
Unappropriated	2,649,222		2,572,425
Accumulated other comprehensive income (loss) (Notes 9 and 15)	464,526		427,354
Treasury stock at cost, 43,011,903 shares at September 30, 2025 and 28,105,521 shares at March 31, 2025	(152,650)		(82,662)
Total Komatsu Ltd. shareholders' equity	3,217,354	54.3	3,173,399	55.0
Noncontrolling interests	169,738	2.9	171,454	2.9
Total equity	3,387,092	57.2	3,344,853	57.9
Total liabilities and equity	¥ 5,922,504	100.0	¥ 5,773,523	100.0

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Unaudited) Komatsu Ltd. and Consolidated Subsidiaries

Six months ended September 30, 2025 and 2024 Consolidated Statements of Income

Six months ended September 30, 2025 Six months ended September 30, 2024 Millions of yen Ratio(%) Millions of yen Ratio(%)

Net sales (Notes 9, 10, 12, 15 and 20) ¥ 1,891,587 100.0 ¥ 1,968,066 100.0

Selling, general and administrative expenses

(Notes 6, 8, 11 and 20)

326,054 17.2

325,764 16.6

Cost of sales (Notes 6, 8, 9, 15 and 20) 1,287,865 68.1 1,338,392 68.0

Other operating income (expenses), net (607) (0.0) (483) (0.0)

Operating income 277,061 14.6 303,427 15.4

Interest and dividend income 12,031 0.6 14,175 0.7

Other income (expenses), net

Interest expense (26,035) (1.4) (30,436) (1.5)

Other, net (Notes 5, 8, 9 and 15) (4,672) (0.2) (8,512) (0.4)

Total (18,676) (1.0) (24,773) (1.3)

Income before income taxes and equity in earnings of affiliated companies

258,385 13.7

278,654 14.2

Income taxes (Note 9)

Current 74,347 79,034

Deferred 1,084 (11,618)

Total 75,431 4.0 67,416 3.4

Income before equity in earnings of affiliated companies 182,954 9.7 211,238 10.7 Equity in earnings of affiliated companies 4,576 0.2 4,688 0.2

Net income 187,530 9.9 215,926 11.0

Less: Net income attributable to noncontrolling interests 11,829 0.6 14,197 0.7

Net income attributable to Komatsu Ltd. ¥ 175,701 9.3 ¥ 201,729 10.3

Yen Per share data (Note 13):

Basic ¥ 191.80 ¥ 215.93

Net income attributable to Komatsu Ltd.:

Diluted ¥ 191.80 ¥ 215.92

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Millions of yen

	Six months ended	Six months ended
	September 30, 2025	September 30, 2024
Net income	¥ 187,530	¥ 215,926
Other comprehensive income (loss), for the period, net of tax
Foreign currency translation adjustments (Note 9)	40,943	(116,381)
Pension liability adjustments (Notes 8 and 9)	199	561
Net unrealized holding gains (losses) on derivative instruments (Notes 9 and 15)	(1,121)	1,339
Total	40,021	(114,481)
Comprehensive income	227,551	101,445
Less: Comprehensive income attributable to noncontrolling interests	14,678	9,415
Comprehensive income attributable to Komatsu Ltd.	¥ 212,873	¥ 92,030

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

Consolidated Statements of Equity (Unaudited) Komatsu Ltd. and Consolidated Subsidiaries

Six months ended September 30, 2025

Retained earnings Appropriated

Millions of yen

Accumulated other

Total Komatsu Ltd.

Non-

Common stock

Capital surplus

for legal reserve

Unappropriated

comprehensive income (loss)

Treasury stock

shareholders' equity

controlling interests

Total equity

Balance at March 31, 2025	¥	70,336	¥	136,525	¥	49,421	¥	2,572,425	¥	427,354	¥	(82,662)	¥	3,173,399	¥	171,454	¥	3,344,853
Cash dividends (Note 19) Transfer to retained earnings appropriat	ed							(98,823)						(98,823)		(16,704)		(115,527)

75							(75)		-						-
for legal reserve
Other changes	(313)										(313)				310		(3)
Net income					175,701						175,701				11,829		187,530
Other comprehensive income (loss),									37,172		37,172				2,849		40,021
for the period, net of tax (Note 9)
Exercise of stock acquisition (29)					(29)										(29)
Purchase of treasury stock												(70,263)		(70,263)				(70,263)
Sales of treasury stock								(6)				159		153				153
Share-based payment (Note 11)		(19)		260								116		357				357
Balance at September 30, 2025	¥	70,317	¥	136,443	¥	49,496	¥	2,649,222	¥	464,526	¥	(152,650)	¥	3,217,354	¥	169,738	¥	3,387,092

rights (Note 11)

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

Six months ended September 30, 2024

Retained earnings Appropriated

Millions of yen

Accumulated other

Total Komatsu Ltd.

Non-

Common stock

Capital surplus

for legal reserve

Unappropriated

comprehensive income (loss)

Treasury stock

shareholders' equity

controlling interests

Total equity

Balance at March 31, 2024	¥	70,336	¥	136,500	¥	48,979	¥	2,367,020	¥	459,865	¥	(49,131)	¥	3,033,569	¥	164,883	¥	3,198,452
Cash dividends (Note 19) Transfer to retained earnings appropriat	ed							(89,908)						(89,908)		(8,504)		(98,412)

275							(275)		-						-
for legal reserve
Other changes	484										484				(486)		(2)
Net income					201,729						201,729				14,197		215,926
Other comprehensive income (loss), for the period, net of tax (Note 9)									(109,699)		(109,699)				(4,782)		(114,481)
Exercise of stock acquisition (72)					(72)										(72)
Purchase of treasury stock												(101,255)		(101,255)				(101,255)
Sales of treasury stock				(9)								83		74				74
Share-based payment (Note 11)				622										622				622
Balance at September 30, 2024	¥	70,336	¥	137,525	¥	49,254	¥	2,478,566	¥	350,166	¥	(150,303)	¥	2,935,544	¥	165,308	¥	3,100,852

rights (Note 11)

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

Consolidated Statements of Cash Flows (Unaudited) Komatsu Ltd. and Consolidated Subsidiaries

Six months ended September 30, 2025 and 2024

Millions of yen Six months ended September 30, 2025 Six months ended September 30, 2024

Operating activities
Net income	¥	187,530	¥	215,926
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		78,385		81,094
Deferred income taxes		1,084		(11,618)
Impairment loss and net loss (gain) on valuation of investment securities		(103)		645
Net gain on sale of fixed assets		(447)		(318)
Loss on disposal of fixed assets		927		1,494
Pension and retirement benefits, net		(154)		(8,803)
Changes in assets and liabilities:
Decrease in trade receivables		37,767		5,199
Increase in inventories		(144,199)		(69,788)
Increase (decrease) in trade payables		(37,457)		1,325
Decrease in income taxes payable		(22,246)		(6,967)
Other, net		26,570		9,484
Net cash provided by operating activities		127,657		217,673
Investing activities
Capital expenditures		(102,612)		(99,760)
Proceeds from sale of fixed assets		8,329		7,416
Purchases of investment securities		(282)		(626)
Acquisition of subsidiaries and businesses, net of cash acquired		(8,118)		(13,500)
Other, net		8,529		2,147
Net cash used in investing activities		(94,154)		(104,323)
Financing activities
Proceeds from debt issued (Original maturities greater than three months)		472,182		328,478
Payment on debt (Original maturities greater than three months)		(437,425)		(264,202)
Short-term debt, net (Original maturities three months or less)		80,458		39,466
Sale (purchase) of treasury stock, net		(70,009)		(101,240)
Dividends paid		(98,823)		(89,908)
Other, net		(17,876)		(9,002)
Net cash used in financing activities		(71,493)		(96,408)
Effect of exchange rate change on cash and cash equivalents		(2,380)		(10,585)
Net increase (decrease) in cash and cash equivalents		(40,370)		6,357
Cash and cash equivalents, beginning of year		385,569		403,178
Cash and cash equivalents, end of period	¥	345,199	¥	409,535

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

Komatsu Ltd. and Consolidated Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

1. Basis of Interim Consolidated Financial Statement Presentation and Summary of Significant Accounting Policies Basis of Interim Consolidated Financial Statement Presentation

   The Company prepares and presents the accompanying interim consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (hereinafter "U.S. GAAP").

   The accompanying interim consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and principally operates.

   Some adjustments without booked on each subsidiary's and affiliate's interim financial statements are added to the accompanying interim consolidated financial statements. These adjustments are mainly due to the gaps of accounting principle between Japan and the United States of America. See Note 22 "Terminology, Forms and Preparation Methods of Interim Consolidated Financial Statements".

   Preparation of Financial Statements and Registration with the U.S. Securities and Exchange Commission

   The Company has been preparing its consolidated financial statements in accordance with U.S. GAAP since 1963, because the Company issued foreign currency convertible bonds at European market in 1964. The Company registered its convertible bonds issued in the United States in 1967 and its common shares issued for U.S. shareholders as well as Japanese shareholders in 1970 with the U.S. Securities and Exchange Commission (hereinafter "SEC"). Since then, the Company, as a non-U.S. issuer, had been having the reporting obligations, such as filing annual report with its consolidated financial statements in accordance with U.S. GAAP, under the Securities Exchange Act of 1934. The Company's registration with SEC was terminated on June 30, 2014.

   Summary of Significant Accounting Policies

   There is no material change for summary of significant accounting policies stated in annual report for the fiscal year ended March 31, 2025.

   Regarding the impact of the disruption and so forth in financial sector and world economy caused by the Ukraine situation and tariff policies of each country on Komatsu's financial position and results of operations, there is uncertainty regarding when such conditions will improve, among other factors. Nevertheless, Komatsu has assumed that a certain level of impact from the Ukraine situation and tariff policies of each country will continue in the future, based on the information which is available at present and our predictions. Komatsu is making its best estimates taking in the assumption to assess the calculation of the expected credit losses, the likelihood of recovery of deferred tax assets and the impairment losses on long-lived assets and goodwill given these items are relatively material among the accounting estimates. However, if actual future trends deviate from the assumption, Komatsu's financial position and results of operations may be adversely affected.

2. Supplemental Cash Flow Information

   Additional cash flow information for the six months ended September 30, 2025 and 2024 is as follows:

   Millions of yen Six months ended September 30, 2025 Six months ended September 30, 2024

   Additional cash flow information:

   Interest paid	¥	25,666	¥	31,001
   Income taxes paid, net		102,697		88,131

3. Receivables and Allowance for Credit Losses

   1. Portfolio segments

      Since Komatsu manages its receivables and allowance for credit losses by operating segments, the portfolio segments are classified in the same way as the operating segments: 1) Construction, Mining and Utility Equipment,

      2) Retail Finance, and 3) Industrial Machinery and Others.

      In the Construction, Mining and Utility Equipment segment and the Industrial Machinery and Others segment, Komatsu mainly holds accounts receivable and notes receivable recorded as consideration for sales of products, parts, services, and others to customers. Komatsu believes that the possibility of losses due to uncollectible is low as these receivables are generally collected within three months.

      In the Retail Finance segment, Komatsu provides installment sales and sales-type leases as a lessor for leveling cash payments of its customers when customers purchase primarily Komatsu's construction and mining equipment.

      Receivables of retail finance business (hereinafter "retail finance receivables") are secured by collateral, in the form of financed equipment. If Komatsu's collection efforts fail to recover the defaulted situation, Komatsu generally can repossess the financed equipment, after satisfying local legal requirements, and sell it to a third party through Komatsu's dealer network. The collection spans an extended period of time and there is a degree of uncertainty that accompanies the calculation of the estimated credit losses and the calculation of an expected amount recoverable from the collateral. Komatsu recognizes the allowance for credit losses on retail finance receivables utilizing the expected credit loss rates that are calculated based on the average historical loss rates adjusted to reflect forecasted changes in relevant economic indicators such as housing starts. For periods beyond which Komatsu is able to make or obtain reasonable and supportable forecasts of future economic indicators of the entire life of the retail finance receivables, expected credit losses are estimated for the remaining life mainly using an appropriate approach that immediately revert to historical credit loss experiences. For those retail finance receivables with a collectability risk due to deterioration of customer's financial condition or prolonged payment delays, Komatsu individually increases the allowance for credit losses based on the available information at hand such as credit ratings of the customer, status of outstanding receivables, and current market price of the equipment used as collateral. There were no significant changes in methodologies used to estimate the allowance for credit losses during the six months ended September 30, 2025.

      Changes in the allowance for credit losses by segments for the six months ended September 30, 2025 and 2024 are as follows:

      Construction, Mining and Utility Equipment

      Millions of yen Six months ended September 30, 2025

      Retail Finance Industrial Machinery and Others

      Allowance for Credit Losses:
      Balance at beginning of year	¥	12,468	¥	23,788	¥	202
      Provision		930		2,436		-
      Write-offs		(238)		(3,421)		-
      Other		(39)		1,773		-
      Balance at end of period	¥	13,121	¥	24,576	¥	202

      Receivables (before deducting allowance for credit losses):

      Balance at end of period ¥ 731,145 ¥ 1,323,040 ¥ 49,791

Construction, Mining and Utility Equipment

Millions of yen Six months ended September 30, 2024

Retail Finance Industrial Machinery and Others

Allowance for Credit Losses:
Balance at beginning of year	¥	13,294		¥	20,590	¥	195
Provision		707			2,688		13
Write-offs		(158)			(2,239)		-
Other		(226)			(341)		(2)
Balance at end of period	¥	13,617		¥	20,698	¥	206
Receivables (before deducting allowance for credit losses):
Balance at end of period	¥	650,736		¥	1,198,202	¥	49,660

Since the risk of uncollectible is low for receivables in the Construction, Mining and Utility Equipment segment and the Industrial Machinery and Others segment due to collection in a short term, the disclosure of these segments is omitted for subsequent items.

1. Credit quality of receivables

   Komatsu considers that retail finance receivables are past due, if unpaid for more than 30 days after its due date. Komatsu classifies retail finance receivables by geographic region since credit risk assessment and measurement methods are similar in each region.

   The retail finance receivables by the aging category and by origination fiscal year at September 30, 2025 and March 31, 2025 are as follows:

   Millions of yen September 30, 2025

   Region Origination fiscal year ending March 31

   Past due date		2026		2025		2024		2023		2022		Prior	Total
   Japan
   Within due and 30 days or less past due	¥	6,987	¥	14,595	¥	10,411	¥	5,795	¥	3,177	¥	1,120	¥ 42,085
   31-90 days past due		-		-		-		1		-		-	1
   Over 90 days past due		-		-		-		4		-		-	4
   Total		6,987		14,595		10,411		5,800		3,177		1,120	42,090
   North America
   Within due and 30 days or less past due		312,409		348,835		161,859		62,430		13,924		5,778	905,235
   31-90 days past due		70		174		213		156		168		41	822
   Over 90 days past due		6		45		166		114		192		330	853
   Total		312,485		349,054		162,238		62,700		14,284		6,149	906,910
   Latin America
   Within due and 30 days or less past due		21,937		33,324		13,906		5,807		3,872		1,074	79,920
   31-90 days past due		68		218		219		261		55		9	830
   Over 90 days past due		-		142		131		162		139		6,508	7,082
   Total		22,005		33,684		14,256		6,230		4,066		7,591	87,832
   Europe
   Within due and 30 days or less past due		31,122		42,118		33,554		18,522		6,662		1,282	133,260
   31-90 days past due		4		9		14		4		11		6	48
   Over 90 days past due		4		17		15		27		56		47	166
   Total		31,130		42,144		33,583		18,553		6,729		1,335	133,474
   Oceania
   Within due and 30 days or less past due		22,295		36,552		20,629		15,227		2,640		604	97,947
   31-90 days past due		-		-		-		-		-		-	-
   Over 90 days past due		-		-		-		20		13		-	33
   Total		22,295		36,552		20,629		15,247		2,653		604	97,980
   Others
   Within due and 30 days or less past due		14,235		13,654		20,043		2,095		1,367		72	51,466
   31-90 days past due		45		313		337		388		141		27	1,251
   Over 90 days past due		28		266		555		410		311		467	2,037
   Total		14,308		14,233		20,935		2,893		1,819		566	54,754
   Totals by Aging Category
   Within due and 30 days or less past due		408,985		489,078		260,402		109,876		31,642		9,930	1,309,913
   31-90 days past due		187		714		783		810		375		83	2,952
   Over 90 days past due		38		470		867		737		711		7,352	10,175
   Total	¥	409,210	¥	490,262	¥	262,052	¥	111,423	¥	32,728	¥	17,365	¥1,323,040

   Region					Origination fiscal year ending March 31
   Past due date		2025		2024		2023		2022		2021		Prior	Total
   Japan
   Within due and 30 days or less past due	¥	17,063	¥	12,148	¥	7,178	¥	4,346	¥	2,346	¥	168	¥	43,249
   31-90 days past due		1		1		-		-		-		-	2
   Over 90 days past due		-		1		2		-		-		-	3
   Total		17,064		12,150		7,180		4,346		2,346		168	43,254
   North America
   Within due and 30 days or less past due		519,769		231,477		101,370		31,437		8,381		2,528	894,962
   31-90 days past due		172		328		209		173		86		22	990
   Over 90 days past due		14		81		233		260		166		432	1,186
   Total		519,955		231,886		101,812		31,870		8,633		2,982	897,138
   Latin America
   Within due and 30 days or less past due		40,852		17,375		8,059		5,227		1,365		179	73,057
   31-90 days past due		160		193		212		112		-		-	677
   Over 90 days past due		49		45		115		105		23		6,250	6,587
   Total		41,061		17,613		8,386		5,444		1,388		6,429	80,321
   Europe
   Within due and 30 days or less past due		46,621		38,323		22,264		9,424		2,243		979	119,854
   31-90 days past due		26		5		20		12		3		2	68
   Over 90 days past due		4		268		298		195		6		3	774
   Total		46,651		38,596		22,582		9,631		2,252		984	120,696
   Oceania
   Within due and 30 days or less past due		40,163		23,776		18,785		4,542		1,300		152	88,718
   31-90 days past due		-		-		19		13		-		2	34
   Over 90 days past due		-		-		-		-		-		-	-
   Total		40,163		23,776		18,804		4,555		1,300		154	88,752
   Others
   Within due and 30 days or less past due		22,673		18,585		5,695		3,341		253		-	50,547
   31-90 days past due		138		84		471		42		17		-	752
   Over 90 days past due		12		1,105		293		260		111		361	2,142
   Total		22,823		19,774		6,459		3,643		381		361	53,441
   Totals by Aging Category
   Within due and 30 days or less past due		687,141		341,684		163,351		58,317		15,888		4,006	1,270,387
   31-90 days past due		497		611		931		352		106		26	2,523
   Over 90 days past due		79		1,500		941		820		306		7,046	10,692
   Total	¥	687,717	¥	343,795	¥	165,223	¥	59,489	¥	16,300	¥	11,078	¥1,283,602

   Millions of yen March 31, 2025

   Gross write-offs by origination fiscal year for the six months ended September 30, 2025 and 2024 are as follows:

   Millions of yen Millions of yen

   Fiscal year ending March 31 Six months ended September 30, 2025

   Fiscal year ending March 31 Six months ended September 30, 2024

   2026	¥	9	2025	¥	-
   2025		448	2024		732
   2024		1,485	2023		563
   2023		1,188	2022		441
   2022		72	2021		307
   Prior		229	Prior		196
   Total	¥	3,431	Total	¥	2,239

2. Non-accrual receivables

   Recognition of income is suspended and the retail finance receivable is placed on non-accrual status when Komatsu determines that collection of future income is not probable. Retail finance receivables on non-accrual status are generally more than 90 days past due. Payments received while the retail finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Recognition of income is resumed when collection is considered probable as evidenced by continual payments from the debtor. Interest earned but uncollected prior to the retail finance receivable being placed on non-accrual status is written off through provision for credit losses when it is considered uncollectible.

   Interest income recognized for retail finance receivables on non-accrual status were not material during the six months ended September 30, 2025 and 2024.

   Retail finance receivables which are on non-accrual status and retail finance receivables over 90 days past due and still accruing income at September 30, 2025 and March 31, 2025 are as follows:

   Non-accrual with an allowance

   Millions of yen September 30, 2025 Non-accrual

   without an allowance

   Over 90 days past due still accruing

   Japan	¥	-	¥	-	¥	4
   North America		-		-		853
   Latin America		6,849		-		233
   Europe		-		-		166
   Oceania		-		-		33
   Others		864		-		1,173
   Total	¥	7,713	¥	-	¥	2,462

   Non-accrual with an allowance

   Millions of yen March 31, 2025 Non-accrual

   without an allowance

   Over 90 days past due still accruing

   Japan	¥	-	¥	-	¥	3
   North America		3,782		2,574		1,068
   Latin America		6,375		-		213
   Europe		-		-		774
   Oceania		-		-		-
   Others		549		-		1,601
   Total	¥	10,706	¥	2,574	¥	3,659

3. Modifications

Komatsu may modify loan terms such as reduction of interest payments, extension of the maturity period, or revision of the repayment schedule in response to the debtor's financial difficulties.

Loan modifications granted to debtors experiencing financial difficulty were not material during the six months ended September 30, 2025 and 2024. The effect of most modifications made to debtors experiencing financial difficulty is already included in the allowance for credit losses based on the methodologies used to estimate the allowance; therefore, a change to the allowance for credit losses is generally not recorded upon modification.

The amount of defaulted retail finance receivables was not material during the six months ended September 30, 2025 and 2024.

1. Inventories

   At September 30, 2025 and at March 31, 2025, inventories comprise the following:

   Millions of yen

   	September 30, 2025	March 31, 2025
   Finished products, including finished parts held for sale	¥ 1,149,729	¥ 1,003,169
   Work in process	304,261	278,445
   Materials and supplies	125,361	125,044
   Total	¥ 1,579,351	¥ 1,406,658

2. Investment Securities

   The realized gains and losses and gross unrealized holding gains and losses for such equity securities which are recorded in other income (expenses), net in the accompanying consolidated statements of income, respectively, for the six months ended September 30, 2025 and 2024 are as follows:

   Millions of yen Six months ended September 30, 2025 Six months ended September 30, 2024

   Net gains and losses recognized during the period on equity securities ¥ 103 ¥ (645)

Less: net gains and losses recognized during the period on equity securities

sold during the period － －

Unrealized gains and losses recognized during the period on equity

securities still held as of September 30, 2025 and 2024

¥

103

¥ (645)

Komatsu measures equity securities without readily determinable fair values at the carrying amount after the write-down due to impairment, except for investments which are measured at net asset value per share. If Komatsu identifies observable price changes in orderly transactions for identical or similar investments issued by the same issuer, Komatsu measures the equity security at fair value as of the date that the observable transaction occurred. As of September 30, 2025 and as of March 31, 2025, the carrying amounts of these investments were ¥10,961 million and ¥10,636 million, respectively. Any impairment or any adjustment relating to observable price changes recorded until September 30, 2025 and until March 31, 2025 were not material.

1. Other Intangible Assets

   Other intangible assets at September 30, 2025 and at March 31, 2025 are as follows:

   Millions of yen September 30, 2025 March 31, 2025

   Gross carrying amount

   Accumulated amortization

   Net carrying amount

   Gross carrying amount

   Accumulated amortization

   Net carrying amount

   Other intangible assets subject to amortization:
   Software	¥ 117,864	¥	(65,037)	¥	52,827	¥ 110,986	¥	(60,268)	¥	50,718
   Leasehold	6,749		(1,996)		4,753	6,656		(2,013)		4,643
   Trademarks	78,132		(42,333)		35,799	78,311		(40,114)		38,197
   Customer relationships	79,277		(41,277)		38,000	80,238		(41,319)		38,919
   Technology assets	46,893		(22,762)		24,131	47,024		(21,516)		25,508
   Other	7,566	(4,810)		2,756		10,036	(6,421) 3,615
   Total	336,481 (178,215) 158,266 333,251						(171,651) 161,600
   Other intangible assets not subject 8,657 8,353 to amortization

   Total other intangible assets ¥ 166,923 ¥ 169,953

   The aggregate amortization expense of other intangible assets subject to amortization during the six months ended September 30, 2025 and 2024 were ¥14,555 million and ¥15,053million, respectively.

2. Trade Payables

   The Company and certain consolidated subsidiaries have entered into agreements with third-party financial institutions for supplier finance programs. Komatsu makes payments to third-party financial institutions after 60 to 120 days based on the transaction agreements entered into with each supplier. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount based on the tripartite agreements between Komatsu, the suppliers, and the financial institutions. Komatsu does not provide pledged assets or any other forms of guarantees from third parties for these programs. The amounts of liabilities under the supplier finance programs at September 30, 2025 and at March 31, 2025 are ¥19,513 million and ¥25,963 million, respectively, and are included in trade notes, bills and accounts payable in the accompanying consolidated balance sheets.

   Changes in the liabilities under supplier finance programs for the six months ended September 30, 2025 and 2024 are as follows:

   Millions of yen

   	Six months ended	Six months ended
   	September 30, 2025	September 30, 2024
   Balance at beginning of year	¥ 25,963	¥ 36,514
   Increase	54,170	70,651
   Decrease	(60,620)	(77,511)
   Balance at end of period	¥ 19,513	¥ 29,654

3. Cost of Retirement Benefits

   Net periodic cost of Komatsu's defined benefit plans for the six months ended September 30, 2025 and 2024 consisted of the following components:

   Millions of yen

   	Six months ended	Six months ended
   	September 30, 2025	September 30, 2024
   Service cost	¥ 3,757	¥ 4,158
   Interest cost on projected benefit obligations	6,148	6,377
   Expected return on plan assets	(6,342)	(6,913)
   Amortization of actuarial loss or gain	245	191
   Amortization of prior service cost	499	583
   Gains recognized due to partial settlements	-	(2,119)
   Net periodic cost	¥ 4,307	¥ 2,277

   Net periodic cost of the other postretirement benefit plans for the six months ended September 30, 2025 and 2024 included the following components:

   Millions of yen

   	Six months ended	Six months ended
   	September 30, 2025	September 30, 2024
   Service cost	¥ 183	¥ 197
   Interest cost on projected benefit obligations	301	324
   Expected return on plan assets	(370)	(385)
   Amortization of actuarial loss or gain	(77)	(104)
   Amortization of prior service cost	(180)	(184)
   Net periodic cost	¥ (143)	¥ (152)

   Net periodic cost components other than the service cost of Komatsu's defined benefit plans and the other postretirement benefit plans are recorded in other income (expenses), net in the accompanying consolidated statements of income.

4. Other Comprehensive Income (Loss)

   Changes in accumulated other comprehensive income (loss) for the six months ended September 30, 2025 and 2024 are as follows:

   Millions of yen Six months ended September 30, 2025

   					Net unrealized
   		Foreign			holding gains
   		currency	Pension		(losses)
   		translation	liability		on derivative
   		adjustments	adjustments		instruments			Total
   Balance, beginning of the year	¥	438,058	¥ (11,645)		¥ 941		¥	427,354
   Other comprehensive income (loss) before reclassifications		40,943	(162)		89			40,870
   Amounts reclassified from accumulated other comprehensive income (loss)		-	361		(1,210)			(849)
   Net other comprehensive income (loss)		40,943	199		(1,121)			40,021
   Less: other comprehensive income (loss) attributable to noncontrolling interests		2,875	-		(26)			2,849
   Other comprehensive income (loss) attributable to Komatsu Ltd.		38,068	199		(1,095)			37,172
   Balance, end of the period	¥	476,126	¥	(11,446)	¥	(154)	¥	464,526

   Millions of yen Six months ended September 30, 2024

   					Net unrealized
   		Foreign			holding gains
   		currency	Pension		(losses)
   		translation	liability		on derivative
   		adjustments	adjustments		instruments			Total
   Balance, beginning of the year	¥	479,377	¥ (18,762)		¥ (750)		¥	459,865
   Other comprehensive income (loss) before reclassifications		(116,381)	139		1,336			(114,906)
   Amounts reclassified from accumulated other comprehensive income (loss)		-	422		3			425
   Net other comprehensive income (loss)		(116,381)	561		1,339			(114,481)
   Less: other comprehensive income (loss) attributable to noncontrolling interests		(4,607)	-		(175)			(4,782)
   Other comprehensive income (loss) attributable to Komatsu Ltd.		(111,774)	561		1,514			(109,699)
   Balance, end of the period	¥	367,603	¥	(18,201)	¥	764	¥	350,166

   Reclassification out of accumulated other comprehensive income (loss) for the six months ended September 30, 2025 and 2024 are as follows:

   Pension liability adjustments

   Millions of yen Six months ended September 30, 2025

   Affected line items in consolidated statements of income

   Amortization of actuarial loss or gain and prior service cost	(485)	Other income (expenses), net: Other, net
   	(485)	Total before tax
   	124	Income taxes
   	(361)	Net of tax
   Net unrealized holding gains (losses) on derivative instruments
   Foreign exchange forward contracts, Interest rate swaps and cross-currency swap agreements	470	Net sales
   	(110)	Cost of sales
   	1,448	Other income (expenses), net: Other, net
   	1,808	Total before tax
   	(598)	Income taxes
   	1,210	Net of tax
   Total reclassification for the period ¥	849	Net of tax

   Pension liability adjustments

   Millions of yen Six months ended September 30, 2024

   Affected line items in consolidated statements of income

   Amortization of actuarial loss or gain and prior service cost	(578)	Other income (expenses), net: Other, net
   	(578)	Total before tax
   	156	Income taxes
   	(422)	Net of tax
   Net unrealized holding gains (losses) on derivative instruments
   Foreign exchange forward contracts, Interest rate swaps and cross-currency swap agreements	(1,226)	Net sales
   	(447)	Cost of sales
   	1,642	Other income (expenses), net: Other, net
   	(31)	Total before tax
   	28	Income taxes
   	(3)	Net of tax
   Total reclassification for the period ¥	(425)	Net of tax

   Tax effects allocated to each component of other comprehensive income (loss) for the six months ended September 30, 2025 and 2024 are as follows:

   Millions of yen Six months ended September 30, 2025

   Before tax amount

   Tax (expense) or benefit

   Net of tax amount

   Foreign currency translation adjustments

   Foreign currency translation adjustments arising during the period

   ¥ 41,188 ¥ (245) ¥ 40,943

   Less: reclassification adjustment for gains included in net

   income

   -

   -

   -

   Net foreign currency translation adjustments 41,188 (245) 40,943 Pension liability adjustments

   Pension liability adjustments arising during the period (227) 65 (162)

   Less: reclassification adjustment for losses included in net

   income

   485

   (124)

   361

   Net pension liability adjustments 258 (59) 199

   Net unrealized holding gains (losses) on derivative instruments Unrealized holding gains arising during the period 262 (173) 89

   Less: reclassification adjustment for gains included in net

   income

   (1,808)

   598

   (1,210)

   Other comprehensive income (loss) ¥ 39,900 ¥ 121 ¥ 40,021

   Net unrealized holding losses (1,546) 425 (1,121)

   Millions of yen Six months ended September 30, 2024

   Before tax amount

   Tax (expense) or benefit

   Net of tax amount

   Foreign currency translation adjustments

   Foreign currency translation adjustments arising during the period

   ¥ (116,434) ¥ 53 ¥ (116,381)

   Less: reclassification adjustment for gains included in net

   income

   -

   -

   -

   Net foreign currency translation adjustments (116,434) 53 (116,381) Pension liability adjustments

   Pension liability adjustments arising during the period 195 (56) 139

   Less: reclassification adjustment for losses included in net

   income

   578

   (156)

   422

   Net pension liability adjustments 773 (212) 561

   Net unrealized holding gains (losses) on derivative instruments Unrealized holding gains arising during the period 1,954 (618) 1,336

   Less: reclassification adjustment for losses included in net

   income

   31

   (28)

   3

   Net unrealized holding gains 1,985 (646) 1,339

   Other comprehensive income (loss) ¥ (113,676) ¥ (805) ¥ (114,481)

1. Revenue

   1. Disaggregation of revenue

      The disaggregation of revenue by operating segment and geographic region are described in Note 20.

   2. Contract balances

      Contract balances arising from contracts with customers at September 30, 2025 and at March 31, 2025 are as follows:

      Millions of yen

      	September 30, 2025	March 31, 2025
      Receivables *1	¥ 1,753,012	¥ 1,793,660
      Contract assets *2	4,711	6,390
      Contract liabilities *3	234,497	222,993

      *1 Receivables are included in trade notes and accounts receivable, net and long-term trade receivables, net in the accompanying consolidated balance sheets. These amounts are before deducting allowances for credit losses.

      *2 Contract assets are included in trade notes and accounts receivable, net and long-term trade receivables, net in the accompanying consolidated balance sheets. These amounts are before deducting allowances for credit losses.

      *3 Contract liabilities are included in other current liabilities and deferred income taxes and other liabilities in the accompanying consolidated balance sheets.

      Revenue recognized for the six months ended September 30, 2025 that was included in the contract liability balance as of March 31, 2025 was ¥86,286 million. Revenue recognized for the six months ended September 30, 2024 that was included in the contract liability balance as of March 31, 2024 was ¥85,587 million.

      The amounts of revenue recognized during the six months ended September 30, 2025 and 2024 from performance obligations satisfied or partially satisfied in previous periods were immaterial.

   3. Transaction price allocated to the remaining performance obligations

   As of September 30, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations that have original expected durations greater than one year is ¥364,321 million, of which ¥205,690 million is expected to be recognized as revenue in the twelve months following September 30, 2025.

2. Stock-Based Remuneration

   The Company had a stock option plan which transfers the Company's shares to directors, certain employees and certain representative directors of major subsidiaries under an agreement granting the right for them to request such transfers at a predetermined price until the fiscal year ended March 31, 2018.

   From the fiscal year ended March 31, 2019, the Company had introduced a new compensation plan, i.e., the restricted stock compensation system for the purpose of providing directors (other than outside directors) and employees of the Company and directors and employees of major subsidiaries with medium- to long-term incentives and advance in sharing value between the directors and shareholders of the Company.

   However, in order to realize more stable and more efficient operations of the plan and to further raise the awareness of persons eligible for the plan to contribute to improving profitability and the enhancement of the medium- and long-term corporate value of the Company, a trust-type stock-based remuneration has been introduced in place of the restricted stock compensation system from the fiscal year ending March 31, 2025.

   In the plan, the Board Incentive Plan Trust for directors of the Company and subsidiaries, and the Employee Ownership Plan Trust for eligible employees of the Company acquires the Company's shares and delivers the shares or provides the amount of money equivalent to the value of the shares to eligible directors, etc., depending on the degree of achievement of performance targets, etc.

   Compensation expenses during the six months ended September 30, 2025 and 2024 were recorded in selling, general and administrative expenses, and were not material to Komatsu's financial position and results of operations. The Company recognizes share-based compensation expense using the fair value method.

3. Leases

   Revenues from sales-type and operating leases as a lessor, included in net sales on the consolidated statement of income, for the six months ended September 30, 2025 and 2024 are as follows:

   Millions of yen Six months ended September 30, 2025 Six months ended September 30, 2024

   Sales-type lease revenue

   Revenue recognized at the commencement date *	¥	70,013	¥	80,511
   Interest income		7,290		7,278

   Total sales-type lease revenue 77,303 87,789

   Operating lease revenue 44,103 47,624

Total ¥ 121,406 ¥ 135,413

* The revenue recognized at the commencement date is included in net sales of the Construction, Mining and Utility Equipment operating segment.

1. Net Income Attributable to Komatsu Ltd. per Share

   The Company had the restricted stock compensation system (hereinafter, the "System") for directors (other than outside directors) and employees of the Company and directors and employees of major subsidiaries. Among the new shares issued under the System, those transfer restrictions which have not been cancelled are distinguished as participating securities from common shares. Each common share and restricted stock has the same rights to net income attributable to Komatsu Ltd.

   A reconciliation of the numerators and denominators of the basic net income attributable to Komatsu Ltd. per share computations is as follows:

   Millions of yen

   	Six months ended	Six months ended
   	September 30, 2025	September 30, 2024
   Net income attributable to Komatsu Ltd.	¥ 175,701	¥ 201,729
   Net income attributable to participating securities (restricted stocks)	118	183
   Net income attributable to common shareholders	¥ 175,583	¥ 201,546

   Number of shares Six months ended September 30, 2025 Six months ended September 30, 2024

   Weighted average number of common shares outstanding, less treasury

   stock

   916,046,493

   934,247,913

   Weighted average number of common shares 915,432,616 933,399,944

Weighted average number of participating securities (restricted stocks) 613,877 847,969

Six months ended September 30, 2025 Yen Six months ended September 30, 2024

Basic net income attributable to Komatsu Ltd. per share ¥ 191.80 ¥ 215.93

A reconciliation of the numerators and denominators of the diluted net income attributable to Komatsu Ltd. per share computations is as follows:

Millions of yen

	Six months ended	Six months ended
	September 30, 2025	September 30, 2024
Net income attributable to Komatsu Ltd.	¥ 175,701	¥ 201,729
Net income attributable to participating securities (restricted stocks)	118	183
Net income attributable to common shareholders	¥ 175,583	¥ 201,546

Number of shares Six months ended September 30, 2025 Six months ended September 30, 2024

Weighted average number of common shares outstanding, less treasury

stock

916,046,493

934,247,913

Stock options 5,328 37,266

Dilutive effect of:

Weighted average number of participating securities (restricted stocks) 613,877 847,969

Weighted average number of diluted common shares 915,437,944 933,437,210

Six months ended September 30, 2025 Yen Six months ended September 30, 2024

Diluted net income attributable to Komatsu Ltd. per share ¥ 191.80 ¥ 215.92

1. Contingent Liabilities

   1. Komatsu provides guarantees to third parties of loans of the employees, affiliated companies, and other companies. The guarantees of loans relating to the employees are mainly made for their housing loans. The guarantees of loans relating to the affiliated companies, and other companies are made to enhance the credit of those companies. For each guarantee provided, Komatsu would have to perform under a guarantee if the borrower defaults on a payment within the contract terms. The contract terms are from 10 years to 30 years in the case of employees with housing loans, and from 1 year to 5 years in the case of loans relating to the affiliated companies and other companies. The maximum amount of undiscounted payments Komatsu would have had to make in the event of default at September 30, 2025 and at March 31, 2025 were ¥16,766 million and ¥13,929 million, respectively. The fair value of the liabilities recognized for Komatsu's obligations as guarantors under those guarantees at September 30, 2025 were insignificant. Certain of those guarantees were secured by collateral and insurance issued to Komatsu.

      Komatsu provides guarantees that subsidiaries of the Company perform the obligations of the terms and conditions of contracts by standby letters of credit issued by banks. Komatsu would have to pay the liabilities incurred to banks if the subsidiaries do not perform the obligations of the terms and conditions of contracts. The maximum amount of undiscounted payments Komatsu would have had to make in the event of defaults of the contracts at September 30, 2025 and at March 31, 2025 were ¥19,827 million and ¥20,193 million, respectively.

      Management of the Company believes that losses from those contingent liabilities, if any, would not have a material effect on the interim consolidated financial statements.

   2. Komatsu is involved in certain legal actions and claims arising mainly in the ordinary course of its business. It is the opinion of management and legal counsel that such litigation and claims will be resolved without material effect on Komatsu's financial position.

   3. Komatsu has business activities with customers, dealers and associates around the world and its trade receivables from such parties and the guarantees for them are well diversified to minimize concentrations of credit risks. Management does not anticipate incurring losses on its trade receivables in excess of established allowances.

2. Derivative Financial Instruments

   Notional principal amounts of derivative financial instruments outstanding at September 30, 2025 and at March 31, 2025 are as follows:

   Millions of yen September 30, 2025 March 31, 2025

   Foreign exchange forward contracts:

   Sale of foreign currencies	¥	289,103	¥	356,941
   Purchase of foreign currencies		205,050		195,268
   Interest rate swaps and cross-currency swap agreements		287,083		259,721

   Fair value of derivative instruments at September 30, 2025 and at March 31, 2025 on the consolidated balance sheets are as follows (Refer to Notes 16 and 17):

   Millions of yen September 30, 2025

   Derivative Assets Derivative Liabilities

   Foreign exchange forward

   contracts

   Other current assets

   Deferred income taxes and other assets

   ¥

   195

   1

   Other current liabilities

   Deferred income taxes and other liabilities

   ¥ 1,369

   241

   Derivative instruments designated as hedging instruments

   Location on the consolidated Balance Sheets

   Estimated fair value

   Location on the consolidated Balance Sheets

   Estimated fair value

   Interest rate swaps and Other current assets 152 Other current liabilities 701

   cross-currency swap

   Deferred income taxes and

   83 Deferred income taxes and

   1,853

   Total ¥ 431 ¥ 4,164

agreements other assets other liabilities

Derivative Assets Derivative Liabilities

Foreign exchange forward

contracts

Other current assets

Deferred income taxes and other assets

¥ 1,790

43

Other current liabilities

Deferred income taxes and other liabilities

¥ 1,952

37

Undesignated derivative instruments

Location on the consolidated Balance Sheets

Estimated fair value

Location on the consolidated Balance Sheets

Estimated fair value

Interest rate swaps and Other current assets 697 Other current liabilities 2,218

cross-currency swap

Deferred income taxes and

155 Deferred income taxes and

1,844

agreements other assets other liabilities

Total ¥ 2,685 ¥ 6,051

Total Derivative Instruments ¥ 3,116 ¥ 10,215

Millions of yen March 31, 2025

Derivative Assets Derivative Liabilities

Foreign exchange forward

contracts

Other current assets

Deferred income taxes and other assets

¥ 2,212

3

Other current liabilities

Deferred income taxes and other liabilities

¥ 896

109

Derivative instruments designated as hedging instruments

Location on the consolidated Balance Sheets

Estimated fair value

Location on the consolidated Balance Sheets

Estimated fair value

Interest rate swaps and Other current assets 575 Other current liabilities 75

cross-currency swap

Deferred income taxes and

546 Deferred income taxes and

468

Total ¥ 3,336 ¥ 1,548

agreements other assets other liabilities

Derivative Assets Derivative Liabilities

Foreign exchange forward

contracts

Other current assets

Deferred income taxes and other assets

¥

2,258 Other current liabilities

- Deferred income taxes and other liabilities

¥ 2,953

-

Undesignated derivative instruments

Location on the consolidated Balance Sheets

Estimated fair value

Location on the consolidated Balance Sheets

Estimated fair value

Interest rate swaps and Other current assets 863 Other current liabilities 1,720

cross-currency swap

Deferred income taxes and

204 Deferred income taxes and 80

agreements other assets other liabilities

Total ¥ 3,325 ¥ 4,753

Total Derivative Instruments ¥ 6,661 ¥ 6,301

The effects of derivative instruments on the consolidated statements of income and the consolidated statements of comprehensive income for the six months ended September 30, 2025 and 2024 are as follows:

Derivative instruments designated as cash flow hedging relationships

Amount of gains (losses) recognized

in OCI

Foreign exchange forward contracts ¥

599 Net sales

Cost of sales

Other income (expenses), net: Other, net

¥

470

(129)

1,448

on derivatives

Millions of yen Six months ended September 30, 2025

Gains (losses) reclassified from accumulated OCI on derivatives

Location of

consolidated statements of income Amount

Interest rate swaps and (337) Cost of sales 19

Total ¥ 262 ¥ 1,808

cross-currency swap agreements

Amount of gains (losses) recognized

in OCI

Foreign exchange forward contracts ¥

2,290 Net sales

Cost of sales

Other income (expenses), net: Other, net

¥

(1,226)

(455)

1,642

on derivatives

Millions of yen Six months ended September 30, 2024

Gains (losses) reclassified from accumulated OCI on derivatives

Location of

consolidated statements of income Amount

Interest rate swaps and (336) Cost of sales 8

Total ¥ 1,954 ¥ (31)

cross-currency swap agreements

* OCI stands for other comprehensive income (loss).

Derivative instruments not designated as hedging instruments relationships

	Millions of yen
	Six months ended September 30, 2025
	Location of gains (losses) recognized	Amount of gains (losses) recognized in income on
	in income on derivatives	derivatives
Foreign exchange forward contracts	Other income (expenses), net: Other, net	¥ 3,804
Interest rate swaps and	Cost of sales	125
cross-currency swap agreements	Other income (expenses), net: Other, net	(2,127)
Total		¥ 1,802
	Millions of yen
	Six months ended September 30, 2024
	Location of gains (losses) recognized	Amount of gains (losses) recognized in income on
	in income on derivatives	derivatives
Foreign exchange forward contracts	Other income (expenses), net: Other, net	¥ (5,056)
Interest rate swaps and	Cost of sales	1,243
cross-currency swap agreements	Other income (expenses), net: Other, net	(1,562)
Total		¥ (5,375)

1. Fair Values of Financial Instruments

   The carrying amounts and the estimated fair values of the financial instruments as of September 30, 2025 and March 31, 2025 and fair value levels are summarized as follows:

   1. Cash and cash equivalents, Trade notes and accounts receivable, net, Miscellaneous accounts receivable, Short-term debt, Trade notes, bills and accounts payable

      The carrying amounts approximate fair value because of the short maturity of these instruments. Therefore, the fair values of these instruments are not included in the table below. Cash and cash equivalents are classified at fair value level 1, and trade notes and accounts receivable, net, miscellaneous accounts receivable, short-term debt, trade notes, bills and accounts payable are classified at fair value level 2. Miscellaneous accounts receivable is included in other current assets on the consolidated balance sheet.

   2. Long-term trade receivables, net, excluding lease receivables (Note 3)

      The fair values of long-term trade receivables are based on the present value of future cash flows through maturity, discounted using the current interest rates for similar receivables of comparable maturity.

   3. Long-term debt, including current portion

      The fair values of each of the long-term debt are based on the quoted price in the most active market or the present value of future cash flows associated with each instrument discounted using the current market borrowing rate for similar debt of comparable maturity.

   4. Derivatives (Notes 15 and 17)

   The fair values of derivative financial instruments are stated in Note 17 and therefore are not included in the table below.

   Millions of yen September 30, 2025 March 31, 2025

   Carrying amount	Estimated fair value		Carrying amount	Estimated fair value	Fair Value Levels
   Long-term trade receivables, net, excluding 607,601	619,540		614,914	620,041	Level 2
   Long-term debt, including current portion 786,517	773,628		774,271	761,474	Level 2

   lease receivables

   Notes:

   1. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could affect the estimates.

   2. The fair value levels are stated in Note 17.

2. Fair Value Measurements

   Financial Accounting Standards Board Accounting Standards CodificationTM(hereinafter "ASC") 820, "Fair Value Measurements" defines that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:

   Level 1 - Quoted prices in active markets for identical assets or liabilities Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly Level 3 - Unobservable inputs for the assets or liabilities Assets and liabilities that are measured at fair value on a recurring basis

   The fair value hierarchy levels of assets and liabilities that are measured at fair value on a recurring basis at September 30, 2025 and at March 31, 2025 are as follows:

   Millions of yen

   At September 30, 2025		Level 1			Level 2		Level 3			Total
   Assets
   Derivatives
   Foreign exchange forward contracts	¥		-	¥	2,029	¥		-	¥	2,029
   Interest rate swaps and cross-currency swap agreements			-		1,087			-		1,087
   Total	¥		-	¥	3,116	¥		-	¥	3,116
   Liabilities
   Derivatives
   Foreign exchange forward contracts	¥		-	¥	3,599	¥		-	¥	3,599
   Interest rate swaps and cross-currency swap agreements			-		6,616			-		6,616
   Total	¥ －			¥ 10,215		¥ －			¥	10,215

   Millions of yen At March 31, 2025 Level 1 Level 2 Level 3 Total

   Assets

   Foreign exchange forward contracts ¥ － ¥ 4,473 ¥ － ¥ 4,473

Derivatives

Interest rate swaps and cross-currency swap agreements

- 2,188 － 2,188

Total ¥ － ¥ 6,661 ¥ － ¥ 6,661

Derivatives

Liabilities

Foreign exchange forward contracts ¥ － ¥ 3,958 ¥ － ¥ 3,958

Interest rate swaps and cross-currency swap

agreements

-

2,343

-

2,343

Total ¥ － ¥ 6,301 ¥ － ¥ 6,301

Derivatives (Notes 15 and 16)

Derivatives primarily represent foreign exchange forward contracts and interest rate swap agreements. The fair value of foreign exchange forward contracts is based on a valuation model that discounts cash flows resulting from the differential between contract rate and the market-based forward rate and is classified in Level 2 in the fair value hierarchy. The fair value of interest rate swap agreements is based on a valuation model that discounts cash flows based on the terms of the contract and the swap curves and is classified in Level 2 in the fair value hierarchy.

Assets and liabilities that are measured at fair value on a non-recurring basis

During the six months ended September 30, 2025 and 2024, assets and liabilities that were measured at fair value on a non-recurring basis were not material.

1. Committed Credit Lines

   The Company and certain consolidated subsidiaries have entered into contracts with certain financial institutions for committed credit lines. These total amounts of committed credit lines at September 30, 2025 and at March 31, 2025 were ¥341,811 million and ¥342,827 million, respectively. These total amounts of unused committed credit lines available for full and immediate borrowings at September 30, 2025 and at March 31, 2025 were ¥302,655 million and ¥305,239 million, respectively.

2. Dividends

Six months ended September 30, 2025

1. Payment amount of dividends

   	Type of	Aggregate amount of dividends	Resource of	Dividend per share	Record	Effective
   Resolution	stock	(Millions of yen)	dividends	(Yen)	date	date
   Ordinary general meeting of Common ¥98,823 Retained ¥107 March 31, June 20, shareholders held stock earnings 2025 2025 on June 19, 2025

   Note: The amount is rounded down to nearest million yen.

2. Dividends to be paid for the six months ended September 30, 2025, of which effective date is after September 30, 2025

	Type of	Aggregate amount of dividends	Resource of	Dividend per share	Record	Effective
Resolution	stock	(Millions of yen)	dividends	(Yen)	date	date
Board of Directors Common Retained September December held on October stock ¥86,318 earnings ¥95 30, 2025 1, 2025 29, 2025

Note: The amount is rounded down to nearest million yen.

Six months ended September 30, 2024

1. Payment amount of dividends

   	Type of	Aggregate amount of dividends	Resource of	Dividend per share	Record	Effective
   Resolution	stock	(Millions of yen)	dividends	(Yen)	date	date
   Ordinary general meeting of Common ¥89,907 Retained ¥95 March 31, June 20, shareholders held stock earnings 2024 2024 on June 19, 2024

   Note: The amount is rounded down to nearest million yen.

2. Dividends to be paid for the six months ended September 30, 2024, of which effective date is after September 30, 2024

	Type of	Aggregate amount of dividends	Resource of	Dividend per share	Record	Effective
Resolution	stock	(Millions of yen)	dividends	(Yen)	date	date
Board of Directors Common Retained September December held on October stock ¥76,656 earnings ¥83 30, 2024 2, 2024 29, 2024

Note: The amount is rounded down to nearest million yen.