Hitachi Construction Machinery : Financial Results for the Second quarter Ended September 30, 2020(IFRS)

Consolidated Financial Results for the Second quarter Ended September 30, 2020

(IFRS)

October 27, 2020

Listed company: Hitachi Construction Machinery Co., Ltd. (HCM)

Stock exchange: Tokyo (first section) Code number: 6305 URL https://www.hitachicm.com/global/

Representative: Kotaro Hirano, Executive Officer, President & CEO

Scheduled date for submission of the Quarterly Securities Report: November 12, 2020

Scheduled date of commencement of payment of dividends: November 30, 2020

Supplementary materials to the financial statements have been prepared: Yes

Presentation will be held to explain the financial statements: Yes (for institutional investors, analysts and journalists)

(Rounded off to the nearest million)

1. Consolidated results for the second quarter ended September (April 1, 2020 to September 30, 2020)

1. Consolidated results

(The percentages indicated show changes from the same period of the previous fiscal year)

			Adjusted	Income before			Net income
	Revenue	Net income	attributable to
	Operating income	income taxes
					owners of the parent
	Millions of	%	Millions of	%	Millions of	%	Millions of	%	Millions of	%
	yen		yen		yen		yen		yen
September 30,	360,902	(24.9)	10,939	(75.7)	4,779	(88.4)	2,168	(92.4)	211	(99.2)
2020
September 30,	480,559	(2.0)	44,965	(15.7)	41,130	(15.6)	28,443	(18.5)	25,196	(16.7)
2019

Note: "Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses.

Net income attributable to	Net income attributable to
owners of the Parent per share	owners of the Parent per share
(basic)	(diluted)

	Yen	Yen
September 30,	0.99	0.99
2020
September 30,	118.48	118.48
2019
References: Share of profits (losses) of investments accounted for using the equity method
September 30, 2020: ¥66million September 30, 2019: ¥2,030million

(2)

Consolidated financial position

Total assets

Total equity

Total equity attributable to

Equity attributable to owners

owners of the parent

of the parent ratio

Millions of yen

Millions of yen

Millions of yen

%

September 30,

1,141,533

530,343

478,499

41.9

2020

March 31, 2020

1,167,567

525,111

473,537

40.6

2. Dividends status

Cash dividends per share

First

Second

Third

Year end

Total

Quarter

Quarter

Quarter

Yen

Yen

Yen

Yen

Yen

March 31, 2020

－

36.00

－

24.00

60.00

March 31, 2021

－

10.00

March 31, 2021

－

－

－

(Projection)

Year-end dividends for the fiscal year ending March 2021 are to be determined.

Note: Changes involving the dividend states for the fiscal year ending March 2021: Yes

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

3. Consolidated earnings forecast for the full year ending March 2021(April 1, 2020 to March 31, 2021)

(The percentages indicated show changes from the same period of the previous fiscal year)

										Net income
			Adjusted		Income before		Net income attributable to	attributable
	Revenue				to owners of
		Operating income	income taxes		owners of the parent
				the parent
										per share
March	Millions of yen	%	Millions of yen	%	Millions of yen		%	Millions of yen	%	Yen
31, 2021	770,000	(17.3)	40,000	(47.8)	34,000		(49.3)	20,000	(51.4)	94.05

Notes: Changes in consolidated earnings forecast: None

*Notes

1. Important changes in the scope of the consolidation during period(changes involving specific subsidiaries accompanying changes in the scope of consolidation): None
2. Changes in accounting policies; changes in accounting estimates

[1]	Changes in accounting policies required by IFRS	None
[2]	Changes in accounting policies other than those in [1]	None
[3]	Changes in accounting estimates	None

1. Number of outstanding shares (common shares)
   [1] Number of outstanding shares (including treasury shares)

September	2020	215,115,038
March	2020	215,115,038
[2] Number of treasury shares
September	2020	2,462,281
March	2020	2,461,867

[3] Average number of common shares outstanding during the fiscal year (shares)

September	2020	212,652,965
September	2019	212,654,558

Indication of audit procedure implementation status

This earnings report is exempt from audit procedure.

Explanation on the appropriate use of results forecasts and other important items

Any forward-looking statements in the report, including results forecasts, are based on certain assumptions that were deemed rational as well as information currently available to the Company at this time. However, various factors could cause actual results to differ materially. Please refer to ''1. Management Performance and Financial Conditions,

1. Outlook for the Fiscal Year Ending March 2021'' of the attachment for conditions serving as assumptions for results forecasts.

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

Index of the Attachment
1. Management Performance and Financial Conditions ...........................................................................	2
(1) Management Results.........................................................................................................................	2
(2)	Outlook for the Fiscal Year Ending March 2021 .............................................................................	4
(3)	Analysis of Financial Condition .....................................................................................................	5
2. Consolidated Financial Statements.........................................................................................................	7
(1)	Consolidated Balance Sheets ............................................................................................................	7
(2)	Consolidated Statements of Income and Comprehensive Income....................................................	8
	Consolidated Statements of Income .................................................................................................	8
	Consolidated Statements of Comprehensive Income .......................................................................	9
(3)	Consolidated Statements of Changes in Equity ..............................................................................	10
(4)	Consolidated Statements of Cash Flows.........................................................................................	12
(5)	Notes on Consolidated Financial Statements..................................................................................	13
	(Notes on the Preconditions for a Going Concern) ........................................................................	13
	(Note on consolidated statements of income) ................................................................................	14
	(Segment Information) ...................................................................................................................	15

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

1

1. Management Performance and Financial Conditions

(1) Management Results

As a direction of the HCM Group's medium-term management strategy, in order to further strengthen the value chain business, on which the Group has been focusing, the Group is using digital technology to provide even deeper solutions at every point of contact with customers, and is working to transform itself into a corporate structure that is resilient to change.

During the 2Q of the current fiscal year (April 1, 2020 to September 30, 2020), revenues from rental and used equipment increased year-on-year, but overall revenues fell sharply to ¥360,902 million (a decrease of 24.9% year-on-year). This was mainly due to a decrease in sales of new machinery and parts & services due to a deterioration in the market caused by COVID-19, a decrease in sales of new mining machinery and parts & services due to restrained capital expenditure due to sluggish resource prices and other factors, and the impact of the yen's appreciation compared to the previous fiscal year. These factors were partially offset by an increase in sales of rental and used equipment compared to the same period of the previous fiscal year in the value chain business, on which we are focusing.

As for consolidated income items, adjusted operating income was ¥10,939 million ( a decrease of 75.7% year on year ), mainly due to a decrease in revenue and the impact of the yen's appreciation. Quarterly profit attributable to owners of parent was ¥211 million (a decrease of 99.2% year-on-year), affected by foreign exchange losses due to the appreciation of domestic currencies at overseas bases, income tax expenses, and non-controlling interests' gains and losses.

Business results by segment are described below.

1. Construction Machinery Business

Demand for hydraulic excavators in the consolidated cumulative 2Q was significantly

lower than that in the same period of the previous fiscal year in major regions except China. Demand for mining machinery was also marked by restraints on capital investment by mining companies, and demand from small and medium-sized mining companies declined significantly in particular.

As a result, although rentals and used equipment rose, revenues for the first half of the

fiscal year under review amounted to ¥320,216 million (a decrease of 26.3% year-on-year), mainly due to the decline in sales of new machinery and parts & services, as well as the impact of the yen's appreciation, due to the sluggish markets caused by COVID-19.

Adjusted operating income was ¥7,159 million (a decrease of 82.5% year-on-year), mainly due to a decrease in revenue and the impact of the yen's appreciation.

2. Solution Business

This segment consists primarily of Bradken Pty Limited and its subsidiaries, which are

engaged in the parts service business in the after-sales sales of mining facilities and machinery, and H-E Parts International LLC and its subsidiaries, which provide service solutions.

Sales of consumables for processing facilities operating at mining companies remained steady, reaching ¥42,071 million (a decrease of 11.5% year-on-year), despite a decrease in sales revenues in the 2Q of the fiscal year.

Adjusted operating income was ¥3,780 million (a decrease of 8.2% year-on-year), due in part to the effects of business restructuring, despite the decrease in revenue and the impact of the yen's appreciation.

The above revenues of segment 1 and 2 are figures before intersegment adjustments

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

2