Komatsu : Mid-Term Management Plan(FY2019-FY2021) (478 KB)

Komatsu's Growth Strategies

Mid-Term Management Plan (FY2019-FY2021)

DANTOTSU Value

Komatsu's Business Model		Komatsu's Growth Strategies		Resolution of ESG Issues		Corporate Profile
		through Growth Strategies

Demand for Construction and Mining Equipment

FORWARD Together for Sustainable Growth

Komatsu's External Environment

Today, protectionism is growing around the world, and multipolarity is becoming evident. We are also witnessing growing concerns over climate change. As the external environment is changing dynamically, in the construction, mining, and utility equipment business, we assume gradual growth of the demand in the medium to long term, but the volatility will remain high in the short term. In the industrial machinery and others business, we anticipate a structural change of demand in the automobile manufacturing industry, mainly resulting from ongoing progress toward electric vehicles. In addition, we anticipate assured growth in demand in the semiconductor manufacturing industry over the medium to long term, while a temporary adjustment phase is also expected. Achieving sustainable growth in this environment will require growth strategies that are not affected by demand fluctuations.

Changes in the External Environment and of ESG Issues

Sales / Demand

Period of the previous plan

• Growth strategies based on innovation
• Growth strategies of existing businesses
• Structural reforms designed to reinforce the business foundation

Demand recovery for mining equipment and in emerging economies

We assumed demand recovery would start in FY2019 in the previous plan.

(Actually it started in FY2017.)

Period of the mid-term

management plan

• Value creation by means of innovation
• Growth strategies based on business reforms
• Structural reforms for growth

Growth above the industry's

average by focusing

investment in growth areas

We assume gradual growth in

the mid to long ranges,

but volatility will remain high

in the short range.

Sustainable

growth

Assumed range of demand change

Politics &	economy		Technologies
• Multipolarization of the world		• Further spread of	IoT, AI, and big data
• Emergence of protectionism		•The progress of electric and
• Growth of emerging economies		autonomous vehicles

Environment	& energy		Society &	values
• Climate change			• Acceleration of diversity in
• Growing demand	for energy, foods and water		advanced countries
• Decarbonization &	renewable energy		• A decline of working-age population
			• Achievement of a recycling-oriented
			society by accelerating the pace of sharing
			• Growing pursuit and needs for safety
			and comfort

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

FY2022~

Construction, Mining, and Utility Equipment Business Sales (to Outside Customers) by Region

(Billions of yen)

3,000
2,500		2,466.6
2,267.3	Africa
2,000		Middle East	Strategic
	Oceania	Markets
1,566.3		Asia	54%
1,500		China
		CIS
1,000		Latin America	Traditional
		Europe	Markets
500		North America	46%
0		Japan
FY2016	FY2017	FY2018

Expectations of achieving

a sustainable society

Our Tasks in the

Growth Strategies

1. To solve ESG issues through the growth strategies of our core business

2. To promote sustainable growth based on our profit structure which is free of changes in the external environment and market demand

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Komatsu's Growth Strategies

Mid-Term Management Plan (FY2019-FY2021)

Overview of the Mid-Term Management Plan

The mid-term management plan sets forth the future vision Komatsu should aspire to and hope to accomplish as it approaches and moves beyond the 100th anniversary of its founding in 2021. As part of this vision, we seek to become a company that can help realize the safe, highly productive, smart, and clean workplaces of the future together with customers while generating a positive cycle of resolving ESG issues through the creation of value for customers and improving earnings.

Management		Make commitment to Quality and Reliability and maximize corporate
Principle		value (the total sum of trust from society and all stakeholders)

Komatsu's Business Model		Komatsu's Growth Strategies		Resolution of ESG Issues		Corporate Profile
		through Growth Strategies

Management Targets of the Mid-Term Management Plan and Related Performance

	Management Target	FY2019 (First year of the plan)
	Indicator	Performance
Growth	• Growth rate above the industry's average	Sales growth rate	10.3%
Profitability	• An industry's top-level operating income ratio	Operating	10.3%
income ratio
Efficiency	• 10%-level ROE	ROE	8.6%
	• Keep a fair balance between investment for growth and	Net debt-to-	0.43
Financial position	shareholder return (including stock buybacks), while placing main
equity ratio
	priority on investment
Shareholder return	• Set the goal of a consolidated payout ratio of 40% or higher	Consolidated	57.7%
payout ratio
		Reduction of	CO2 emissions:
	• Reduction of environmental impact	Decrease by 40% in 2021
	environmental
	Renewable energy use:
	CO2 emissions: Decrease by 50% in 2030 from 2010.	impact
	Increase to 15% of total

		2021
		100th
		anniversary
		and beyond
1		Mid-Term
Previous Plan
Management Plan
(FY2016-FY2018)
(FY2019-FY2021)

Backcasting	2

Growth strategies and management targets by backcasting the roadmap to our future vision

Future Vision

ESG Solutions

ESG	Renewal energy use: Increase to 50% of total energy use in 2030.	Evaluation by	energy use in 2021
	• Evaluation by external organizations: Selected for DJSI (World &
	Selected for DJSI
	Asia Pacific) and CDP A-list (Climate Changes and Water Risk)	external	CDP Climate Change: A
		organizations	CDPWater Risk: A-
Retail finance	• ROA: 1.5%-2.0%	ROA	1.5%
business	• 5.0 or under for net debt-to-equity ratio	Net debt-to-	3.80
	equity ratio

• Growth strategies based on innovation
• Growth strategies of existing businesses

•Structural reforms designed to reinforce the business foundation

3

Three Pillars of Growth Strategies

1. Value creation by means of
	innovation
2.	Growth strategies based on
	business reforms
3.	Structural reforms for

Positive cycle = Sustainable growth

Workplaces of the future: Safe, highly productive, smart and clean

Concepts and Stance of the Mid-Term Management Plan

The mid-term management plan defines three pillars of growth strategies: 1) value creation by means of innovation,

1. growth strategies based on business reforms, and 3) structural reforms for growth. By prioritizing investment on growth areas based on the three pillars of growth strategies, we will seek to achieve sustainable growth through a positive cycle of improving earnings and solving ESG issues that is resilient to fluctuations in demand.

Integration of KMC

(FY2017)

growth

Positive cycle = Sustainable growth

Improvement of earnings

Expectations of society and

stakeholders

Stakeholders

Growth Strategy Aligned with

Management Principles

Maximize Corporate Value which is

the Total Sum of Trust

				• Optimization platform and solutions business strategies
			Value creation	SMARTCONSTRUCTION, Autonomous Haulage System (AHS), and
	1		platforms (LANDLOG and IntelliMine)
		by means of
		• Automation, autonomous operation, electrification and remote-controlling of
			innovation	construction, mining and utility (compact) equipment
				• Smart forestry and agriculture
				• KMC integration synergies and business reinforcement
				• Value chain reforms and redefinition of the aftermarket business
			Growth strategies	Preventive maintenance by applying IoT and AI, and Lifecycle support under serial number-based
			management; logistics reforms; and next-generation key components
	2
		based on business	• Next-generation KOMTRAX
		• Stronger focus on aggregate & cement, forestry, agriculture and other segments
			reforms
			• Efforts for "DANTOTSU No. 1 in Asia" and in the growing markets of India and Africa
				• Reforms of the industrial machinery business (Expansion of synergy with the construction
				equipment­	business and growth by capitalizing on core technologies)
	3		Structural	• Business reforms by means of ICT and IoT
		reforms for	• Structural reforms of development operations Model based development Open innovation
		• Connected plants with Zero impact on environment and workers

growth	• Global human resource development

Communities

		Solutions for
Customers		ESG issues
		Sustainable
		growth
Employees
Distributors
Suppliers
	Shared growth
		based on
Business	growth strategies
partners
Shareholders
Investors		Sustainable
		increase of
		earnings

Enhance Corporate Brand

ESG Solutions

Positive cycle = Sustainable growth

Three Pillars of Growth Strategies

1. Value creation by means of innovation
2. Growth strategies based on business reforms
3. Structural reforms for growth

Positive cycle = Sustainable growth

Improvement of earnings

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