Kawasaki Heavy Industries : Financial Results for the First Quarter FY2020(Presentation Material) (PDF：990KB）

Financial Results for First Quarter FY2020 (for the year ending March 31, 2021)

August. 6, 2020

Table of Contents

Ⅰ . Consolidated Results for First Quarter FY2020

•	Summary of Financial Results	3
•	Financial Results by Segment	4
•	Details of Change in Profit	5
•	Summary of Income Statement	6

• Financial Results/Impact of COVID-19

	− Aerospace Systems	7
	− Energy System & Plant Engineering	8
	− Precision Machinery & Robot	9
	− Ship & Offshore Structure	10
	− Rolling Stock	11
	− Motorcycle & Engine	12
•	Summary of Balance Sheet	13
•	Summary of Cash Flows	14

Ⅱ. Forecast for FY2020

•	Consolidated Operating Performance	15
•	Forecast by Segment	16
•	Historical Data	17
•	Market Overview	18

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	2

Summary of Financial Results

[Billion Yen]

	FY2019	FY2020	Change
	1Q	1Q
Orders Received	328.2	248.2	－	79.9
Net Sales	350.7	300.6	－	50.1
Operating Income / Loss	1.0	-20.6	－	21.7
Recurring Profit / Loss	-4.3	-18.9	－	14.5
Net Loss Attributable to Owners	-8.2	-11.7	－	3.5
of Parent

<> exchange rates>

Yen/US$	110.32	106.29
Yen/EUR	124.35	118.75

vs. FY2019.1Q

• Orders Received
• • Decreased mainly in Aerospace Systems and Energy System & Plant Engineering segment
• Net Sales
• • Decreased as a whole due to a decrease in Aerospace Systems, Motorcycle & Engine and other segments, despite an increase in Rolling Stock and other segments
• Profits
• • Operating income and recurring profit decreased due to a deterioration in Aerospace Systems and other segments, despite an improvement in Rolling Stock segment
  • Net income attributable to owners of parent decreased due to a decrease in recurring loss, despite gains on sales of fixed assets being recorded extraordinary income and a decrease in tax expenses

(Appendix)

Net Sales in Foreign Currencies for FY2020. 1Q

[Billion]

US$EUR

0.240.03

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	3

Financial Results by Segment

[Billion Yen]

	Orders Received			Net Sales			Operating Income / Loss
	FY2019	FY2020	Change	FY2019	FY2020	Change	FY2019	FY2020	Change
	1Q	1Q	1Q	1Q	1Q	1Q
Aerospace Systems	69.7	45.4	－	24.3	122.1	74.6	－	47.5	4.8	-17.5	－	22.3
Energy System &	69.8	46.2	－	23.6	45.0	50.0	+	5.0	0.8	1.5	+	0.7
Plant Engineering
Precision Machinery & Robot	52.9	50.7	－	2.1	48.3	45.4	－	2.9	1.7	1.3	－	0.4
Ship & Offshore Structure	21.5	9.9	－	11.6	22.8	22.1	－	0.7	-0.3	-0.4	－	0.0
Rolling Stock	16.0	18.7	+	2.7	20.4	32.3	+	11.9	-3.5	-1.4	+	2.0
Motorcycle & Engine	68.3	58.9	－	9.3	68.3	58.9	－	9.3	-2.8	-5.9	－	3.0
Others	29.7	18.0	－	11.6	23.5	16.9	－	6.5	0.4	-0.1	－	0.6
Eliminations and corporate※	-	-		-	-	-		-	0.0	1.9	+	1.9
Total	328.2	248.2	－	79.9	350.7	300.6	－	50.1	1.0	-20.6	－	21.7

• "Eliminations and corporate" includes some expenses incurred at Head Office which were not allocated to each industry segment for internal reporting

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	4

Details of Change in Profit and Loss

• Operating Profit and Loss

-21.7Billion yen (FY2019.1Q 1.0 Billion yen ⇒ FY2020.1Q -20.6 Billion yen)

FY2019. 1Q

1.0

－21.7 Billion yen

FY2020. 1Q

	－20.2							－20.6
			Effects of		Change in product mix
			foreign exchange rates
					and other factors
			－2.1	－0.8
Impact of COVID-19				+5.3
※	－3.9
Change in Sales

Change in selling, general and administrative expenses

• This figure is an approximate value that aggregates profit and loss fluctuations that are clearly attributable to the spread of COVID-19 in the 1Q of 2020, assuming the 1Q FY2019 results as a normal value

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	5

Summary of Income Statement

[Billion Yen]

					(	FY2019.1Q	⇒	FY2020.1Q	)
Operating Income / Loss	－ 21.7	(	1.0	⇒	-20.6	)
・ Net Sales	－ 50.1	(	350.7	⇒	300.6	)
・ Cost of sales	－ 23.0	(	301.4	⇒	278.3	)
・ Selling, general & administrative expenses	－	5.3	(	48.2	⇒	42.9	)
	-	Salaries and benefits	+	0.1	(	13.3	⇒	13.4	)
-	R&D expenses	－	2.9	(	11.1	⇒	8.1	)
Non-operating Income / Expenses	+	7.2	(	-5.4	⇒	1.7	)
・ Net Interest expense (incl. dividend income)	－	0.2	(	-0.5	⇒	-0.7	)
・ Equity in income / loss of non-consolidated subsidiaries	－	0.3	(	0.3	⇒	0.0	)
	and affiliates
・ Gain and loss on foreign exchange	+	7.4	(	-5.0	⇒	2.3	)
・ Others	+	0.3	(	-0.2	⇒	0.1	)
Extraordinary Income / Losses	+	4.8	(	-	⇒	4.8	)
	- Gain on sales of fixed assets	+	3.2	(	-	⇒	3.2	)
-	Gain on sales of shares of subsidiaries and affiliates	+	1.5	(	-	⇒	1.5	)

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	6

Aerospace Systems

Main Products: Aircrafts for Japan Ministry of Defense(MOD), Component parts for commercial aircrafts, Commercial helicopters, Missiles, Space equipment, Jet engines, Aerospace Gearbox

FY2019(Accumulated)FY2020(Accumulated)

1Q 2Q 3Q 4Q1Q 2Q 3Q 4Q

		Orders Received			Net Sales
[Billion Yen]	532.5	Order backlog
			546.8Billion Yen

371.4	420.0
360.0
250.8
122.1	45.474.6
69.7

FY2020.1Q (vs. FY2019.1Q)

• Orders Received: Decreased due to a decrease in component parts for commercial aircrafts and component parts for commercial aircraft jet engines
• Net Sales: Decreased due to a decrease in aircrafts for MOD, component parts for commercial aircrafts and component parts for commercial aircraft jet engines
• Operating Income: Deteriorated due to a decrease in revenue and other factors

FY2020 forecast (vs. FY2019)

• Orders Received: Decreased due to a decrease in component parts for commercial aircrafts and component parts for commercial aircraft jet engines by the impact of COVID-19

		Operating Income		Operating Margin
[Billion Yen]	42.7

20.5

4.8 9.7 5.5% 8.0%

3.9% 3.8%		-17.5			-5.0%
-23.4%	-
21.0

• Net Sales:

Same as above

• Operating Income: Deteriorated due to a decrease in revenue and other factors

Sales units of component parts for commercial aircraft [Unit]

			FY2019.1Q		FY2020.1Q
Boeing 767		8			4
Boeing 777		12			3
Boeing 777X		4			1
Boeing 787		43			18
			FY2018		FY2019
			Actual		Actual
		Before-tax ROIC	5.0%		8.0%

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	7

Energy System & Plant Engineering

Main Products: Industrial plants(cement, fertilizer and others), Power plants, LNG tanks, Municipal waste incineration plants, Tunnel boring machines, Crushing machines,

Gas turbine co-generation system, Gas engines, Diesel engines, Gas turbines & steam turbines for marine & land, Marine propulsion system, Aero-dynamic machinery

FY2019(Accumulated)

FY2020(Accumulated)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Orders Received

Net Sales

[Billion Yen]	Order backlog	280.0
	252.3 242.9	386.9Billion Yen	240.0
	184.3
	124.0
69.8	95.6	46.2 50.0

Operating Income	Operating Margin
[Billion Yen]	8.0% 7.2%
5.2%		17.5
	13.0	3.1%	2.5%
1.8%
5.0		1.5	6.0
0.8
※1. CCPP = Combined Cycle Power Plant

FY2020.1Q (vs. FY2019.1Q)

• Orders Received: Decreased compared to FY2019 1Q when the order received for major repair work on domestic municipal waste incineration plants
• Net Sales: Increased due to an increase in projects for government such as domestic municipal waste incineration plants
• Operating Income: Increased due to an decrease in revenue, despite occurrence of operation losses by the impact of COVID-19

FY2020 forecast (vs. FY2019)

• Orders Received: Increased due to an increase in various energy related equipment and CCPP for domestic market, and other factors
• Net Sales: Remained despite a decrease in sales of the after service by the impact of COVID-19
• Operating Income: Decreased due to a decrease in sales of the after service and occurrences of operation losses by

the	impact of COVID-19 and a decrease in profitable
	projects

	FY2018	FY2019
	Actual	Actual
Before-tax ROIC	9.3%	10.4%

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	8

Precision Machinery & Robot

Main Products: Hydraulic components for construction machinery, Hydraulic components and systems for industrial machines,

Marine application machines, Deck cranes and other marine deck equipment, Industrial robots, Medical and pharmaceutical robot

FY2019(Accumulated)FY2020(Accumulated)

1Q 2Q 3Q 4Q1Q 2Q 3Q 4Q

			Orders Received		Net Sales
[Billion Yen]				Order backlog
218.8 217.3	56.0Billion Yen 200.0 200.0
157.1
104.6
52.9			50.7 45.4

		Operating Income		Operating Margin
[Billion Yen]	5.6%

FY2020.1Q (vs. FY2019.1Q)

• Orders Received: Decreased due to a decrease in hydraulic components for construction machinery, despite an increase in robots for semiconductor manufacturing equipment

• Net Sales:

Same as above

• Operating Income: Decreased due to a decrease in revenue

FY2020 forecast (vs. FY2019)

• Orders Received: Remained due to an increase in robots for semiconductor manufacturing equipment, despite a decrease in hydraulic components for construction machinery and general prupose robots by the impact of COVID-19

• Net Sales:

Same as above

• Operating Income: Decreased due to a decrease in revenue

3.6%	3.2%	3.5%	3.5%
	12.2	2.9%
		5.2	7.0
	3.2
1.7		1.3
		FY2018	FY2019
				Actual	Actual
			Before-tax ROIC	19.8%	8.8%

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	9

Ship & Offshore Structure

Main Products: LNG carriers, LPG carriers, Bulk carriers, Submarines, JETFOIL

FY2019(Accumulated)

FY2020(Accumulated)

FY2020.1Q (vs. FY2019.1Q)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

• Orders Received:

Decreased compared to FY2019 when

Orders Received

Net Sales

• Net Sales:

received orders of LPG carriers

Decreased due to a decrease in sales of ship

[Billion Yen]

Order backlog

repairs, despite an increase in construction works

120.0

of LPG carriers and submarines

73.7 Billion Yen

• Operating Income: Same as FY2019 1Q

71.6

80.0

FY2020 forecast (vs. FY2019)

• Orders Received:

Increased due to expecting of orders received of

53.0

• Net Sales:

LNG carriers, LPG carriers and submarines

21.5 22.8

37.1

22.1

Increased due to an increase in construction

works for ship repairs and new model submarines

9.9

• Operating Income: Deteriorated due to occurrence of operating loss

by the decrease in construction works of new

ships and other factors

Operating Income

Operating Margin

[Billion Yen]

-0.3			-0.6	-0.4
	-0.7	-0.8%
-1.7%	-1.4
-1.4%		-1.9%
		-3.9%		-4.0
				-5.0%

Units of Orders Received and Sales of New Building Ships [Unit]

	Orders Received	Sales※	Orders Backlog
	FY2019.1Q	FY2020.1Q	FY2019.1Q	FY2020.1Q	FY2020.1Q
LNG carriers			2
LPG carriers	2		4	3	5
Submarines			2	2	2
Others			4	3	3
Total	2	0	12	8	10

※Sales includes units by percentage-of-completion method

	FY2018	FY2019
	Actual	Actual
Before-tax ROIC	3.2%	1.4%

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	10

Rolling Stock

Main Products: Electric train cars (incl. Shinkansen), Electric and diesel locomotives, Passenger coaches, Bogies

FY2019(Accumulated)

FY2020(Accumulated)

FY2020.1Q (vs. FY2019.1Q)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

• Orders Received:

Increased due to received orders of Shinkansen

Orders Received

Net Sales

• Net Sales:

and other factors

Increased due to an increase in passenger cars

[Billion Yen]

150.0

136.5

Order backlog

for the domestic market

125.7

• Operating Income: Improved due to an increase in sales, a decrease

485.8Billion Yen

in periodic costs, and other factors, despite a

91.297.4

deterioration in profit for overseas project by the

70.0

impact of COVID-19

59.3

FY2020 forecast (vs. FY2019)

32.3

• Orders Received:

Decreased due to decrease in received orders

16.0 20.4

18.7

and delay of contracts by the impact of

• Net Sales:

COVID-19

Increased due to an increase in passenger cars

for the US market

Operating Income		Operating Margin		• Operating Income: Improved due to an improvement in profitability
[Billion Yen]						of passenger cars for the domestic market, a
					decrease in temporary expense of the US
-3.5	-4.3	-3.1	-3.8			projects incurred in FY2019, and other factors,
-1.4	-1.3%	despite delayed in delivery due to temporary
					production interruptions at the US local
					-4.5%		subsidiaries and temporary suspension of
		-3.2%	-2.7%	-2.0	acceptance process by customers in the US by
							the impact of the COVID-19
	-7.3%
								FY2018	FY2019
-17.3%								Actual	Actual
						Before-tax ROIC	-26.4%	-7.2%

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	11

Motorcycle & Engine

Main Products: Motorcycles, Utility Vehicles, All-Terrain Vehicles(ATVs), Personal Watercraft, General-purpose Gasoline Engines

FY2019(Accumulated)		FY2020(Accumulated)
1Q	2Q	3Q	4Q		1Q	2Q	3Q	4Q

Net Sales

[Billion Yen]

337.7

280.0

230.1

147.2

68.3

58.9

Operating Income

Operating Margin

[Billion Yen]

-2.8-3.3-4.5-1.9

-2.2%-1.9% -0.5%

-5.9[3.0]

-4.1%	-6.0%

-10.0%-17.0

FY2020.1Q (vs. FY2019.1Q)

• Net Sales: Decreased due to a decrease significantly in motorcycle for emerging and Europe markets and General-purpose Gasoline Engines for the US market, and other factors by the impact of COVID-19
• Operating Income: Deteriorated due to a decrease in revenue, and the appreciation of the yen against the euro, US dollar, and the emerging market currencies, and other factors

FY2020 forecast (vs. FY2019)

• Net Sales: Decreased due to a decrease in motorcycle for emerging and Europe markets and General- purpose Gasoline Engines for the US market by the impact of COVID-19
• Operating Income: Deteriorated due to a decrease in revenue and other factors

Wholesales by Product			[Thousands of units, Billion Yen]
		FY2019.1Q	FY2020.1Q
		Unit	Amount	Unit	Amount
Motorcycles for developed contries	30	26.2		29		24.7
Motorcycles for emerging market	69	16.4		25		9.1
Utility Vehicles, ATVs & PWC	11	13.3		13		16.6
General-purpose gasoline engines			12.4				8.5
Total	110	68.3		67		58.9
					FY2018		FY2019
					Actual		Actual
		Before-tax ROIC		8.4%		-2.6%

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	12

Summary of Balance Sheet

[Billion Yen]

	End of	End of	Change
	Mar. 2020	Jun. 2020
Cash on hand and in banks	106.1	171.6	+	65.5
Trade receivables	473.2	430.1	－	43.0
Inventories	631.6	658.3	+	26.7
Total fixed assets	503.9	493.8	－	10.0
Others assets	242.9	259.1	+	16.2
Total assets	1,957.8	2,013.2	+	55.4
Trade payables	371.6	307.3	－	64.3
Interest-bearing debt	567.4	732.7	+	165.2
Advances from customers	148.6	143.3	－	5.2
Other liabilities	398.5	372.2	－	26.2
Total liabilities	1,486.2	1,555.7	+	69.4
Total shareholders' equity	485.5	473.7	－	11.7
Other net assets	▲ 13.9	▲ 16.1	－	2.2
Total net assets	471.5	457.5	－	14.0
Total liabilities & net assets	1,957.8	2,013.2	+	55.4
Ratio of shareholders' equity to total assets	23.2%	21.9%
Net D/E Ratio	101.2%	126.8%

• Assets increased due to an increase in cash and deposit by securing cash on hand in case of an unexpected situation and an increase in working capital of Aerospace Systems segment and other factors
• Liabilities increased as a whole due to an increase in debt obligation
• Net assets decreased due to net loss attributable to owners of parent, and other factors

Change in CAPEX and others [Billion Yen]

499.1

504.4

493.8

Fixed Asset_______
CAPEX___________	17.5	17.5	24.2
Depriciation_______
14.6	14.6	14.9

FY2018

FY2019

FY2020

Change in interest-bearing debt [Billion Yen]

Long-term debt	Short-term debt
800
600
400
200
0
4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q
	FY2018			FY2019			FY2020

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Summary of Cash Flows

[Billion Yen]

Change in CF from operating activities & others

FY2019	FY2020	Change
1Q	1Q

[Billion Yen]

547.4611.1658.0

Cash flows from	-163.7	-101.1	+	62.6
operating activities
Cash flows from	-17.1	2.6	+	19.7
investing activities
Free Cash Flows	-180.8	-98.4	+	82.3
Cash flows from	150.5	163.8	+	13.2
financing activities

• Cash flows from operating activities improved due to differences in receivables payment timing in Aerospace Systems segment and a decrease in working capital in Motorcycle & Engine segment
• Cash flows from investing activities improved due to income from sales of fixed assets and stock of affiliated companies
• Given the above mentioned changes, free cash flows improved

Working capital___	__	___ _
Income / Loss before	_
income taxes	8.5
		-4.3	-14.1
CF from operating activities	FY2018.1Q	FY2019.1Q	FY2020.1Q
_

-74.1

-101.1

-163.7

Change in FCF &

Net Income attributable to Owners of Parent [Billion Yen]

Net Income / Loss
Attributable to
Owners of Parent ______2.5	-8.2	-11.7
FY2018.1Q	FY2019.1Q	FY2020.1Q
FCF_______ ________
-100.8		-98.4
	-180.8

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	14

Consolidated Operating Performance

			[Billion Yen]
	FY2019	FY2020	Change
	Actual	Forcast
Orders Received	1,513.5	1,400.0	－ 113.5
Net Sales	1,641.3	1,460.0	－ 181.3
Operating Income	62.0	-30.0	－ 92.0
Recurring Profit	40.4	ー	ー
Net Income Attributable	18.6	ー	ー
to Owners of Parent
Before-tax ROIC	4.2%	ー	ー
ROE	4.0%	ー	ー
Dividend(per share)	35 yen	ー	ー

※ >

Yen/US$	108.94	106.00
Yen/EUR	121.7	119.00

※Assumed rates are applied to the outstanding foreign exchange exposure as of August.6, 2020

vs. FY2019.1Q

• Orders Received
• • Decreased a whole due to a decrease in Rolling Stock and Aerospace Systems segments and other factors, despite increase in Ship & Offshore Structure and Energy System & Plant Engineering segments
• Net Sales
• • Decreased a whole due to decrease in Aerospace Systems and Motorcycle & Engine segments, despite an improvement in Rolling Stock and Ship & Offshore Structure segments
• Profit
• • Operating income decreased a whole due to a decrease in Aerospace Systems and Motorcycle & Engine segments, and other factors, despite an improvement in Rolling Stock segments
  • Since any post-COVID-19 costs that may be incurred in the future cannot be estimated at this time, no projections have been made for recurring profit and net income attributable to owners of the parent. KHI will immediately announce its projections once it is able to make reasonable estimates.
  • Considering the current business environment, not to pay an interim dividend at the end of the second quarter. While there is still no forecast for the year-end dividend, and there isn't likely to be any, KHI will immediately announce its dividend projection as soon as it is determined.

(Appendix)

Impact on profit by FX fluctuation of 1 yen

		[Billion Yen]
	Operating	Recurring
	Income	Profit
US$	1.73	1.66
EUR	0.15	0.19

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	15

Forecast by Segment

[Billion Yen]

Orders Received		Net Sales		Operating Income
FY2019	FY2020	Change	FY2019	FY2020	Change	FY2019	FY2020	Change
Actual	Forecast	Actual	Forecast	Actual	Forecast

Aerospace Systems	414.9	360.0	－	54.9	532.5	420.0	－ 112.5	42.7	-21.0	－	63.7
Energy System &	252.3	280.0	+	27.7	242.9	240.0	－	2.9	17.5	6.0	－	11.5
Plant Engineering
Precision Machinery & Robot	218.8	200.0	－	18.8	217.3	200.0	－	17.3	12.2	7.0	－	5.2
Ship & Offshore Structure	56.2	120.0	+	63.8	71.6	80.0	+	8.4	-0.6	-4.0	－	3.4
Rolling Stock	125.7	70.0	－	55.7	136.5	150.0	+	13.5	-3.8	-2.0	+	1.8
Motorcycle & Engine	337.7	280.0	－	57.7	337.7	280.0	－	57.7	-1.9	-17.0	－	15.1
Others	107.5	90.0	－	17.5	102.4	90.0	－	12.4	1.2	5.0	+	3.8
Eliminations and corporate※	-	-		-	-	-		-	-5.3	-4.0	+	1.3
Total	1,513.5	1,400.0	－ 113.5	1,641.3	1,460.0	－ 181.3	62.0	-30.0	－	92.0

※ "Eliminations and corporate" includes some expenses incurred at Head Office which were not allocated to each industry segment for internal reporting

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	16

Historical Data

1,200.0					Share holders' equity(left axis)			Interest bearing debt(left axis)			Before-tax ROIC(right axis)			12.0%
900.0														414.3			400.6		439.4	567.4			9.0%
																446.6
600.0												484.6	444.6	398.4					6.0%
	304.2	276.4	389.2	428.9	429.1	407.1
300.0		290.4	313.1	290.4	277.0	289.0	306.0	338.2	363.0	431.9	431.3	437.2	466.0	476.3	455.6			3.0%
0.0																								0.0%
[Billion yen]	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015		2016	2017	2018	2019
Before-tax ROIC	8.7%	11.2%	4.5%	0.2%	6.0%	7.4%	6.1%	8.1%	10.4%	9.4%	5.0%	3.9%	4.5%	4.2%
Invested Capital	594.6	589.6	679.7	705.9	718.2	713.2	822.8	807.6	846.3	829.7	837.9	912.7	915.8	1,023.0
Net Sales	1,438.6	1,501.0	1,338.5	1,173.4	1,226.9	1,303.7	1,288.8	1,385.4	1,486.1	1,541.0	1,518.8	1,574.2	1,594.7	1,641.3
Operating Profit	69.1	76.9	28.7	-1.3	42.6	57.4	42.0	72.3	87.2	95.9	45.9	55.9	64.0	62.0
Recurring Profit	49.0	63.9	38.7	14.2	49.1	63.6	39.3	60.6	84.2	93.2	36.6	43.2	37.8	40.4
Net Income	29.7	35.1	11.7	-10.8	25.9	23.3	30.8	38.6	51.6	46.0	26.2	28.9	27.4	18.6
Attributable to
Owners of Parent
Yen/US$	117	115	101	93	86	79	82	99	109	118	108	110	110	108

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	17

Market Overview (1/2)

Aerospace Systems

• In military aircraft business, there is a certain demand within tight defense budget.
• In commercial aircraft business, global passenger demand has been sluggish due to the impact of COVID- 19, both aircraft and aircraft jet engine business demands decline.

Energy System & Plant Engineering

• In Japan, the demand for major repair work on municipal waste incineration plants continues.
• In the medium and long-term, the demand for distribute power plants in the domestic and overseas market, and for energy infrastructure development in emerging countries is strong.
• However, the uncertain situation continues due to the review of short-term capital investment decisions by customers due to factors such as economic activity stagnation and resource price instability caused by COVID-19.

Precision Machinery & Robot

.

• Demand significantly decreases world wide due to the impact of COVID-19.
• Chinese market has been recovering, although the impact of COVID-19 is still uncertainty.
• Sales of general purpose robots remained strong in Chinese market where recovery was quick, despite there were delays in projects by the impact of COVID-19.
• In semiconductor markets, demand will steadily expand in the medium to long-term due to the resumption of investment by a major semiconductor manufacturer, despite concern about other suppliers delay delivery.

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	18

Market Overview (2/2)

Ship & Offshore Structure

• New-buildvessel price is on the path of moderate recovery and the demand for LNG fueled vessels increases along with strengthening environmental regulations.
• However, the situation is still intense due to the shipping market downturn in long-term, delays in business negotiations due to the impact of COVID-19.

Motorcycle & Engine

• The market has been significantly affected due to the impact of COVID-19 in the major market of Europe, North America, and Southeast Asia.

Rolling Stock

• In the medium and long-term, replacement demand for aging railcars is stable in Japan.
• In the US, including the focused market of New York, demand for new and replacement is expected.
• In Asia, the demand in the emerging market increases along with promoting infrastructure exports by Japanese Government.
• However, plans of delivery and order received in the domestic and overseas projects are expected to be reviewed caused by the impact of COVID-19

© 2020 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved	19

Figures recorded in the business forecasts are forecasts that reflect the judgment of the Company based on the information available at the time of release and include risks and uncertainties. Accordingly, the Company cautions investors not to make investment decisions solely on the basis of these forecasts.

Actual business results may differ materially from these business forecasts due to various important factors resulting from changes in the external environment and internal environment. Important factors that may affect actual business results include, but are not limited to, economic conditions, the yen exchange rate against the U.S. dollar and other currencies, the tax system, and laws and regulations.