Management Overview
0
October 30, 2018

Progress of Medium-Term Business Plan “MTBP2016”[Billion yen]Orders Received

Forecast in July
Order Recieved:1,590.0
Net Sales:1,650.0

2,000

1,693.6
1,541.0
1,500

Net Sales[Billion yen]

(Before-tax ROIC)
120.0

95.9
(9.4%)

1,608.0
1,574.2 1,610.0
1,518.8

1,645.0

1,348.7

Operating Income

Forecast in July
Operating Income:75.0
ROIC:8.0%

80.0

55.9
1,000

45.9

(3.9%)(5.0%)

66.0(5.9%)

40.0
5000
Assumedexchange
rates
（USD）

0.0
FY2015FY2016FY2017118.99108.98110.62

FY2018
Forecast

October 1100July
107

MTBP2016© 2018 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

FY2015FY2016FY2017118.99108.98110.62FY2018
Forecast

October 1100July
107

MTBP2016
2Details of Change in Operating Income Forecast• Operating Income Forecast−Compared to the forecast in July: – 9.0 Billion yen(July: 75.0 Billion yen ⇒ October: 66.0 Billion yen）

[Billion yen]

Losses on theRolling Stock Business- 16.5

Effects of foreignexchange rates＋5.0Others＋2.5

Details

75.0[Billion Yen]

Recording Period

Basecontract-2.5

Second Quarter

Optioncontract-6.0

Third Quarter(TBD)

Washington Metropolitan Area
Transit Authority Project, etc.

-5.0

Second and ThirdQuarter

Domestic Projects-3.0

Second Quarter

Long Island
Rail Road Project

Forecast in July

LossesItem© 2018 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

66.0

Forecast in October3

Details of Change in Operating Income Forecast (Con’t)• Operating Income Forecast at the Rolling Stock Business−Compared to the forecast in July: – 16.5 Billion yen(July: 2.5 Billion yen ⇒ October: - 14.0 Billion yen）

[Billion yen]

2.5

Washington Metropolitan
Area Transit Authority
Project, etc.

-2.5Long Island
Rail Road Project
Base Contract• Material cost: -1.5
• Production cost: -0.5
• Engineering cost, etc.

-6.0

• Cost increase for WMATA※1: -3.0
• Modification cost for delivered cars toother project in North America: -1.0
• Revision of sales and cost, etc.

Long Island
Rail Road Project
Option Contract• Insufficient priceadjustment forrequired changes: -2.0
• Material cost: -3.5 etc.

Forecast in July
2.5 Billion yen

Domestic Projects-5.0-16.5 Billion yen-14.0• Material cost: -1.5
• Difference in the perception tothe specifications: -0.5
• Production cost, etc.

-3.0
Forecast in October-14.0 Billion yen※1. WMATA = Washington Metropolitan Area Transit Authority© 2018 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

4Structure of
Rolling Stock Business Restructuring Committee
Rolling Stock Business Restructuring Committee
Function

Preside overrestructuring business

Make a reinforcement plan ofgovernanceMonitorsub-committees’ status

Consider organizational structure& increasing headcountBusiness Condition & Profit
Management Sub-committee
Function

Member・Head Office

President, Vice President, General Manager ofCorporate Planning and Finance & Accounting Division

・Rolling Stock Company

President, Vice President, General Managerof Business Planning & Control Division

Reviewing Project Management
Sub-committee
Function

Deliberate order received &Report status of order received

Follow up on
profit management① Analyze unprofitableprojects

Follow up on performance ofmajor projects’ contract

Follow up on profitability
improvement measures② Review problemsby phase

MemberMember・Head OfficeVice President, General Manager of Corporate
Planning and Finance & Accounting Division,
Corporate Planning Department

・Rolling Stock Company

President, Vice President, General Managerof Business Planning & Control Division© 2018 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Improve business process
through ① & ②・Head OfficeVice President, General Manager of Corporate Technology
Division, Auditing Department

・Rolling Stock Company

President, Vice President, General Managerof Business Planning & Control Division

・Aerospace Systems Company・Energy System &Plant Engineering Company
5

Figures recorded in the business forecasts are forecasts that reflect the judgment of the Company based on theinformation 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.

© 2018 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved6