Report of Earnings and Financial Statements
for the Fiscal Year Ended March 31, 2018 (Consolidated)(Prepared pursuant to Japanese GAAP)
April 26, 2018
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

Listed on:
Stock code:
URL:
Representative:
Contact:
Tel:

1st sections of the TSE, and NSE
7012
http://www.khi.co.jp/
Yoshinori Kanehana, President
Tatsuo Hoshino, Senior Manager, Accounting Department+81 3-3435-2130

Scheduled dates:
Ordinary general meeting of shareholders
Commencement date of dividend payments
Submission of financial statements
Supplementary materials to financial results
Earnings presentation

June 27, 2018
June 28, 2018
June 27, 2018
Available
Conducted (for institutional investors, analysts and thepress)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2018
(April 1, 2017 – March 31, 2018)(Amounts in million yen rounded down to the nearest million yen)

(1) Operating Results
Years ended March 31(Million yen ) (Percentage figures indicate change compared with the previous fiscal year)
Net income attributable
Net sales
Operating income
Recurring profit
to owners of parent
%
%
%
%
2018
1,574,242
3.6
55,92521.6
43,22517.8
28,91510.3
20171,518,830(1.4)
45,960 (52.1)
36,671 (60.6)
26,204(43.0)
Note: Comprehensive income Fiscal year ended March 31, 2018: ¥ 39,683 million 56.6%
Fiscal year ended March 31, 2017: ¥ 25,335 million 25.2%

Years ended March 31
Earnings per share
Return on equity Return on assets– diluted
Yen
Yen
%
%
2018
173.096.4
2.4
2017
156.856.0
2.2
For reference: Equity in income of non consolidated subsidiaries and affiliates
Fiscal year ended March 31, 2018: ¥ 4,492 million
Fiscal year ended March 31, 2017: ¥ 5,537 million
Earnings per share

Operating income
to net sales
%
3.5
3.0

Note: As the company carried out a share consolidation with a 10:1 ratio of common shares with aneffective date of October 1, 2017, earnings per share has been calculated assuming this shareconsolidation was carried out at the beginning of the fiscal year ended March 31, 2017.

1

(2) Financial Condition
March 31

(Million yen)
Total assets

Net assets

Equity ratio

Net assets per share

%

Yen

2018

1,785,028

481,38626.1

2,789.99

2017

1,687,363

451,32725.9

2,617.38

For reference: Shareholders’ equity

March 31, 2018:
March 31, 2017:¥ 466,061 million¥ 437,247 million

Note: As the company carried out a share consolidation with a 10:1 ratio of common shares with aneffective date of October 1, 2017, net assets per share has been calculated assuming this shareconsolidation was carried out at the beginning of the fiscal year ended March 31, 2017.
(3) Cash Flow Position
Years ended March 31
Cash flow fromoperating activities

Cash flow frominvesting activities

Cash flow fromfinancing activities(Million yen)
Cash and cash equivalents
at end of year2018

56,050(80,590)

37,77064,362

2017

93,514(64,879)(15,850)

50,722

2. Dividends
Years ended/ending March 31
Recorddate orterm

Dividend per share

Total
dividends
paid
Full year(annual)Yen
million yen

Payout ratio(consolidated)

Dividends /Net assets(consolidated)

%

%

1Q

2Q

3Q

Year-end

Yen

Yen

Yen

Yen

2017

-

4.00

-

2.00

6.00

10,023

38.2

2.3

2018

-

3.00

-

30.00

-

10,023

34.6

2.2

2019
(forecast)

-

35.00

-

35.00

70.00

24.8

Note: The company conducted a share consolidation with a 10:1 ratio of common shares, with an effective
date of October 1, 2017. The expected dividend per share for the fiscal year ended March 31, 2018
factoring in the impact of the share consolidation is shown. The total annual dividend for the fiscal
year ended March 31, 2018 is denoted with the “-“ mark. Without the impact of the shareconsolidation factored in, the expected dividend per share for the fiscal year ended March 31, 2018
would be ¥3 per share, and the total annual dividend would be ¥6 per share.

3. Forecast of Consolidated Earnings for the Fiscal Year Ending March 31, 2019
(April 1, 2018 – March 31, 2019)

Full year(Million yen)(Percentage figures indicate change compared with the previous fiscal year)
Net income
Earnings
Net sales
Operating income
Recurring profit
attributable to owners
per shareof parent
%
%
%
%
Yen
1,650,000
4.8
75,00034.1
70,00061.9
47,00062.5
281.352

*Notes(1) Changes affecting the status of material subsidiaries (scope of consolidation): None
(2) Changes in accounting policies, changes in accounting estimates, and correction of errors(i) Changes in accounting policies in accord with revisions to accounting standards: None(ii) Changes in accounting policies other than (i): None(iii) Changes in accounting estimates: None(iv) Correction of errors: None
(3) Number of shares issued and outstanding (common stock)(i) Number of shares issued as of period-end (including treasury stock)
March 31, 2018:
167,080,532 shares
March 31, 2017:
167,080,532 shares(ii) Number of shares held in treasury as of period-end
March 31, 2018:
33,049 shares
March 31, 2017:
25,910 shares(iii) Average number of shares during respective periods
March 31, 2018:
167,051,224 shares
March 31, 2017:
167,056,115 shares*As the company carried out a share consolidation with a 10:1 ratio of common shares with an effective date ofOctober 1, 2017, the number of shares issued as of period-end, the number of shares held in treasury as ofperiod-end, and the average number of shares during respective periods have been calculated assuming that
this share consolidation was carried out at the beginning of the fiscal year ended March 31, 2017.

*Report of Earnings and Financial Statements are not subject to audit.
*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain earnings forecast and other forward-looking statements based on information
available to the company at the time of disclosure and the company makes no assurances as to the actual
results and/or other outcomes, which may differ from those expressed or implied herein due to various
factors. For assumptions underlying earnings forecasts and other information regarding the use of suchforecasts, refer to “(4) Consolidated earnings outlook” on page 11 in section “1. Overview of operating
results” in the Accompanying Materials.
How to Obtain Supplementary Briefing Material on Financial Results and Details of the Financial
Results Briefing
The Company plans to conduct a briefing for institutional investors, analysts and the press on Thursday
April 26, 2018, and to post the briefing material on financial results to be used for the briefing on TDnetand the Company’s website simultaneously with the announcement of financial results.

3

Accompanying Materials – Contents
1. Overview of operating results

5(1) Consolidated operating results

5(2) Consolidated financial condition

9(3) Cash flows

10(4) Consolidated earnings outlook

10

2. Basic rationale for selecting accounting standards

11

3. Consolidated Financial Statements

12(1) Consolidated balance sheets

12(2) Consolidated statements of income and comprehensive income

14(3) Consolidated statement of changes in net assets

16(4) Consolidated statements of cash flows

18(5) Notes on financial statements

19

Notes on the going-concern assumption

19

Related to consolidated statements of income

19

Segment information

21

Per share data

24

Material subsequent events

24

4. Supplementary information on earnings forecasts for the fiscal year ending March 31, 2019424

1. Overview of operating results(1) Consolidated operating results
In the fiscal year ended March 31, 2018, the global economy is relatively lacking in vigor overall
due to the economic slowdown in emerging countries and resource-rich countries, along with otherfactors, despite the ongoing modest growth centered on the U.S., where the real economy remains
strong, as well as China, where foreign and domestic demand is robust. In addition, uncertainty
about future prospects for the real economy persists, including influence to corporate activities due
to Brexit, concerns about a trade friction due to an expansion of protectionist policies in the U.S.,
and other factors. Going forward, these risks with the potential to drag down the global economy
must continue to be watched.
The Japanese economy has been recovering modestly, due to the modest increasing of capital
investment, the improvement in corporate earnings, and other factors. Going forward, the economy
is expected to grow modestly overall, but there is a possibility that economic policies enacted bycountries around the world, especially the U.S., and geopolitical risks on the Korean Peninsula andin other regions, could result in both rapid and significant fluctuations in foreign exchange rates. As
a result, foreign exchange rates must continue to be watched carefully.
Amid such an operating environment, the Group’s orders received in the fiscal year ended March
31, 2018, increased versus the previous fiscal year, mainly in the Aerospace, Rolling Stock andPrecision Machinery segment. Net sales increased overall, due to increases in the Precision
Machinery, Gas Turbine & Machinery, and Motorcycle & Engine segments, despite a decline in the
Plant & Infrastructure segment. Operating income and recurring profit both increased, due to higher
profit in the Precision Machinery segment, improvement in the Ship & Offshore Structure segment,
and other factors, despite the deterioration in the Rolling Stock segment in conjunction withworsening profitability on passenger railcars for the U.S. and other factors, along with decreased
profit in the Aerospace segment. Net income attributable to owners of parent increased as a result of
extraordinary income (gain on sale of fixed assets), reduced tax expenses due to the recognition ofdeferred tax assets related to losses in a shipbuilding joint venture project in Brazil, and other factors,
despite the posting of extraordinary loss in conjunction with the termination of a shipbuilding
contract for an offshore service vessel.
As a result, the Group’s consolidated orders received increased ¥259.3 billion versus the same
period of the previous fiscal year to ¥1,608.0 billion, consolidated net sales increased ¥55.4 billion
year on year to ¥1,574.2 billion, consolidated operating income increased ¥9.9 billion year on year to¥55.9 billion, consolidated recurring profit rose by ¥6.5 billion year on year to ¥43.2 billion, and net
income attributable to owners of parent increased ¥2.7 billion year on year to ¥28.9 billion. ROIC*
was 3.9%, while ROE was 6.4%.
* Before-tax ROIC = EBIT (income before income taxes + interest expense) ÷ invested capital(interest-bearing debt + shareholders’ equity)5Consolidated operating performance in the fiscal year ended March 31, 2018, is summarized bysegment below.
Segment information
Segment net sales, operating income, and orders received (billion yen)
Fiscal year ended March 31

2017(A)

2018(B)

Orders received

Change (B – A)

Fiscal year ended March 31

Net

OperatingNet

OperatingNet

Operating

2017

2018

Changesales

incomesales

incomesales

income(A)(B)(B – A)

Ship & Offshore
Structure

103.2(21.4)

95.6

(3.8)

(7.5)

17.6

36.9

4.7

(32.2)

Rolling Stock

137.1

3.4

141.7

(12.4)

4.6(15.9)

158.5

257.1

98.5

Aerospace

329.9

25.0

330.2

20.9

0.2

(4.1)

237.0

374.4

137.3

241.9

15.2

266.4

14.7

24.5

(0.5)

260.3

248.1

(12.2)

160.8

2.6

124.4

2.9

(36.4)

0.3

95.0

100.1

5.0

313.0

11.7

331.6

15.2

18.6

3.5

313.0

331.6

18.6

Machinery

155.2

13.1

198.9

21.6

43.7

8.5

166.8

207.1

40.2

Other

77.4

3.1

85.0

2.9

7.6

(0.2)

80.9

84.8

3.8

-

(7.0)

-

(6.2)

-

0.8

-

-

-

1,518.8

45.9

1,574.2

55.9

55.4

9.9

1,348.7

1,608.0

259.3

Gas Turbine &Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision

Adjustments
Total

Notes: 1. Net sales include only sales to external customers.
2. The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

Ship & Offshore StructureWith respect to the business environment surrounding the Ship & Offshore Structure segment,
while new-build vessel prices are recovering after bottoming out, demand for gas-fueled vessels has
been increasing in conjunction with the tightening of environmental regulations, competition
remains intense due to factors including the pushing back of demand for LNG carriers due to thedelay in LNG development projects, and the continuation of policies by the Chinese and South
Korean governments to support their domestic shipbuilding industries.
Amid such an operating environment, consolidated orders received were ¥4.7 billion, a ¥32.2
billion year on year decline versus the same period of the previous fiscal year when orders forsubmarines were received, due to the termination of a shipbuilding contract for an offshore service
vessel, despite receiving orders for LPG carriers and Kawasaki JETFOIL during the period.
Consolidated net sales fell ¥7.5 billion year on year to ¥95.6 billion, due to the decline inconstruction work volume relation to submarines, and other factors.
6

Consolidated operating loss was ¥3.8 billion, a ¥17.6 billion improvement from the same periodof the previous fiscal year, when additional allowance for doubtful receivables was posted and there
was an increase in provision for losses on construction contracts.
Rolling Stock
With respect to the business environment surrounding the Rolling Stock segment, there continues
to be stable demand in Japan for the replacement of aging railcars. In North America, while there
have been some changes to railcar order plans in the New York area, which is the core market,
demand for new and replacement railcars have been increasing. Meanwhile, in Asia, demand in
emerging markets is increasing in tandem with the Japanese government’s efforts to promote
infrastructure-related exports.
Amid such an operating environment, consolidated orders received rose by ¥98.5 billion versus
the same period of the previous fiscal year, when rolling stock for a domestic subway and otherorders were received, to ¥257.1 billion, due to receiving large-scale orders, such an order received
for new generation subway cars for New York City Transit, and an order received for rolling stock
for a high-speed railway (MRT) in Bangladesh.
Consolidated net sales increased ¥4.6 billion year on year to ¥141.7 billion, due to the increase ofsales in the domestic market, despite a decline of overseas sales such as in North America, Asia andother countries.
Operating income declined ¥15.9 billion year on year to an operating loss of ¥12.4 billion, due toa provision for losses on construction contracts for passenger railcars for the Long Island Railroad in
the U.S., expenses for replacing the N700 series Shinkansen bogie frame, and other factors.
Aerospace
Concerning the business environment surrounding the Aerospace segment, there is a certain levelof demand from the Ministry of Defense in Japan amid the tight defense budget, while demand for
new and replacement commercial aircraft is increasing in conjunction with the rise in the number of
air passengers.
Amid such an operating environment, consolidated orders received increased ¥137.3 billion year
on year to ¥374.4 billion due to remains for a high level of demand of component parts forcommercial aircraft in addition to the increase of the demand from the Ministry of Defense.
Consolidated net sales increased ¥0.2 billion year on year to ¥330.2 billion, due to the increase insales to the Ministry of Defense and other factors, despite the decline in sales of component parts forcommercial aircraft.
Consolidated operating income fell ¥4.1 billion year on year to ¥20.9 billion, due to the decline inprofitability of component parts for commercial aircraft, and other factors.

7Gas Turbine & Machinery
Concerning the business environment surrounding the Gas Turbine & Machinery segment, in theaircraft sector demand for aircraft engines is increasing due to growth in demand for commercial
aircraft based on the increase in the number of air passengers. In the energy and environmental field,
although there is large potential demand for distributed power sources in Japan, investment plans areslightly delayed in light of the liberalization of electricity. Meanwhile, overseas, demand for
distributed power sources is increasing due to stronger interest in investment in the environment andenergy conservation, among other factors.
Amid such an operating environment, consolidated orders received declined ¥12.2 billion year on
year to ¥248.1 billion, due to the decline in gas engine power plants for the domestic market, andother factors.
Consolidated net sales increased ¥24.5 billion year on year to ¥266.4 billion, due to the increase incomponent parts of aircraft engines, and other factors.
Operating income was ¥14.7 billion, a ¥0.5 billion decrease compared to the previous fiscal year
due to the decrease of highly profitable orders in energy segment, despite the sales increased.
Plant & Infrastructure
Regarding the business environment surrounding the Plant & Infrastructure segment, in addition
to the recovery in resources development and oil and natural gas-related investment overseas due tothe rise in crude oil prices, there is still demand for energy infrastructure maintenance in Asia. In
Japan, there is ongoing demand for replacing aging facilities for refuse incineration plants andindustrial machinery.
Amid such an operating environment, consolidated orders received increased ¥5.0 billion year on
year to ¥100.1 billion, due to the increase in refuse incineration plants and operations, despite
overseas orders decreasing.
Consolidated net sales fell ¥36.4 billion year on year to ¥124.4 billion, due to the decline inconstruction work volume on a chemical plant for an overseas market, and other factors.
Despite the drop in sales, operating income was ¥2.9 billion, a ¥0.3 billion increase compared tothe previous year when there was an increase in provision for loss on construction contracts.

8

Motorcycle & Engine
Regarding the business environment surrounding the Motorcycle & Engine segment, the modest
growth in motorcycle markets in developed countries continues, and the decline in demand for
motorcycles in emerging countries is signaling a bottoming out. With respect to utility vehicles, themarket continues to grow stably mainly in North America, and the general-purpose engine market isalso growing steadily.
Amid such an operating environment, consolidated net sales increased ¥18.6 billion year on yearto ¥331.6 billion, due to the increase in motorcycles and vehicles for developed countries andgeneral-purpose engines, despite the decline in motorcycles for emerging markets.
Consolidated operating income increased ¥3.5 billion year on year to ¥15.2 billion, due to theincrease in sales.
Precision Machinery
With respect to the business environment surrounding the Precision Machinery segment, theconstruction machinery market is brisk, centered on robust demand for vigorous excavators in China,
and our construction machinery manufacturers, which are our customers, are competing to increase
production. As for robots, in addition to increased demand in the automotive and semiconductor
fields, demand is growing due to the expansion of the application coverage of industrial robots
caused by the shortage of workers.
Amid such an operating environment, consolidated orders received increased ¥40.2 billion year on
year to ¥207.1 billion, due to the increase in hydraulic components for construction machinery andvarious industrial robots.
Consolidated net sales increased ¥43.7 billion year on year to ¥198.9 billion, due to an increase insales of hydraulic components for construction machinery and various industrial robots.
Consolidated operating income increased ¥8.5 billion year on year to ¥21.6 billion, due to theincrease in sales.
Other Operations
Consolidated net sales increased ¥7.6 billion year on year to ¥85.0 billion.
Consolidated net operating income decreased ¥0.2 billion year on year to ¥2.9 billion.

9(2) Consolidated financial condition(i) Assets
Total assets at March 31, 2018, were ¥1,785.0 billion, ¥97.6 billion increase from March 31, 2017.
Current assets increased ¥70.4 billion year on year to ¥1,148.3 billion, due to increasing of tradereceivables. Fixed assets increased ¥27.1 billion year on year to ¥636.7 billion, primarily due to anincrease in holdings of property, plant and equipment because of capital investment.
(ii) Liabilities
Consolidated liabilities increased ¥67.6 year on year to ¥1,303.6 billion at March 31, 2018, due tothe increasing of interest bearing liabilities such as Long-term debt and other factors.
Interest bearing liabilities increased ¥45.9 billion year on year to ¥446.6 billion.
(iii) Net assets
Consolidated net assets increased ¥30.0 billion year on year to ¥481.3 billion, as the increase dueto the posting of net income attributable to owners of parent was partly offset by dividend
payments and other factors.
(3) Cash flows(i) Cash flows from operating activities
Operating activities provided net cash of ¥56.0 billion, a ¥37.4 billion decrease from the previous
fiscal year. Major sources of operating cash flow included income before income taxes of ¥32.9
billion and depreciation and amortization of ¥56.1 billion. Major uses of operating cash flow
included expenditure of ¥35.5 billion due to an increase in trade receivables and expenditure of¥26.4 billion due to an increase in inventory asset.
(ii) Cash flows from investing activities
Investing activities used net cash of ¥80.5 billion which is ¥15.7 billion more than in the previous
fiscal year, mainly due to requisition of property, plant and equipment, as well as intangible assets.
(iii) Cash flows from financing activities
Financing activities provided net cash of ¥37.7 billion which is ¥53.6 billion more than in theprevious fiscal year when ¥15.8 billion was used. This was mainly due to an increase in proceeds
due to a net increase in short-term debt, and the increase in proceeds from long-term debt.

10

(4) Consolidated earnings outlook
For the fiscal year ending March 31, 2019, we are expecting consolidated net sales of ¥1,650.0
billion, a ¥75.8 billion year-on-year increase, due to expected increases mainly in the Precision
Machinery & Robot and Energy System & Plant Engineering segment. In terms of profit, we areforecasting consolidated operating income of ¥75.0 billion, recurring profit of ¥70.0 billion, and net
income attributable to owners of parent of ¥47.0 billion. Furthermore, we are expecting ROIC of
8.0% and ROE of 9.7%. These forecasts are based on the expectation for an increase in profits inconjunction with a rise in sales of Precision Machinery & Robot segment, a recovery in Rolling
Stock and Ship & Offshore Structure segment which posted a large loss in the previous fiscal year,
and other factors, although we expect the yen to be stronger than in the previous fiscal year.
Consolidated orders received are expected to decrease ¥18.0 billion year on year to ¥1,590.0
billion.
Assumed exchange rates of ¥107/US$ and ¥130/Euro were used for the above consolidated
earnings outlook.
Note: The company will change its reportable segments to “Aerospace System”, “Energy System & Plant
Engineering”, “Precision Machinery & Robot”, “Ship & Offshore Structure”, “Rolling
Stock”, ”Motorcycle & Engine” and “Other” from the fiscal year ending March 31, 2019.

Note regarding consolidated earnings outlook
The above earnings outlook is based on information available at the time of preparation, andincludes risks and uncertainties. We therefore discourage making investment decisions depending
solely on this outlook. Please note that actual earnings may differ materially from this outlook, due
to a variety of important factors stemming from changes in the external environment and/or theCompany’s internal environment. Important factors that impact actual operating performance include,
but are not limited to, the economic situation surrounding the Company’s scope of business, foreignexchange rates in particular the yen/dollar exchange rate, tax codes and other regulatory
system-related issues.
2. Basic rationale for selecting accounting standards
In the near term, KHI Group plans to continue to use Japanese accounting standards to disclose
consolidated financial statements. The Group will continue to study the possible adoption of IFRS
from the standpoint of increasing corporate value over the medium- to long-term horizon as well as
promoting constructive dialogue with investors, all while taking the situation surrounding the Groupboth in Japan and overseas into consideration.

11

3. Consolidated Financial Statements(1) Consolidated balance sheets
March 31

Million yen

AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful receivables
Total current assets
Fixed assets
Net property, plant and equipment
Buildings and structures,
Machinery and equipment,
Land
Leased assets,
Construction in progress
Other,
Total property, plant and equipment
Intangible assets
Investments and other assets
Investments in securities
Net defined benefit assets
Deferred tax assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

12

2017

2018

55,388444,633
49,850323,433
111,577
26,566
68,978(2,593)
1,077,835

70,632
470,11062,385
326,459
115,893
32,54672,542(2,247)
1,148,322

180,070
134,071
64,743
1,955
21,13359,906
461,881
15,284

186,623
144,399
62,694
2,199
25,724
58,155
479,797
16,17813,91786
36,49996,585(14,727)
132,362
609,527
1,687,363

14,79888
37,08692,441(3,685)
140,730
636,705
1,785,028

Liabilities
Current liabilities
Trade payables
Electronically recorded obligations - operating
Short-term debt
Current portion of bonds
Lease obligations, current
Income taxes payable
Deferred tax liabilities
Accrued bonuses
Provision for product warranties
Provision for losses on construction contracts
Advances from customers
Other
Total current liabilities
Long-term liabilities
Bonds payable
Long-term debt
Lease obligations
Deferred tax liabilities
Net defined benefit liability
Other
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

13

240,572
101,449
111,456
10,000
192
4,295
22
20,288
12,175
18,103205,871
119,013
843,441

245,398
117,772
108,978
20,000
283
6,042
244
19,90313,00018,258194,306
125,454869,643

130,000
147,492
1,550
8,476
81,56323,511
392,594
1,236,035

130,000
185,685
1,697
8,942
86,836
20,837433,999
1,303,642

104,484
54,393
287,448(96)
446,230

104,484
54,573308,010(124)
466,944

3,232(1,182)((341)(10,692)(8,983)14,080451,327
1,687,363

3,526
403
719
(5,532)(883)
15,324
481,386
1,785,028

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Million yen

Years ended March 31
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
Advertising expenses
R&D expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in income of non-consolidated subsidiaries and affiliates
Other
Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
Payments for contract adjustment for commercial aircraft jetengines
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sale of fixed assets
Total extraordinary income
Extraordinary losses
Losses from the termination of a shipbuilding contract for an
offshore service vessel
Total extraordinary losses
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

14

2017

2018

1,518,830
1,278,906
239,923

1,574,242
1,319,715
254,527

51,436
11,241
43,62787,657
193,963
45,96052,502
11,95345,43488,712
198,60255,925

845
254
5,537
5,757
12,394

720
291
4,492
3,626
9,131

2,859
7,724

2,794
7,017

-

(*1)2,505

11,10021,68436,671

9,513
21,83043,225(*2)2,2022,202(*2)2,606
2,606-(*3)12,833

38,873

12,83332,9997,470
3,477
10,94827,925
1,721
26,204

11,634(9,982)
1,652
31,3472,431
28,915

Consolidated statements of comprehensive income
Million yen

Years ended March 31
2017
Net income

2018

27,92531,347

559

338

Deferred gains (losses) on hedges(1,844)

1,616

Foreign currency translation adjustments(3,742)(1,085)Remeasurements of defined benefit plans

8,777

5,170

Share of other comprehensive income of entities accounted forusing equity method(6,340)2,296

Total other comprehensive income(2,590)8,336

Comprehensive Income attributable to:25,33539,683

Owners of parent

24,27237,015

Non-controlling interests

1,062

2,668

Other comprehensive income
Net unrealized gains (losses) on securities15(3) Consolidated statements of changes in net assets
Million yen

Years ended March 31
2017
Shareholders’ equity
Common stock
Balance at end of previous year
Total changes during the period
Balance at end of year
Capital surplus
Balance at end of previous year
Treasury stock disposed
Capital increase of consolidated subsidiaries
Total changes during the period
Balance at end of year
Retained earnings
Balance at end of previous year
Changes during the period
Cash dividend
Net income attributable to owners of parent
Change in the scope of consolidation
Total changes during the period
Balance at end of year
Treasury stock
Balance at end of previous year
Changes during the period
Treasury stock purchased
Treasury stock disposed
Total changes during the period
Balance at end of year
Total shareholders’ equity
Balance at end of previous year
Changes during the period
Cash dividend
Net income attributable to owners of parent
Change in the scope of consolidation
Treasury stock purchased
Treasury stock disposed
Capital increase of consolidated subsidiaries
Total changes during the period
Balance at end of year

16

2018

104,484

104,484--

104,484

104,484

54,394(0)-54,393
(0)
179

(0)

179

54,39354,573

279,627

287,448(18,376)
26,204(7)(8,352)
28,915-

7,820

20,562

287,448

308,010

(86)

(96)

(10)
0

(28)
0

(9)

(27)

(96)

(124)

438,419446,230(18,376)
26,204
(7)
(10)
0
-

(8,352)
28,915
(28)
0
179

7,810

20,714446,230

466,944Comprehensive income
Net unrealized gain (loss) on securities
Balance at end of previous year
Changes during the period
Net changes in items other than shareholder’s equity
Total changes during the period

2,705

3,232

527

293

527

293

3,232

3,526

692

(1,182)

Net changes in items other than shareholders’ equity(1,874)

1,585

Total changes during the period(1,874)

1,585(1,182)

403

8,990

(341)

(9,331)

1,060(9,331)

1,060

(341)

719

(19,439)(10,692)

8,747
8,747

5,160
5,160

(10,692)(5,532)(7,051)(8,983)

Net changes in items other than shareholders’ equity(1,931)

8,099

Total changes during the period(1,931)

8,099

Balance at end of year

(8,983)(883)

Non-controlling interests
Balance at end of previous year

14,257

14,080

(176)

1,244

Balance at end of year
Deferred gains (losses) on hedges
Balance at end of previous year
Changes during the period

Balance at end of year
Foreign currency translation adjustments
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Remeasurements of defined benefit plans
Balance at end of previous year
Changes during the period
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year
Total comprehensive income
Balance at end of previous year
Changes during the period

Changes during the period
Net changes in items other than shareholders’ equity

(176)

1,244

Balance at end of year

Total changes during the period

14,08015,324

Total net assets
Balance at end of previous year
Changes during the period

445,625

451,327(18,376)(8,352)

26,204(7)

28,915
-

(10)
0

(28)
0

(2,108)179
9,344

Cash dividend
Net income attributable to owners of parent (loss)
Change in the scope of consolidation
Treasury stock purchased
Treasury stock disposed
Capital increase of consolidated subsidiaries
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year

17

5,702

30,058451,327

481,386

(4) Consolidated statements of cash flows
Million yen

Years ended March 31
2017Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in accrued bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for losses on construction contracts
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expense
Equity in income non-consolidated subsidiaries and affiliates(Gain) loss on sale of property, plant, and equipment
Losses from the termination of a shipbuilding contract for an offshore
service vessel(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables(Increase) decrease in advance payments
Increase (decrease) in advances from customers(Increase) decrease in other current assets
Increase (decrease) in other current liabilities
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible
assetsAcquisition of investments in securities
Proceeds from sales of investments in securities
Purchase of stocks of subsidiaries and affiliates
Proceeds from sales of stocks of subsidiaries and affiliates
Other
Net cash used for investing activities
Cash flows from financing activities
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds payable
Cash dividends paid
Cash dividends paid to non-controlling interests
Other
Net cash used for financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting from change ofscope of consolidation
Cash and cash equivalents at end of period

18

2018

38,87351,564
4,872(4,852)(385)
10,185
3,537(1,100)2,859(5,537)(3,077)32,99956,137
1,093
(387)
814
11,02913,324(1,011)
2,794(4,492)(2,606)-

12,833(64,605)
7,453
20,743
7,838
35,565(1,272)
1,468(558)
103,572
5,870(2,827)(13,100)
93,514(35,516)(26,443)
21,5696,103(10,092)(22,937)
8,644
(789)
63,066
4,166(2,795)(8,386)56,050(69,341)(82,238)

4,810

6,452

(1,208)
1,841
(625)
966
(1,323)(64,879)(512)
342(3,408)(1,226)(80,590)(20,843)
31,734(16,946)
20,000(10,000)(18,351)
(765)
(679)
(15,850)543
13,327
37,832

16,36364,363(42,694)
20,000(10,000)(8,375)(1,433)(454)
37,770410
13,64050,722(438)-

50,72264,362

(5) Notes on financial statements
Notes on the going-concern assumption
Not applicable.

Related to consolidated statements of income(*1) Payments for contract adjustment for commercial aircraft jet engines
Fiscal year ended March 31 2018 (April 1, 2017 – March 31, 2018)
The company faced one-time expenses in connection with contracts with customers relating
to aircraft engine programs in which the company was participating. These expenses arose fromthe new requirement to allocate a portion of the engines planned to be delivered to customers
for use as spare engines for operational supports. Accordingly, the company recorded these
program expenses as non-operating expenses.

(*2) Gain on sale of fixed assets
Fiscal year ended March 31, 2017 (April 1, 2016 – March 31, 2017)
Gain on sale of fixed assets occurred in relation to the sale of the land and building of thecompany’s Tokyo office. The gain was mainly the sale of the land.

Fiscal year ended March 31, 2018 (April 1, 2017 – March 31, 2018)
Gain on sale of fixed assets occurred in relation to the sale of the land and building of thecompany-offered dormitory and houses. The gain was mainly the sale of the land.

19

(*3) Losses from the termination of a shipbuilding contract for an offshore service vessel
Fiscal year ended March 31, 2018 (April 1, 2017 – March 31, 2018)
These are losses in conjunction with the termination of a shipbuilding contract for an
offshore service vessel (losses recognized on valuation of inventories and trade receivables,
etc.)(Additional information)
Concerning the posting of losses in conjunction with the termination of a shipbuilding contract
for an offshore service vessel.
With the intention of entering the offshore development industry, which is a promisingmarket over the medium to long term, in November 2013 the company entered into a
shipbuilding agreement for an offshore service vessel (hereinafter, “vessel”) with a subsidiary*of Island Offshore Shipholding LP (hereinafter, “Island Offshore”). This was the first vessel of
its type to be constructed by the company, and certain problems during the engineering stage
arose along with an increase in materials costs and other issues.
Meanwhile, the stagnation in crude oil prices led to a very difficult business environment foroffshore service providers in general ever since the order for this vessel was received, andIsland Offshore negotiated financial restructuring with its banking partners since November
2016.
Given the above circumstances, the company proceeded cautiously, including temporarilysuspending the construction of the vessel, while paying close attention to the progress of thefinancial restructuring of Island Offshore. During this time, the company was holding
discussions with Island Offshore regarding the handling of the vessel. Based on the sharedunderstanding that the environment surrounding the offshore service business remained
challenging, and that uncertainty about the future would not be eliminated, the company andIsland Offshore agreed to terminate the shipbuilding agreement, and the company therefore
carried out the necessary accounting treatment.
*Island Navigator I KS (100% subsidiary company of Island Offshore Shipholding LP)

20

Segment information
1. Overview of reportable segments
The Company’s reportable segments are components of the company about which separate
financial information is available. These segments are subject to periodic reviews by theCompany’s board of directors to decide how to allocate resources and assess performance. The
Company’s operations are divided into internal companies based on product categories. Certain
authority is delegated to each of the internal companies, based on which they conduct businesses
in Japan and overseas. The Company’s operations are therefore segmented based on each internal
company’s product categories. The Company’s eight reportable segments are the Ship & Offshore
Structure segment, the Rolling Stock segment, the Aerospace segment, the Gas Turbine &Machinery segment, the Plant & Infrastructure segment, the Motorcycle & Engine segment, thePrecision Machinery segment, and the Other segment.
Main segment businesses are listed below.
Industry segment
Ship & Offshore
Structure
Rolling Stock
Aerospace
Gas Turbines &Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery
Other

Major products
Construction and sale of ships and other vessels, etc.
Production and sale of rolling stock, snow plows, etc.
Production and sale of aircraft, etc.
Production and sale of jet engines, general-purpose gas turbine
generators, prime movers, etc.
Production and sale of industrial equipment, boilers, environmental
equipment, steel structures, crushers, etc.
Production and sale of motorcycles, all-terrain vehicles (ATV), utility
vehicles, personal watercraft (“JET SKI”), general-purpose gasoline
engines, etc.
Production and sale of industrial hydraulic products, industrial robots, etc.
commercial activities, sales/order agency and intermediary activities,
administration of welfare facilities, etc.

2. Method for calculating sales, profit/loss, assets, liabilities, and other items for reportable segments
The accounting methods applied to the reported business segments generally follow theaccounting policies used to prepare the consolidated financial statements. The income of reporting
segments is based on operating income. Inter-segment earnings and transfers are based on market
prices.

21

3. Sales, income (loss), assets, liabilities, and other items by reportable segment
Fiscal year ended March 31, 2017 (April 1, 2016 – March 31, 2017)(Million yen)
Sales
Intersegment
External sales
sales ortransfer
Ship & Offshore
Structure

Rolling Stock
Aerospace
Gas Turbines& Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision
Machinery
Other
Operations
Total
Adjustments
Consolidated
total

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Investment inequitymethod affiliates

Increase inproperty, plantand equipment
and intangibles

103,204

2,447

105,651(21,423)

168,577

1,277

47,643

3,705

137,159
329,91575
1,614

137,235
331,530

3,485
25,034

164,412433,241

2,626
15,022

129
-

2,728
33,273241,953

12,823

254,776

15,294347,453

4,764

-

8,944

160,877

7,928

168,806

2,610

119,157

1,456

16,8992,207

313,030682

313,713

11,749243,412

13,1391,350

18,292

155,278

15,872

171,151

13,104

157,501

6,471

297

7,227

77,41040,041

117,452

3,137

86,465

1,672

3,173

1,174

1,518,830-

81,486(81,486)

1,600,317(81,486)

52,992(7,031)

1,720,222(32,858)

46,4305,134

69,493-77,553
5,191

1,518,830-

1,518,830

45,9601,687,363

51,56469,49382,744

Fiscal year ended March 31, 2018 (April 1, 2017 – March 31, 2018)(Million yen)
Sales
Intersegment
External sales
sales ortransfer
Ship & Offshore
Structure

Rolling Stock
Aerospace
Gas Turbines& Machinery
Plant &
Infrastructure
Motorcycle &EnginePrecision
Machinery
Other
Operations
Total
Adjustments
Consolidated
total

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Investment inequitymethod affiliates

Increase inproperty, plantand equipment
and intangibles

95,6103,786

99,397(3,820)147,963

1,444

49,7494,774

141,760
330,211105
1,829

141,866
332,041(12,438)
20,923

180,792
424,109

2,567
17,484

138
-

2,505
28,875

266,471

11,987

278,458

14,703

373,639

5,018

-

7,785

124,465

11,023

135,4882,936

136,130

1,508

19,118

1,689

331,659669

332,329

15,255266,550

14,163

1,474

20,542

198,996

15,890214,887

21,648188,155

7,165

411

10,97485,066

41,507

126,573

2,925

85,061

1,579

3,336

696

1,574,242-

86,800(86,800)

1,661,042(86,800)

62,132(6,207)1,802,402(17,374)

50,932
5,205

74,228-77,844
4,319

1,574,242-

1,574,242

55,925

1,785,028

56,13774,22882,163

Note: The company will change its reportable segments to “Aerospace System”, “Energy System & Plant
Engineering”, “Precision Machinery & Robot”, “Ship & Offshore Structure”, “Rolling Stock”,“Motorcycle & Engine” and “Other” from the fiscal year ending March 31, 2019.

22

4. Reconciliation and main components of difference between total for reportable segments andamounts on the consolidated financial statements
Fiscal year ended March 31(Million yen)

Sales

2017

Total for reportable segments
Intersegment transactions
Net sales reported on the consolidated
financial statements

2018

1,600,317(81,486)

1,661,042(86,800)

1,518,830

1,574,242

Fiscal year ended March 31(Million yen)

Income2017

Total for reportable segments
Intersegment transactions
Corporate expenses*
Operating income (loss) on consolidated
financial statements

2018
52,992(34)(6,997)

62,132(95)(6,112)45,96055,925

Note: Corporate expenses mainly comprise general and administrative expenses not attributed toreportable segments.
Fiscal year ended March 31(Million yen)

Assets2017

Total for reportable segments
Intersegment transactions etc.
Corporate assets shared by all segments*
Total assets on consolidated financial
statements

2018

1,720,222(80,391)
47,532

1,802,402(82,213)64,8381,687,363

1,785,028

Note: Corporate assets shared by all segments mainly comprise fixed assets not attributed to reportablesegments.
Fiscal year ended March 31
Other items

Total for reportablesegments

Adjustments*

2017

2018

2017

Depreciation/amortization

46,43050,932

5,134

Increase in property, plantand equipment andintangibles

77,553

77,844

5,191

2018

(Million yen)Amounts reported on
the consolidated
financial statements
2017

2018

5,205

51,56456,137

4,319

82,744

82,163

Note: Adjustments are mainly due to fixed assets not attributed to reportable segments.

23Per share data
Years ended March 31
Net assets per share
Earnings per share - basic

2017
2,617.38

(Yen)
2018
2,789.99

156.85173.09Notes:
1. Diluted net earnings per share is not stated because there are no potential shares.
2. Net income/loss per share and net income per share (diluted) were calculated based on the following:
Years ended March 31(Million yen)
2018

2017
Earnings per share - basic
Net income attributable to owners of parent
Earnings not attributable to common shareholders

26,204-

Net income allocated to the common shares
Average number of common shares outstanding (Thousands of shares)

28,91528,915

26,204
167,056

167,051

3. As the company carried out a share consolidation with a 10:1 ratio of common shares with aneffective date of October 1, 2017, earnings per share has been calculated assuming this shareconsolidation was carried out at the beginning of the fiscal year ended March 31, 2017.

Material subsequent events
Not applicable.

4. Supplementary information on earnings forecasts for the fiscal year ending March 31, 2019(1) Net sales and operating income (loss)(Billion yen)

Fiscal year ended
March 31, 2018 (actual)(B)

Outlook for the fiscal year
ending March 31, 2019
(A)

Aerospace System
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore structure
Rolling Stock
Motorcycle & Engine
Other
Adjustments

Total

Change (A – B)

Net sales

Operating
Income (loss)

Net sales

Operating
Income (loss)

Net sales

Operating
Income (loss)

475.0

27.5

469.5

30.8

5.5

(3.3)

280.0

9.0

251.6

7.6

28.4

1.4

230.0
85.0
160.0
335.0
85.0

24.5
1.0
2.5
15.0
3.0
(7.5)
75.0

198.9
95.6
141.7
331.6
85.0

21.6
(3.8)
(12.4)
15.2
2.9
(6.2)
55.9

31.1
(10.6)
18.3
3.4
-

2.9
4.8
14.9
(0.2)
0.1
(1.3)
19.1

1,650.0

1,574.2

24

75.8

(2) Orders received
Outlook for the fiscal year
Fiscal year ended
ending March 31, 2019
March 31, 2018 (actual)(A)(B)
Aerospace System
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore structure
Rolling Stock
Motorcycle & Engine
Other

Total

(Billion yen)

Change (A – B)

385.0

498.9

(113.9)

310.0

223.6

86.4

245.0
100.0
130.0
335.0
85.0
1,590.0

207.1
4.7
257.1
331.6
84.8
1,608.0

37.9
95.3(127.1)
3.4
0.2(18.0)

Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainly on
estimated demand.

(3) Before-tax ROIC
Outlook for the fiscal year
Fiscal year ended
ending March 31, 2019
March 31, 2018 (actual)(A)(B)
Aerospace System
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore structure
Rolling Stock
Motorcycle & Engine
Total

(%)

Change (A – B)

7.7

7.8

(0.1)

7.8

8.0

(0.2)

21.1
2.9
3.4
11.3
8.0

22.9
(21.3)(26.2)
9.4
3.9

(1.8)
24.2
29.6
1.9
4.1

Notes: 1. The company will change its reportable segments to “Aerospace System”, “Energy System & Plant
Engineering”, “Precision Machinery & Robot”, “Ship & Offshore Structure”, “Rolling Stock”, “Motorcycle& Engine” and “Other” from the fiscal year ending March 31, 2019. Operating results for the fiscal year
ended March 31, 2018, have been recombined to match reportable segments following the changes.
2. Assumed exchange rates in the fiscal year ending March 31, 2019 would be ¥107/US$ and ¥130/Euro.
3. Before-tax ROIC = EBIT (income before income taxes + interest expense) ÷ invested capital(interest-bearing debt + shareholders’ equity).

25