Report of Earnings and Financial Statements for theNine Months Ended December 31, 2019 (Consolidated)(Prepared pursuant to Japanese GAAP)
February 6, 2020
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

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

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

Scheduled dates:
Submission of quarterly securities filing:
Commencement of dividend payments:
Supplementary materials to quarterly earnings:
Quarterly earnings presentation:

February 6, 2020
Available
Conducted (for institutional investors, analysts and thepress)(Amounts in millions of yen rounded down to the nearest million yen)

1. Consolidated Financial Results for the Nine Months ended December 31, 2019
(April 1, 2019 – December 31, 2019)(1) Operating Results
Net sales(Percentage figures represent changes versus the year-ago period)
Net income attributable
Operating income
Recurring profit
to owners of parent
million yen%
million yen%
million yen%

million yen%
Nine Months Ended
1,135,444
3.7
30,983 (15.9)
15,379 (22.5)
December 31, 2019
Nine Months Ended
1,094,583
0.2
36,849 (17.4)
19,865 (50.3)
December 31, 2018
Note: Comprehensive income: Nine months ended December 31, 2019: ¥(82) million-%
Note: Comprehensive income: Nine months ended December 31, 2018: ¥10,916 million(54.6)%
Earnings per share
Earnings per share– dilutedyenyenNine Months Ended
28.50
December 31, 2019
Nine Months Ended
68.15
December 31, 2018

(2) Financial Condition

Nine Months Ended
December 31, 2019Year ended
March 31, 2019

Total assets

Net assets

million yen

million yen%

2,053,540

475,01322.3

1,838,855

492,26125.9

1Equity ratio

4,762(58.1)

11,385(21.5)

Note: Shareholders’ equity: Nine Months Ended December 31, 2019: ¥459,064 million
Note: Shareholders’ equity: Year ended March 31, 2019: ¥ 476,387 million

2. Dividends

Record date or term

Dividend per share
End of third
End of fiscal
quarter
year
yen
yen

End of firstquarteryen

End of second
quarter
yen

-

35.00

-

-

35.00

-

Year ended
March 31, 2019Year ending
March 31, 2020
Year ending March
31, 2020 (forecast)-

Full year
yen

35.00

70.00

35.00

70.00

Note: Revisions to the most recently announced dividend forecast: None

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2020
(April 1, 2019 – March 31, 2020)
Net sales

Full year

million yen%

1,660,000

4.0(Percentage figures represent changes versus the year-ago period)
Net income
Earnings per
Operating income
Recurring profit
attributable to owners
shareof parent
million yen%
million yen%
million yen%
yen
60,000(6.2)

Note: Revisions to the most recently announced earnings forecast: Yes

2

41,0008.2

25,000(8.9)

149.66

Notes1) Changes affecting the status of material subsidiaries (scope of consolidation): None2) Accounting procedures specific to preparation of quarterly consolidated financial statements: Yes*For further details, see “2.Consolidated Financial Statements (3) Notes on financial statements” onpage 16 in the Accompanying Materials.
3) Changes in accounting policies, changes in accounting estimates, and correction of errors(1) Changes in accounting policies in accord with revisions to accounting standards: Yes(2) Changes in accounting policies other than (1): None
(3) Changes in accounting estimates: None
(4) Correction of errors: None
4) Number of shares issued and outstanding (common stock)(1) Number of shares issued as of period-end (including treasury stock)
December 31, 2019:
167,080,532 shares
March 31, 2019:
167,080,532 shares(2) Number of shares held in treasury as of period-end
December 31, 2019:36,402 shares
March 31, 2019:35,196 shares(3) Average number of shares during respective periods
December 31, 2019:
167,044,779 shares
December 31, 2018:
167,046,730 shares

The quarterly report of earnings and financial statements is exempted from quarterly review
procedures based on the Financial Instruments and Exchange act.
Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain various forward-looking statements and other forecasts regarding performanceand other matters. Such statements are based on information available at the time of their preparation, anddo not mean that the Company promises to achieve these figures. Actual results may differ from thoseexpressed or implied by forward-looking statements due to a range of factors. For assumptions underlying
earnings forecasts and other information regarding the use of such forecasts, refer to “1. Qualitative
Information and Financial Statements (3) Consolidated earnings outlook ” on page 10 in the
Accompanying Materials.
How to Obtain Supplementary Briefing Material on Quarterly Financial Results and Details of theQuarterly Financial Results Briefing
The Company plans to conduct a briefing for institutional investors, analysts and the press by conference
call on Thursday February 6, 2020, and to post the briefing material on quarterly financial results to be
used for the briefing on TDnet and the Company’s website simultaneously with the announcement offinancial results.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial position

10(3) Consolidated earnings outlook

11

2. Consolidated Financial Statements

12(1) Consolidated balance sheets

12(2) Consolidated statements of income and comprehensive income

14(3) Notes on financial statements

16(Notes on the going-concern assumption)

16(Notes on significant changes in the amount of shareholders’ equity)

16(Accounting procedures specific to preparation of quarterly consolidated financial

16

statements)(Changes in accounting policies)

16(Related to consolidated balance sheets)

16(Related to consolidated statements of income)17(Segment information)

18

3. Supplementary information

19(1) Consolidated cash flow statements (condensed)

19(2) Supplementary information on earnings forecasts for the fiscal year ending March 31, 2020

20

4

1. Qualitative Information about Financial Statements(1) Consolidated operating results
The global economy continues to grow at a moderate pace overall, but future developments remaindifficult to predict, including uncertainty about the future of U.S.-China trade talks as well as
negotiations for a new trade agreement between the U.K. and the EU, concerns about the economic
impact of the Covid-19 coronavirus outbreak, and developments in the Middle East. Consequently,
sufficient attention must be paid to the risk of a global economic downturn.
The Japanese economy has been recovering modestly due to the gradual increase incapital investment and other factors, but deterioration in corporate earnings due to theimpact of the U.S.-China trade friction and a dip in personal consumption caused by the
consumption tax hike have emerged, so the situation requires close monitoring.
Amid such an operating environment, the Group’s orders received in the first nine months of the
fiscal year ending March 31, 2020, decreased versus the previous fiscal year, mainly in the Aerospace
Systems segment, and the Ship & Offshore Structure segment. Net sales increased overall, due toincreases in the Aerospace Systems and the Rolling Stock segment and other segments, despite adecline in the Ship & Offshore Structure segment and other segments. Operating income andRecurring profit decreased, due to decreases in the Precision Machinery & Robot and the Motorcycle& Engine segment and other factors, despite the improvement in the Energy System & Plant
Engineering segment. Net income attributable to owners of parent decreased due to the drop inrecurring profit, the posting of loss on business withdrawal as extraordinary losses, and otherfactors.
As a result, the Group’s consolidated orders received decreased ¥73.9 billion versus the same periodof the previous fiscal year to ¥1,022.6 billion, consolidated net sales increased ¥40.8 billion year on
year to ¥1,135.4 billion, operating income decreased ¥5.8 billion year on year to ¥30.9 billion,
recurring profit decreased ¥4.4 billion year on year to ¥15.3 billion, and net income attributable toowners of parent decreased ¥6.6 billion year on year to ¥4.7 billion.

5

Consolidated operating performance in the nine months of the fiscal year is summarized bysegment below.
Segment Information
Segment net sales, operating income, and orders received (billion yen)
Nine months ended December 31

2018(A)

2019 (B)

Orders received

Change (B – A)

Nine months ended
December 31

Net

OperatingNet

OperatingNet

Operating

2018

2019

Changesales

incomesales

incomeSales

income(A)(B)(B – A)

Aerospace
Systems

328.1

21.2

371.4

20.5

43.3

(0.7)

280.5

245.1

(35.4)

168.8

4.5

162.3

13.0

(6.5)

8.4

201.6

184.3

(17.2)

154.2

14.9

147.0

5.2

(7.2)

(9.7)

172.0

157.1

(14.8)

Structure

63.0

2.8

53.0

(0.7)

(10.0)

(3.5)

65.2

31.6

(33.6)

Rolling Stock

86.0

(6.4)

97.4

(3.1)

11.3

3.3

79.6

91.2

11.5

Engine

226.2

(0.0)

230.1

(4.5)

3.8

(4.4)

226.2

230.1

3.8

Other

67.8

2.4

73.9

2.0

6.0

(0.4)

71.1

82.8

11.7

-

(2.6)

-

(1.3)

-

1.3

-

-

-

1,094.5

36.8

1,135.4

30.9

40.8

(5.8)

1,096.6

1,022.6(73.9)

Energy System& Plant
Engineering
Precision
Machinery &RobotShip & Offshore

Motorcycle &Adjustments
Total

Notes: 1. Net sales include only sales to external customers.
2. The method for calculating orders received in the Precision Machinery & Robot segment was changed in
the first quarter of FY2019 from the previous simple method to a method based on more detailed ordervalues. The value for orders received in the third quarter of the previous fiscal year has been recalculated inaccordance with the new calculation method.
3. The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

6

Aerospace Systems
Regarding the business environment surrounding the Aerospace Systems segment, there is a certain
level of demand from the Ministry of Defense in Japan amid the tight defense budget. Demand forcommercial aircraft airframes and jet engines is increasing in conjunction with the rise in the numberof air passengers.
Amid such an operating environment, consolidated orders received decreased ¥35.4 billion year on
year to ¥245.1 billion due to decreases in component parts of airframes for Ministry of Defense andcommercial aircraft, although component parts of commercial aircraft jet engines remain high level.
Consolidated net sales increased ¥43.3 billion year on year to ¥371.4 billion due to increases incomponent parts of airframes for Ministry of Defense and commercial aircraft, and component partsof commercial aircraft jet engines.
Operating income of ¥20.5 billion was on par with the previous year's result, as increased sales
offset an increase in depreciation of development costs of a new program relating to component partsfor commercial aircraft engines.
Energy System & Plant Engineering
Regarding the business environment surrounding the Energy System & Plant Engineering segment,in addition to the recovery in resources development and oil and natural gas-related investment
overseas, there is still demand for energy infrastructure maintenance in Asia. Besides, demand for
distributed power sources is increasing due to stronger interest in investment in the environment andenergy conservation, among other factors. In Japan, there is ongoing demand for replacing aging
facilities for refuse incineration plants and industrial machinery. Meanwhile, in the energy andenvironmental field, although there is large potential demand for distributed power sources in Japan,
investment plans are slightly delayed in light of the liberalization of electricity.
Amid such an operating environment, consolidated orders received decreased ¥17.2 billion year on
year to ¥184.3 billion. Although new orders were relatively strong, including an order for major
refurbishments of domestic waste disposal facilities, the year-on-year result reflects the nonrecurrence of orders received for large projects in the previous fiscal year, including orders for a
Combined Cycle Power Plant and an LNG tank for the Japanese market.
Consolidated net sales decreased ¥6.5 billion year on year to ¥162.3 billion, due to a decline in salesof the Energy system segment and other factors, despite increases in construction work volume on
chemical plant for overseas.
Operating income increased ¥8.4 billion year on year to ¥13.0 billion, due to the profitability
improvement in chemical plant for overseas and the Energy System segment and the other factors,
despite a drop in sales.

7Precision Machinery & Robot
Regarding the business environment surrounding the Precision Machinery & Robot segment, inthe construction machinery market, production is currently declining as procurement of parts from adomestic manufacturer impacted by Typhoon Hagibis has stagnated, and sales declined due to thedecrease in sales in emerging markets such as India and Indonesia, as well as in South Korea.
However, going forward, strong demand is expected, particularly in emerging markets.
In the robot market, market conditions remain challenging due to factors including the
postponement of capital investment in the Chinese market in response to the U.S.-China trade
friction. However, with respect to robots for the semiconductors market, demand has started torecover due to the resumption of investment by leading semiconductor manufacturers in Taiwan andSouth Korea, and demand is expected to expand steadily over the medium to long term.
Amid such an operating environment, consolidated orders received decreased ¥14.8 billion year
on year to ¥157.1 billion, due to decreases in hydraulic components for construction machinery
market and various robots.
Consolidated net sales decreased ¥7.2 billion year on year to ¥147.0 billion, due to decreases inhydraulic components for construction machinery market and various robots.
Operating income decreased ¥9.7 billion year on year to ¥5.2 billion, as a result of factors including
a decrease in the number of robots produced in China, increases in costs of hydraulic components andresearch and development, in addition to the drop in sales.
Ship & Offshore Structure
While demand for gas-fueled vessels is being driven higher by tighter environmental regulationsand LNG development projects are beginning to take shape, the Ship & Offshore Structure segment’s
operating environment remains adverse due to the prolonged slump in the marine transport market,
the continuation of the South Korean government’s support policies for its shipbuilding industry, andother issues.
Amid such an operating environment, we received new orders LPG carriers but consolidated orders
received totaled only ¥31.6 billion, ¥33.6 billion less than a year earlier when we received order forthe submarine for Ministry of Defense.
Consolidated net sales decreased ¥10.0 billion year on year to ¥53.0 billion, due to decreases involume of construction of LNG carrier and LPG carrier.
The segment posted an operating loss of ¥0.7 billion, a ¥3.5 billion deterioration from operating
income a year earlier. The main factors dragging down earnings were lower revenue from newly built
ships and the posting of losses from operations.

8

Rolling StockRegarding the business environment surrounding the Rolling Stock segment, there continues to bestable demand in Japan for the replacement of aging railcars. Overseas, demand for new andreplacement railcars is expected to increase in the U.S., including in the core New York area market.
Meanwhile, in Asia, we are planning the formation of projects for emerging markets in tandem with
the Japanese government’s efforts to promote infrastructure-related exports.
Amid such an operating environment, consolidated orders received increased ¥11.5 billion year on
year to ¥91.2 billion, due to an increase in subway cars in Japan.
Consolidated net sales increased ¥11.3 billion year on year to ¥97.4 billion, due to an increase insales of rolling stocks for Japan and U.S., despite a decrease in components for overseas.
Operating loss improved by ¥3.3 billion year on year to an operating loss of ¥3.1 billion. This was
mainly due to an increase in sales and a decrease in temporary expenses in a project in the U.S.
market (the order for which was received in the same period of the previous fiscal year), despite cost
fluctuations in some projects.
Motorcycle & Engine
Regarding the business environment surrounding the Motorcycle & Engine segment, while themodest growth in motorcycle markets mainly in Europe is continuing, some emerging markets are
weak. With respect to utility vehicles and personal watercrafts, the market continues to grow stably
mainly in North America. In the general-purpose engine market, growth is slowing down temporarily
due to the impact of inclement weather and U.S.-China trade friction.
Amid such an operating environment, consolidated net sales increased ¥3.8 billion year on year to¥230.1 billion, due to an increase in utility vehicles for U.S.
Operating loss deteriorated by ¥4.4 billion year on year to an operating loss of ¥4.5 billion. Thiswas due to the appreciation of the yen, primarily against the euro and the US dollar, compared to thesame period of the previous year, an increase in manufacturing costs due to the appreciation of theThai baht against the yen, and other factors, despite an increase in revenue.
Other Operations
Consolidated net sales increased ¥6.0 billion year on year to ¥73.9 billion.
Operating income of ¥2.0 billion was on par with the previous year's result.

9(2) Consolidated financial position(i) Assets
Current assets were ¥1,351.6 billion, ¥215.3 billion increase from March 31, 2019 due to anincrease in trade receivables.
Fixed assets were ¥701.8 billion, ¥0.6 billion decrease from March 31, 2019 due to a decrease inlong-term accounts receivables.
As a result, total assets were ¥2,053.5 billion, ¥214.6 billion increase from March 31, 2019.
(ii) Liabilities
Interest bearing liabilities were ¥787.6 billion, ¥348.2 billion increase from March 31, 2019.
Liabilities were ¥1,578.5 billion, ¥231.9 billion increase from March 31, 2019 due to an increase
in interest bearing liabilities and other factors.
(iii) Net assets
Consolidated net assets were ¥475.0 billion, ¥17.2 billion decrease from March 31, 2019 due topayment of dividends and a decrease in foreign currency translation adjustment.

10(3) Consolidated earnings outlook
Regarding its consolidated earnings forecast for the fiscal year ending March 31, 2020, theCompany has left its forecast for consolidated net sales unchanged from the previously announced
forecast (October 31). The Company has upwardly revised its consolidated operating income forecast
to ¥60.0 billion, as despite expecting impacts from automobile recalls in the Motorcycle & Engine
segment and a deterioration in profitability on U.S. projects in the Rolling Stock segment, theCompany anticipates improved profitability of chemical plants for overseas markets in the Energy
System & Plant Engineering segment, while in the Aerospace Systems segment the Company expects
an improvement due to progress on cost reduction efforts and the impact of swifter collection of sales
information on component parts for commercial aircraft jet engines.
The Company has left its forecasts for consolidated recurring profit and net income attributable toowners of parent unchanged from the previously announced forecasts.
Consolidated orders are forecast to decrease by ¥100.0 billion from the figures previous announced,
to ¥1,550.0 billion, due to expected decreases in the Energy System & Plant Engineering segment andShip & Offshore Structure segment, and other segments. ROIC and ROE are forecast to be 4.8% and5.2%, respectively.
The Company’s earnings forecasts assume exchange rates of ¥107 to the U.S. dollar and ¥118 tothe euro.

Note regarding consolidated earnings outlook
The above earnings outlook is based on information available at the time of preparation, and includes
risks and uncertainties. We therefore discourage making investment decisions depending solely on thisoutlook. Please note that actual earnings may differ materially from this outlook, due to a variety ofimportant factors stemming from changes the external environment and/or the Company’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, foreign exchange rates, inparticular the yen/dollar exchange rate, tax codes and other regulatory system-related issues.

112. Consolidated Financial Statements(1) Consolidated balance sheets
Million yen
As of
As of
March 31, 2019
December 31, 2019
AssetsCurrent assets
Cash on hand and in banks
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Other
Allowance for doubtful receivables
Total current assets
Fixed assets
Net property, plant and equipment
Buildings and structures
Other
Total property, plant and equipment
Intangible assets
Investments and other assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Trade payables
Electronically recorded obligations - operating
Short-term debt
Income taxes payable
Provision for sales promotion expenses
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
Net defined benefit liability
Provision for the in-service issues of commercial aircraft
jet engines
Other
Total long-term liabilities
Total liabilities

12

74,311
427,665
68,176
405,087
119,558
45,333(3,792)
1,136,340

74,408548,257
89,052449,740
128,011
66,322(4,094)
1,351,697

194,939
290,729
485,669
16,797

195,891
288,883
484,774
18,977201,471(1,422)200,048
702,514
1,838,855

199,402(1,311)
198,091
701,843
2,053,540

247,191
123,083
100,023
10,390497
21,16813,096
27,609181,419
139,800
864,280

227,269
111,157
283,420
4,755
6,317
10,595
12,428
14,214145,900
272,256
1,088,316

140,000
187,568
97,602140,000
191,940
101,980(*1)11,468(*1)13,993

45,674
482,313
1,346,593

42,296490,211
1,578,527

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

104,484
54,542
324,606(130)
483,502104,484
54,542
312,726(133)
471,620

Accumulated other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total net assets and liabilities

2,682
(227)
(4,556)(5,014)(7,115)
15,874492,261
1,838,855

2,673
(391)
(11,171)(3,667)(12,556)
15,949475,013
2,053,540

13

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Million yen
Nine Months Ended
December 31, 2018
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and benefits
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 the in-service issues of commercial aircraft jet engines

Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sales of fixed assets
Total extraordinary income
Extraordinary loss
Loss on withdrawal from businessTotal extraordinary loss
Income before income taxes
Income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

14

Nine Months Ended
December 31, 2019

1,094,583
910,113
184,469

1,135,444
954,085
181,359

40,32533,42773,867
147,620
36,84941,35736,371
72,645150,375
30,983

648
263
1,014
2,585
4,512

530
252
867
2,157
3,807

2,505
4,620
(*1) 9,745
4,625
21,496
19,8652,787
4,794(*1) 7,640
4,189
19,411
15,379-(*2) 1,277
1,277

19,865
6,721
13,144
1,758
11,385(*3) 2,383
2,383
14,273
8,416
5,856
1,094
4,762

Consolidated statements of comprehensive income
Million yen
Nine Months Ended
December 31, 2018
Net income
Other comprehensive income
Net unrealized gains (losses) on securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurement of defined benefit plans
Share of other comprehensive income(loss) of associates
accounted for using equity method
Total other comprehensive income(loss)
Comprehensive Income(loss) attributable to:
Owners of parent
Non-controlling interests

15

Nine Months Ended
December 31, 201913,144

5,856(1,182)
(387)
313
2,363

1
(143)
(2,903)
1,352(3,332)(4,246)(2,227)
10,916
9,446
1,469(5,939)
(82)
(678)
595

(3) Notes on financial statements

Notes on the going-concern assumption
Not applicable
Notes on significant changes in the amount of shareholders’ equity
Not applicable
Accounting procedures specific to preparation of quarterly consolidated financial statements(Calculation of tax expense)
The Company calculates tax expense by rationally estimating its effective tax rate after applicationof tax effect accounting to pretax net income for the fiscal year which includes the third quarter underreview, and multiplying quarterly pretax net income by said estimated effective tax rate. If unable touse the estimated effective tax rate, the Company calculates tax expense by multiplying the statutory
effective tax rate by quarterly pretax net income adjusted to reflect material differences other than
temporary differences.
Income taxes are reported inclusive of income tax adjustments.
Changes in accounting policies
Consolidated subsidiaries applying U.S. accounting standards began applying Topic 606, "Revenue
from Contracts with Customers" from the first quarter of the year under review.
With the application of this standard, when contracted goods or services are transferred to thecustomer, revenue is recognized at an amount that reflects the consideration expected to be received
in exchange for the goods or services. In applying this standard, the Company adopted the method, as
is permitted as a transitional measure, of recognizing the cumulative effect of a retroactive adjustment
from the date at which the standard was applied and accordingly reducing retained earnings at the
beginning of the current consolidated fiscal year.
As a result, retained earnings at the beginning of the third quarter of the year under review decreasedby ¥4,948 million. In addition, income before income taxes for the third quarter of current fiscal year
increased by ¥2,004 million over the amount that would have been recorded if the previous accounting
standard had been applied.

Related to consolidated balance sheets(*1) Provision for the in-service issues of commercial aircraft jet engines
The Company participates as a risk and revenue sharing partner on the Rolls-Royce Trent 1000
engine program, which has been impacted by the challenge of managing significant in-service issues.
Rolls-Royce continues to work hard to remedy this situation and has made further substantial progresson the implementation of long-term solutions and mitigation of the near-term impact on customers. In
the FY2019 third quarterly financial results, the Company has made a provision of the abnormal cost
related to in-service issues which the Company would cover as a member of this program.

16

Related to consolidated statements of income(*1) Payments for the in-service issues of commercial aircraft jet engines
The Company participates as a risk and revenue sharing partner on the Rolls-Royce Trent 1000
engine program, which has been impacted by the challenge of managing significant in-service issues.
Rolls-Royce continues to work hard to remedy this situation and has made further substantial progresson the implementation of long-term solutions and mitigation of the near-term impact on customers. In
the FY2019 third quarterly financial results, the Company has made a provision of the abnormal cost
related to in-service issues which the Company would cover as a member of this program. The
provision was included within the non-operating expenses.

(*2) Gain on sales of fixed assets
Proceeds from the sale of former dormitory/company housing sites.

(*3) Loss on withdrawal from business
Losses associated with withdrawal from certain businesses by the Energy System & Plant
Engineering Company.

17

Segment information
1. Nine Months Ended December 31, 2018 (April 1, 2018 – December 31, 2018)(1) Sales and income (loss) by reportable segment
Million yen

Aerospace Systems
Energy System & Plant Engineering
Precision Machinery & Robot
Ship & Offshore structure
Rolling stock
Motorcycle & Engine
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

328,137
168,844
154,282
63,06686,088226,298
67,865
1,094,583
1,094,583

8,536
14,285
11,7772,665
16496
29,03566,813(66,813)-336,674
183,129
166,059
65,732
86,105
226,795
96,9001,161,397(66,813)
1,094,583

21,295
4,534
14,942
2,803(6,452)(33)
2,456
39,545(2,696)36,849Million yen
IncomeAmountIntersegment transactions(60)
Corporate expenses*(2,635)
Total(2,696)*Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
Not applicable182. Nine Months Ended December 31, 2019 (April 1, 2019 – December 31, 2019)(1) Sales and income (loss) by reportable segment
Million yen

Aerospace Systems
Energy System & Plant Engineering
Precision Machinery & Robot
Ship & Offshore structure
Rolling stock
Motorcycle & Engine
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

371,446
162,317
147,080
53,016
97,477230,171
73,9341,135,444
1,135,444

6,913
23,37911,4226,514
12
497
27,782
76,522(76,522)-378,360
185,697
158,50359,531
97,489230,668
101,716
1,211,967(76,522)
1,135,444

20,517
13,027
5,216(788)(3,147)(4,517)2,055
32,364(1,380)30,983

Million yen
Amount105(1,486)

IncomeIntersegment transactions
Corporate expenses*

Total(1,380)* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
Not applicable

3. Supplementary information(1) Consolidated cash flow statements (condensed)
Million yen
Nine months ended
December 31, 2018
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash and cash equivalents at end of period(207,489)(67,409)
254,463
43,25919

Nine months ended
December 31, 2019
(288,421)(46,216)
335,815
70,914

(2) Supplementary information on consolidated earnings forecasts for the fiscal year
ending March 31, 2020(i) Net sales and operating income (loss)
Outlook for the year ending March 31, 2020 (fiscal 2019)
Revised forecast
Forecast issued
Change(A)
October 31, 2019 (B)(A – B)

Reportable segment

530.0

Operatingincome(loss)
36.0

520.0

Operatingincome(loss)
28.0

250.0

16.0

250.0

220.0

14.5

70.0
150.0
345.0
95.0

(2.0)
(2.0)
3.0
1.5
(7.0)
60.0

Net sales
Aerospace Systems
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore Structure
Rolling Stock
Motorcycle & Engine
Other
Adjustments
Total

Billion yen

1,660.0

Year ended
March 31, 2019
(Fiscal 2018) (actual)

10.0

Operatingincome(loss)
8.0

11.5

-

230.0

16.0

70.0
160.0
350.0
80.0

(2.5)
1.0
9.0
1.0
(8.0)
56.0

Net sales

1,660.0

463.9

Operatingincome(loss)
32.6

4.5

253.0

11.6

(10.0)

(1.5)

222.0

21.3

(10.0)
(5.0)
15.0

0.5
(3.0)
(6.0)
0.5
1.0
4.0

78.9
124.6
356.8
95.1

1.0
(13.7)
14.3
2.5
(5.7)
64.0

Net sales-(ii) Orders received
Reportable segment

Outlook for the year ending March 31, 2020 (fiscal 2019)
Revised forecast
Forecast issued
Change(A)
October 31, 2019 (B)(A – B)
410.0
415.0
(5.0)

Net sales

1,594.7

Billion yen
Year ended
March 31, 2019
(Fiscal 2018) (actual)
431.6

Aerospace Systems
Energy System & Plant
280.0
330.0
(50.0)Engineering
Precision Machinery &
230.0
240.0
(10.0)
Robot
Ship & Offshore Structure
60.0
100.0
(40.0)
Rolling Stock
130.0
130.0
Motorcycle & Engine
345.0
350.0
(5.0)
Other
95.0
85.0
10.0
Total
1,550.0
1,650.0(100.0)Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainly on
estimated demand.

(iii) Before-tax ROIC
Reportable segment
Aerospace Systems
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore Structure
Rolling Stock
Motorcycle & Engine
Total

263.5
225.2
81.1
136.0
356.8
94.2
1,588.7(%)
Outlook for the year ending March 31, 2020 (fiscal 2019)
Revised forecast
Forecast issued
Change(A)
October 31, 2019 (B)(A – B)

Year ended
March 31, 2019
(Fiscal 2018) (actual)

6.5

6.0

0.5

5.0

10.2

7.1

3.1

9.3

10.0

12.2

(2.2)

19.8

0.1
(3.9)
1.3
4.8

(1.8)
1.6
5.7
4.8

1.9
(5.5)
(4.4)
-

3.2
(26.4)
8.4
4.5

Notes: 1. Forecast’s assumed foreign exchange rates: ¥107 = US$1, ¥118= 1 euro
2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital.

20