Report of Earnings and Financial Statements for the
Six Months Ended September 30, 2021 (Consolidated)(Prepared pursuant to Japanese GAAP)
November 9, 2021
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://global.kawasaki.com/
Yasuhiko Hashimoto, President and Chief Executive Officer
Takashi Torii, Group Manager, Corporate Communication Group Department+81 3-3435-2130

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

November 9, 2021
December 3, 2021
Available
Conducted (for institutional investors, analysts and thepress)(Amounts in millions of yen rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the Six Months ended September 30, 2021
(April 1, 2021 – September 30, 2021)(1) Operating Results
Net sales

Six Months Ended
September 30, 2021
Six Months Ended
September 30, 2020
Note: Comprehensive income(Percentage figures represent changes versus the year-ago period)
Profit attributable toOperating profit
Ordinary profit
owners of parent
Millions of%Millions of%Millions of
%
yen
yen
yen

Millions ofyen%

681,082

3.6

20,406-

11,085

-

4,513

-

657,325(10.8)(21,883)-(18,286)-(27,267)-

Six months ended September 30, 2021:
Six months ended September 30, 2020:
Earnings per share

Earnings per share– diluted
yen¥9,603 million-%¥(29,870) million -%yen
Six Months Ended
26.98
September 30, 2021
Six Months Ended(163.23)
September 30, 2020
Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 ofMarch 31, 2020) from this consolidated fiscal year, and the figures for the second quarter of the consolidated
fiscal year ended March 2022 are after the application of the accounting standard.

1(2) Financial Condition
Total assets

Net assets

Millions of yen

Millions of yen

Equity ratio%

September 30, 2021

1,939,967

452,160

22.4

March 31, 2021

1,963,276

482,775

23.7

For reference: Shareholders’ equity

September 30, 2021: ¥ 433,970 million
March 31, 2021:¥ 465,332 million
Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 ofMarch 31, 2020) from this consolidated fiscal year, and the figures for the second quarter of the consolidated
fiscal year ended March 2022 are after the application of the accounting standard.

2. Dividends

Record date or term

End of firstquarteryen

End of second
quarter
yen

-

0.00

-

20.00

Year ended
March 31, 2021
Year ending
March 31, 2022
Year ending March 31,
2022 (forecast)

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

Full year
yen

-

0.00

0.00

-

10.00

30.00

Note: Revisions to the most recently announced dividend forecast: None
In the Company’s articles of incorporation, the dates of record are set as the last day of the fiscal second quarterand the last day of the fiscal year.

3. Forecast of Consolidated Earnings for the Fiscal Year Ending March 31, 2022
(April 1, 2021 – March 31, 2022)
Net sales

Full year

Millions ofyen
1,550,000%
4.1(Percentage figures indicate change compared with the previous fiscal year)
Profit attributable toEarnings
Operating profit
Ordinary profit
owners of parent
per share
Millions of%Millions of%Millions of
%
Yen
yen
yen
yen
40,00022,00015,00089.68

Note: Revisions to the most recently announced earnings forecast: Yes
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 ofMarch 31, 2020) from this consolidated fiscal year, and the figures for the above forecast of consolidated earnings
are after the application of the accounting standard.

2

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 (4)Notes on financial statements(Accounting procedures specific to preparation of quarterly consolidated financial statements)” on
page 17 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
*For further details, see “2.Consolidated Financial Statements (4)Notes on financial statements(Changes in accounting policies)” on page 17 in the Accompanying Materials.
4) Number of shares issued and outstanding (common stock)(1) Number of shares issued as of period-end (including treasury stock)
September 30, 2021:
167,921,800 shares
March 31, 2021:
167,080,532 shares(2) Number of shares held in treasury as of period-end
September 30, 2021:
463,474 shares
March 31, 2021:
38,282 shares(3) Average number of shares during respective periods
September 30, 2021:
167,251,505 shares
September 30, 2020:
167,043,632 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 11 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 on Tuesday
November 9, 2021, and to post the briefing material on quarterly financial results to be used for thebriefing on TDnet and the Company’s website simultaneously with the announcement of financial results.

3

Accompanying Materials – Contents
1. Qualitative Information about Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial condition

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) Consolidated cash flow statements

16(4) Notes on financial statements

17(Notes on the going-concern assumption)

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

17(Accounting procedures specific to preparation of quarterly consolidated financial

17

statements)(Changes in accounting policies)

17(Related to consolidated balance sheets)

18(Related to consolidated statements of income)19(Segment information)

20

3. Supplementary information

224

1. Qualitative Information about Financial Statements(1) Consolidated operating results
The global economy is recovering continuously mainly in developed countries, supported by solid
capital investments, a recovery in service-consumption and an improvement in the employment
environment, due to the progress in COVID-19 vaccination and economic measures. The expectations
are rising for a recovery in personal consumption, such as leisure activities, in Japan as well due tolifting the state of emergency.
On the other hand, the global economic outlook needs to keep a close watch on the new risk factors
such as the management crisis of a major Chinese real estate company, in addition to rising raw
materials prices such as crude oil, natural-gas and steel, concerns over the spread of breakthroughinfection after the vaccination, and the prolonged US-China problem.
In this business environment, the Group’s consolidated orders received during the second quarterof this consolidated fiscal year increased mainly due to increases in the Motorcycle & Engine segment,
the Energy Solution & Marine Engineering segment. Net sales decreased in the Aerospace Systems
segment, the Energy Solution & Marine Engineering segment, and other segments, but overall sales
increased from the same period of the previous fiscal year due to higher sales in the Motorcycle &Engine segment, the Precision Machinery & Robot segment, and other segment. Operating profit
improved significantly year on year due to improvements in the Motorcycle & Engine segment andthe Aerospace Systems segment. Ordinary profit improved significantly due to an improvement in
operating profit despite deterioration in share of gains and losses of entities accounted for using equity
method, and foreign exchange gains and losses. Profit attributable to owners of parent improved
significantly due to a decrease in tax expenses as well as an improvement in ordinary profit.
As a result, the Group’s consolidated orders received increased by ¥157.3 billion year on year to¥659.5 billion, consolidated net sales increased by ¥23.7 billion year on year to ¥681.0 billion,
operating profit improved by ¥42.2 billion year on year to ¥20.4 billion, ordinary profit improved by¥29.3 billion year on year to ¥11.0 billion, and profit attributable to owners of parent improved by¥31.7 billion year on year to ¥4.5 billion.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29 of March 31, 2020), etc. from the beginning of the first quarter of the current fiscal year. For
more information, see “2. (4) Notes on financial statements (Changes in accounting policies) and(Segment Information)”.

5

Second-quarter consolidated operating performance is summarized by segment below.

Segment Information
Segment net sales, operating profit, and orders received (billions of yen)Six months ended September 30

2020(A)

2021(B)

Orders received

Change (B – A)

Six months ended
September 30

Net

OperatingNet

OperatingNet

Operating

2020

2021

Changesales

profitsales

profitSales

profit(A)(B)(B – A)

Aerospace
Systems

168.5(23.8)

133.3

(9.1)

(35.2)

14.7

72.4

97.2

24.7

Rolling Stock

69.1

(0.1)

57.5

1.3

(11.5)

1.5

30.3

23.1

(7.2)

142.8

2.9

130.9

(0.9)

(11.8)

(3.8)

118.4

164.2

45.8

99.0

3.4

118.2

8.9

19.2

5.5

102.4

128.1

25.6

Engine

139.7

(5.1)

206.8

18.5

67.0

23.7

139.7

206.8

67.0

Other

37.9

(0.1)

34.0

1.5

(3.8)

1.7

38.6

40.0

1.3

－

1.1

－

(0)

－

(1.1)

－

－

－

657.3

(21.8)

681.0

20.4

23.7

42.2

502.2

659.5

157.3

Energy Solution& Marine
Engineering
Precision
Machinery &Robot
Motorcycle &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.
3. From the first quarter of the current consolidated accounting period, the previous reporting segments of“Energy System & Plant Engineering” and “Ship & Offshore Structure” have been integrated into “Energy
Solution & Marine Engineering”. As a result, reportable segments have been changed to “Aerospace Systems”,“Rolling Stock”, “Energy Solution & Marine Engineering”, “Precision Machinery & Robot”, “Motorcycle &Engine”, and “Other”.
Segment information for the second quarter of the previous fiscal year is presented using the newclassification method.

6

Aerospace Systems
Regarding the business environment surrounding the Aerospace Systems segment, demand for
Ministry of Defense in Japan is generally stable despite the tight defense budget. With respect tocommercial aircraft, global passenger demand has been sluggish due to the COVID-19 pandemic, anddemand for commercial aircraft airframes and jet engines has declined. Although demand for shorthaul flights is currently recovering in North America, Europe and other regions, the outlook remains
uncertain due to concerns over the spread of breakthrough infection after the vaccination.
Amid such an operating environment, consolidated orders received increased by ¥24.7 billion year
on year to ¥97.2 billion, mainly due to an increase in component parts of airframes for Ministry of
Defense in Japan and commercial aircraft, despite a decrease in component parts of commercial
aircraft jet engines resulting from the impact of the application of revenue recognition accounting
standards.
Consolidated net sales decreased by ¥35.2 billion year on year to ¥133.3 billion, mainly due to adecrease in component parts of jet engines for commercial aircraft resulting from the application ofrevenue recognition accounting standards, as well as a decrease in component parts of airframes for
Ministry of Defense in Japan and commercial aircraft.
Operating loss came to ¥9.1 billion, improving ¥14.7 billion year on year, due to an improvementin profitability of component parts of airframes and jet engines for commercial aircraft, despite adecrease in sales.
Rolling StockRegarding the business environment surrounding the Rolling Stock segment, the effect of the
COVID-19 has led to a review railway-related investment plans in Japan, and delays in work
processes as well as postponement and cancellation of biddings overseas. In the medium and longterm, however, relatively stable growth is expected around the world due to development of urban
transportation as an environmental protection measure and to ease congestion in large cities caused
by increasing population concentration, as well as demand for railway infrastructure following
economic development in Asian countries.
Amid such an operating environment, consolidated orders received amounted to ¥23.1 billion, adecline of ¥7.2 billion compared to the same period of the previous fiscal year, when the Company
received orders for Shinkansen bullet trains.
Consolidated net sales decreased by ¥11.5 billion year on year to ¥57.5 billion, mainly due to adecrease in sales of railcars for overseas and domestic markets.
Operating profit came to ¥1.3 billion, improving ¥1.5 billion despite a decrease in sales, comparedto the same period of the previous fiscal year when the profitability of overseas projects deteriorated
due to the impact of the COVID-19 pandemic.

7

Energy Solution & Marine Engineering
The business environment surrounding the Energy Solution & Marine Engineering segment remains
on a recovery track as the global economy moves from stagnation due to the COVID-19 pandemic tonormalization. Demand for distributed power sources in Japan and overseas and, for energy
infrastructure development in emerging countries, remains strong, while there is ongoing demand forthe replacement of aging facilities for refuse incineration plants. Also, business opportunities on LPG
carriers are gradually increasing. In addition, there is a growing worldwide trend toward achievingcarbon neutrality, and contacts and requests for cooperation are increasing regarding decarbonization
solutions, including hydrogen products of our Company’s strength. On the other hand, there areconcerns that the rapid normalization of the economy will lead to higher raw material prices and higher
transportation costs, which will squeeze earnings.
Amid such an operating environment, consolidated orders received increased by ¥45.8 billion fromthe same period of the previous fiscal year to ¥164.2 billion due to orders received for large-scale
projects such as maintenance and operation of domestic waste disposal facilities, and an increase inorders received for LPG carries.
Consolidated net sales decreased by ¥11.8 billion year on year to ¥130.9 billion, mainly due to adecrease in sales of vessel repair and Gas Turbine Combined Cycle (GTCC) power plants, despite anincrease in the volume of work on LPG carries.
Operating loss came to ¥0.9 billion, deteriorating ¥3.8 billion year on year, due to a decrease insales.
Precision Machinery & Robot
Regarding the business environment surrounding the Precision Machinery & Robot segment, inthe precision machinery field, demand in the Chinese construction machinery market continued to be
at a high level this fiscal year, and demand in the construction machinery market outside China fell
sharply in the first half of the previous fiscal year due to the impact of the COVID-19 pandemic.
However, demand has continued to recover since the second half of the fiscal year, and lately sales
have been favorable. In the robot field, robots for the semiconductor market, performance is strong
due to an increase in capital investment by semiconductor manufacturing equipment manufacturers,
and general-purpose robots performed well mainly in areas where recovery from the COVID-19
pandemic was rapid.
Amid such an operating environment, consolidated orders received increased by ¥25.6 billion year
on year to ¥128.1 billion, due to an increase in hydraulic equipment for the construction equipment
market and various robots for semiconductors and other applications.
Consolidated net sales increased by ¥19.2 billion year on year to ¥118.2 billion, due to an increasein hydraulic equipment for the construction equipment market and various robots forsemiconductors.
8

Operating profit increased by ¥5.5 billion year on year to ¥8.9 billion mainly due to sales increase.
Motorcycle & Engine
The business environment surrounding the Motorcycle & Engine segment continues to be affectedby the COVID-19 pandemic. Demand for off-road models such as four-wheeled vehicles continued to
be strong in the United States, a major market, as in the previous fiscal year, and the European market
also remained strong. On the other hand, although the Southeast Asian market has recovered comparedto the same period of the previous fiscal year, the outlook remains uncertain. The supply of products
is also affected by shortages of semiconductors and raw materials and disruptions in distribution.
Amid such an operating environment, consolidated net sales increased by ¥67.0 billion year on yearto ¥206.8 billion due to an increase in motorcycles for Europe and Southeast Asia, as well as anincrease in motorcycles for North America and an increase in general-purpose engines.
Operating profit improved by ¥23.7 billion from the same period of the previous fiscal year to ¥18.5
billion due to an increase in sales, and a weaker yen compared to the same period of the previous fiscal
year, along with other factors.
Other Operations
Consolidated net sales decreased by ¥3.8 billion year on year to ¥34.0 billion.
Operating profit improved by ¥1.7 billion year on year to ¥1.5 billion.
In the Group Vision 2030, the Group will focus on three fields; “A Safe and Secure RemotelyConnected Society”, “Near-Future Mobility” and “Energy and Environmental Solutions” and willtransform our business structure into a form which promises faster growth in line with environmental
changes. The Group is making steady progress in new businesses, such as the development of surgicalsupport robots and automated PCR testing, the development of delivery robots and unmannedtransport helicopters, and the promotion of hydrogen-related projects.

9(2) Consolidated financial condition(i) Assets
Current assets were ¥1,220.8 billion, ¥64.5 billion decrease from the previous fiscal year due to adecrease in cash and deposits and notes and accounts receivable-trade, and contract assets.
Non-current assets were ¥719.1 billion, ¥41.2 billion increase from the previous fiscal year due toan increase in investments and other assets.
As a result, total assets were ¥1,939.9 billion, ¥23.3 billion decrease from the previous fiscal year.

(ii) Liabilities
Interest-bearing debt was ¥651.9 billion, ¥58.6 billion increase from the previous fiscal year.
Liabilities were ¥1,487.8 billion, ¥7.3 billion increase from the previous fiscal year due toincreases in interest-bearing debt and other factors.

(iii) Net assets
Net assets were ¥452.1 billion, ¥30.6 billion decrease from the previous fiscal year due todecreases in retained earnings at the beginning of this fiscal year because of the application of
Accounting Standard for Revenue Recognition and other factors.

10(3) Consolidated earnings outlook
For the fiscal year ending March 2022, the outlook of consolidated net sales is expected to be¥1,550.0 billion, ¥20.0 billion increase from the outlook announced on August 5, due to an increasein the Motorcycle & Engine segment and other segments, despite decreased sales in the Aerospace
Systems segment. Consolidated operating profit remains unchanged from the previous outlook.
In addition, the outlook of consolidated ordinary profit is expected to be ¥22.0 billion, ¥6.0 billion
decrease from the previous outlook, due to the deterioration in the performance of the Chinese equitymethod affiliate in the Ship & Offshore Structure segment because of the rise in steel prices and otherfactors. The outlook of profit attributable to owners of parent is expected to be ¥15.0 billion, ¥4.0
billion decrease from the previous outlook. ROIC and ROE are expected to be 2.8% and 3.3%,
respectively.
The outlook of consolidated orders received is expected to be ¥1,460.0 billion, ¥50.0 billion
decrease from the previous outlook, due to expected decrease in the Energy Solution & Marine
Engineering segment and other segments.
In this outlook, exchange rates are assumed to be ¥112 to the U.S. dollar and ¥132 to the 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
Millions of yen
As of
As of
March 31, 2021
September 30, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Notes and accounts receivable - trade, and contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Other
Total property, plant and equipment
Intangible assets
Investments and other assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term borrowings
Income taxes payable
Provision for sales promotion expenses
Provision for bonuses
Provision for construction warranties
Provision for loss on construction contracts
Advances received
Contract liabilities
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Retirement benefit liability
Provision for the in-service issues of commercial aircraft
jet engines
Other
Total non-current liabilities
Total liabilities

12

126,702460,436
69,223452,848
136,471
43,314(3,589)1,285,407

60,590405,928
72,320432,986
149,766
102,887(3,624)
1,220,856

172,951
278,308451,259
22,427

170,157
274,928445,085
22,113

205,584(1,403)204,180
677,868
1,963,276

253,287(1,375)251,911719,111
1,939,967

247,294
107,849
141,579
4,753
7,380
18,23912,55014,263
153,298－
210,345

205,673
95,809177,461
5,361－
16,827
11,997
11,991－
168,456
243,923

917,555

937,503

190,000
199,177
115,456

180,000
195,256
118,370(*1) 5,984(*1) 4,022

52,326562,944
1,480,500

52,654550,303
1,487,807

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity

104,484
54,542306,576(136)
465,467

104,484
55,525
271,454(1,160)430,304

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

1,955
(179)
(931)
(979)
(134)
17,442482,775
1,963,276

1,736
(822)
3,510
(758)
3,665
18,189452,160
1,939,967

13

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Millions of yen
Six months ended
September 30, 2020
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and allowances
Research and development expenses
Other

Total selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Reversal of provision for the in-service issues ofcommercial aircraft jet engines
Other

Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Foreign exchange losses
Other

Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sale of non-current assets
Gain on sales of shares subsidiaries and associates
Total extraordinary income
Extraordinary losses
Impairment losses
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

14

Six months ended
September 30, 2021

657,325588,959
68,366

681,082564,582
116,500

27,47519,04143,732
90,249(21,883)

27,901
19,824
48,367
96,094
20,406

265
150
590
1,791
(*1) 3,005

495
245
－
－
(*1) 70

2,573
8,376

3,734
4,545

1,955
－
－
2,824
4,780
(18,286)

1,720
7,024
1,262
3,858
13,866
11,085(*2) 3,236(*3) 1,581
4,817(*2) 1,633－
1,633(*4) 3,916
3,916(17,385)9,454(26,840)426(27,267)(*4) 223
223
12,496
6,934
5,562
1,049
4,513

Consolidated statements of comprehensive income
Millions of yen
Six months ended
September 30, 2020
Profit (loss)
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

Six months ended
September 30, 2021

(26,840)

5,562

(396)
427
(2,202)
1,038(1,898)

(193)
(339)
2,110
214
2,249

(3,030)(29,870)(30,137)
267

4,041
9,603
8,313
1,290

(3) Consolidated cash flow statements

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Impairment losses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for sales promotion expenses
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for construction warranties
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for the in-service issues ofcommercial aircraft jet engines
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted for using equity method
Loss (gain) on sale of non-current assets
Loss (gain) on sale of shares of subsidiaries and associates
Decrease (increase) in trade receivables
Decrease (increase) in notes and accounts receivable - trade andcontract assets
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in advance payments to suppliers
Increase (decrease) in advances received
Increase (decrease) in contract liabilities
Decrease (increase) in other current assets
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets
Proceeds from sale of property, plant and equipment and intangible
assetsPurchase of investment securities
Proceeds from sale of investment securities
Purchase of shares of subsidiaries and associates
Proceeds from sale of shares of subsidiaries and associates
Proceeds from purchase of shares of subsidiaries resulting in change
in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
Proceeds from sale and leaseback transactions
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

16

Million of yen
Six months ended
Six months ended
September 30, 2020 September 30, 2021
(17,385)
30,223
3,916(134)(5,621)(3,617)(1,986)
1,109
5,596(5,139)12,49630,105223(64)－(1,443)(583)(2,384)
3,097(1,962)

(415)
1,955
(590)
(3,236)(1,581)
41,030
－

(741)
1,720
7,024
(1,633)－－24,854(30,368)(65,822)(3,915)(7,650)－(142)(24,761)(5,471)(94,008)
1,556(1,874)(6,430)(100,757)(47,971)(54,024)(23,216)－
8,310(34,804)(6,669)1,828(85,839)767(1,888)(7,893)(94,853)(29,746)
13,739(30,326)
2,625

(474)
1,326
(82)
1,927
－

(185)
487
(7)
－
489

(357)
(13,668)(1,267)(28,185)

103,128
20,900(10,587)
60,000(20,000)(36)(531)
10,014(1,644)
161,24331
46,848102,546
149,395

79,482
11,000(13,001)
10,000(30,000)
(27)
(376)
－
(1,599)55,478165(67,396)
122,166
54,769(4) 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 profit for the fiscal year which includes the second quarter underreview, and multiplying quarterly pretax profit by said estimated effective tax rate. If unable to use theestimated effective tax rate, the Company calculates tax expense by multiplying the statutory effective
tax rate by quarterly pretax profit adjusted to reflect material differences other than temporary
differences.
Income taxes are reported inclusive of income tax adjustments.
Changes in accounting policies(Application of Accounting Standards for Revenue Recognition)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29 of March 31, 2020. Hereinafter referred to as “revenue recognition accounting standards”.),
etc. from the beginning of the first quarter of this consolidated fiscal year, and recognizes revenue
at the amount expected to be received in exchange for the promised goods or services when thecontrol of those goods or services is transferred to customers.
As a result of this adoption, a portion of the costs incurred in connection with the civil aviationengine program in which the Company is participating, which was previously recorded in cost of
sales, has been reduced from sales in consideration of payments to customers. As a result, thedevelopment contribution for the civil aviation engine program, which was previously accounted
for in work in process, has been transferred to investments and other assets. In addition, for aftersales services for the civil aviation engine program, although sales and cost of sales were previously
recorded based on information provided by the Company's main partner, revenue is now recognizedbased on fulfillment of performance obligations, and variable compensation and compensation paid
to customers are estimated when revenue is recognized. In addition, the Company changed themethod of accounting for certain types of discounts the Company is willing to pay in accordancewith the ratio of participation in the civil aviation engine program from the method previously
reported based on information provided by the main partner to the method in which the amount ofsuch discounts is estimated as variable compensation at the time of revenue recognition.
Regarding the application of the revenue recognition accounting standard, in accordance with thetransitional treatment prescribed in the proviso of Paragraph 84 of the revenue recognition
accounting standard, the cumulative effect of retroactive application of the new accounting policy
prior to the beginning of the first quarter of this consolidated fiscal year is added to or subtracted
from retained earnings at the beginning of the first quarter of this consolidated fiscal year, and the
new accounting policy is applied from the beginning balance. However, the new accounting policy
has not been retroactively applied to contracts that have been recognized almost all amounts of17

revenue in accordance with the previous treatment prior to the beginning of the first quarter of thisconsolidated fiscal year by applying the method specified in Paragraph 86 of the AccountingStandard for Revenue Recognition. In addition, by applying the method specified in Paragraph 86
and Item (1) of the Accounting Standard for Revenue Recognition, changes in contracts made prior
to the beginning of the first quarter of this consolidated fiscal year are accounted for under the terms
and conditions after reflecting all changes in contracts, and the cumulative effect of such changes
is recorded in the consolidated financial statements for the first quarter of this consolidated fiscal
year. The amount is adjusted to retained earnings at the beginning of the first quarter of thisconsolidated fiscal year.
As a result, net sales and cost of sales decreased by ¥49,375 million and ¥51,608 million,
respectively, and operating profit, ordinary profit and profit before income taxes increased by¥2,233 million, respectively. The balance of retained earnings at the beginning of this fiscal year
decreased by ¥39,639 million.
Due to the application of revenue recognition accounting standards, “notes and accounts
receivable - trade”, which were included in “current assets” in the consolidated balance sheets forthe previous fiscal year, are included in “notes and accounts receivable - trade, and contract assets”
from the first quarter of this consolidated fiscal year. “Advances received”, which were presented
as “current liabilities” in the consolidated balance sheets for the previous fiscal year, have beenpresented as “contract liabilities” from the first quarter of this consolidated fiscal year, and“provision for sales promotion expenses” in “current liabilities” have been included in “other undercurrent liabilities”. The Company has not reclassified the previous consolidated fiscal year using
the new presentation method in accordance with the transitional treatment prescribed in Paragraph89-2 of the Accounting Standard for Revenue Recognition.

(Application of Accounting Standards for Fair Value Measurements)
The Company has applied the “Accounting Standard for Fair Value Measurements” (ASBJ
Statement No. 30 of July 4, 2019. Hereinafter referred to as “Accounting Standard for Fair Value
Measurements”.), etc. from the beginning of the first quarter of this consolidated fiscal year, and inaccordance with the transitional treatment set forth in Paragraph 19 of the Accounting Standard for
Fair Value Measurements and Paragraph 44-2 of the“ Accounting Standard for Financial
Instruments ” (ASBJ Statement No. 10 of July 4, 2019), the new accounting policy set forth in the
Accounting Standard for Fair Value Measurements, etc. will be applied in the future. There is no
impact on the quarterly consolidated financial statements.
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.
The Company has made a provision of the abnormal cost related to in-service issues which theCompany would cover as a member of this program.

18

Related to consolidated statements of income(*1) Reversal of 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. RollsRoyce continues to work hard to remedy this situation. The Company has made a provision of the cost
related to in-service issues which the Company would cover as a member of this program. The reversalof the provision was included within the extraordinary income.

(*2) Gain on sale of non-current assets
Six Months ended September 30, 2020
Proceeds from the sale of housing sites of the Company and subsidiaries.

Six Months ended September 30, 2021
Proceeds from the sale of the land of the Company in Yokkaichi, Japan.

(*3) Gain on sales of shares subsidiaries and associates
Proceeds from the sale of shares of associates of subsidiaries.

(*4) Impairment losses
Due to a decline in profitability from the assets of the Sakaide Works of the Energy Solution &Marine Engineering segment based on the current market environment.

19

Segment information
1. Six months ended September 30, 2020 (April 1, 2020 – September 30, 2020)(1) Sales and profit (loss) by reportable segment

Aerospace Systems
Rolling stock
Energy Solution & Marine Engineering
Precision Machinery & Robot
Motorcycle & Engine
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Millions of yen
Operatingprofit (loss)

168,595
69,194
142,828
99,020139,784
37,901
657,325－
657,325

3,048
4
10,496
5,972
298
18,79938,619(38,619)－

171,643
69,199153,325
104,993140,083
56,701
695,945(38,619)
657,325(23,865)
(186)
2,994
3,412
(5,169)(175)(22,989)
1,106(21,883)

Millions of yen
AmountProfitIntersegment transactions(30)
Corporate expenses*
1,137
Total
1,106
* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment profit (loss) adjustments are based on operating profit reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on non-current assets and goodwill by reportable segment
The Energy Solution & Marine Engineering segment recorded an impairment loss on noncurrent assets. This impairment loss recorded in the second quarter of the year under review
amounted to ¥3,916 million.

20

2. Six months ended September 30, 2021 (April 1, 2021 – September 30, 2021)(1) Sales and profit (loss) by reportable segment

Aerospace Systems
Rolling stock
Energy Solution & Marine Engineering
Precision Machinery & Robot
Motorcycle & Engine
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Millions of yen
Operatingprofit (loss)

133,360
57,598130,968
118,266
206,815
34,072
681,082－
681,082

3,573
4
7,409
7,977
358
8,490
27,814(27,814)－

136,934
57,603
138,377
126,243
207,174
42,563708,896(27,814)681,082(9,162)
1,377
(900)
8,980
18,591
1,565
20,452(46)
20,406

Millions of yen
AmountIntersegment transactions
111
Corporate expenses*
(158)
Total
(46)
* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
Profit

2. Segment profit (loss) adjustments are based on operating profit reported on the consolidated statements
of income for the corresponding period.

(2) Changes in reportable segment
From the first quarter of this consolidated fiscal year, the previous reporting segments of“Energy System & Plant Engineering” and “Ship & Offshore Structure” have been integrated
into “Energy Solution & Marine Engineering”. As a result, reportable segments have beenchanged to “Aerospace Systems” and “Rolling Stock”, “Energy Solution & Marine Engineering”,“Precision Machinery & Robot”, “Motorcycle & Engine”, “Other”.
Segment information for the second quarter of the previous consolidated fiscal year ispresented using the new classification method.
As stated in Changes in Accounting Policies, the Company has applied revenue recognition
accounting standards, etc. from the beginning of the first quarter of this consolidated fiscal year
and has changed the accounting method for revenue recognition. As a result of this change,
compared with the previous method, net sales of the “Aerospace Systems” segment decreased by¥40,248 million, segment loss improved by ¥2,182 million, net sales of the “Rolling stock”
segment decreased by ¥24 million, segment profit increased by ¥0 million, and net sales of “Other”
decreased by ¥9,102 million, segment profit increased by ¥49 million.

(3) Impairment loss on non-current assets and goodwill by reportable segment
In Energy Solution & Marine Engineering segment, an impairment loss on non-current assets
was recorded. The amount of the impairment loss in the second quarter of this consolidated fiscal
year was ¥223 million.
21

3. Supplementary information(1) Net sales and operating profit (loss)
Billions of yen

Reportable segment

Outlook for the year ending March 31, 2022 (fiscal 2021)
Revised forecast
Forecast issued
Change(A)
August 5, 2021 (B)(A – B)

320.0
150.0

Operatingprofit(loss)(10.5)
3.0

340.0
150.0

Operatingprofit(loss)
(6.0)
3.0

320.0

2.5

320.0

260.0

19.0

440.0
60.0

31.0
2.0
(7.0)
40.0

Net sales
Aerospace Systems
Rolling StockEnergy Solution & Marine
Engineering
Precision Machinery &Robot
Motorcycle & Engine
Other
Adjustments
Total

1,550.0

Year ended
March 31, 2021
(Fiscal 2020) (Actual)(20.0)－

Operatingprofit(loss)
(4.5)
－

2.5

－

－

319.5

10.3

250.0

17.0

10.0

2.0

240.8

14.0

410.0
60.0

25.0
2.0
(3.5)
40.0

30.0
－

6.0
－
(3.5)
－

336.6
80.4
－
1,488.4

11.7
0.4
(5.7)
(5.3)

Net sales

1,530.0

Net sales

20.0

Net sales

Operatingprofit (loss)

377.7
133.2

(31.6)(4.5)(2) Orders received

Reportable segment

Outlook for the year ending March 31, 2022 (fiscal 2021)
Revised forecast
Forecast issued
Change(A)
August 5, 2021 (B)(A – B)
310.0
310.0
－
50.0
70.0
(20.0)

Billions of yen
Year ended
March 31, 2021
(Fiscal 2020) (Actual)
329.5
77.0

Aerospace Systems
Rolling StockEnergy Solution & Marine
330.0
400.0
(70.0)Engineering
Precision Machinery &
260.0
260.0
－
Robot
440.0
410.0
Motorcycle & Engine
30.0
70.0
60.0
10.0
Other
Total
1,460.0
1,510.0(50.0)
Note: 1. Assumed exchange rate for the fiscal year ending March 2022: ¥112/USD, ¥132/EUR
2. The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.
3. From the fiscal year ending March 2022, reportable segments have been changed to “Aerospace Systems”,“Rolling Stock”, “Energy Solution & Marine Engineering”, “Precision Machinery & Robot”, “Motorcycle &Engine”, and “Other”. Results for the fiscal year ended March 2021 have been reclassified to the revised
reportable segments.
4. As a change in accounting policies, the Company has adopted accounting standards for revenue recognition,etc. from the beginning of the first quarter of the current fiscal year. For more information, see “2. (4) Notes on
financial statements Changes in accounting policies and Segment Information”.

22

317.1
259.4
336.6
82.5
1,402.4