Q&A at the Conference on Financial Results for First Quarter FY2018
Question

Answer

Q1：

A1：

What is your outlook of the overseas LNG tanks construction project going

Although we claimed all damages which did not cause from our responsibility,

forward?

there is a possibility to claim additionally because we continue to discuss it with
our legal counsel. In terms of the future schedule, we negotiate with anoverseas subcontractor first and take legal actions against them unless wereach agreement. It is the opinion of our legal counsel that it takes at least oneyear to settle, and in some cases it takes two to three years.

Q2：

A2：

Why is the decrease in the operating income margin in Precision Machinery &<Hydraulic components>

Robot segment and what is your outlook going forward?

Production has not kept up with demand since fiscal year 2017 because order
received from China has been growing significantly. Developing a supply chain
is an urgent issue and we are taking measures ,such assupporting oursuppliers, so SG&A expenses has been increasing. However, in order to solve
bottlenecks, we are increasing overseas procurement and enhancing
production capacity. Therefore, we believe that operating income margin is
gradually recovered to expected level through the narrowing of demand supply
imbalance.
<Robots>
Because of expanding the applications of robots, fixed costs are increasing.
However, operating income tends to increase towards the end of fiscal year
2018, so we believe that operating income margin is gradually improve.

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Q&A at the Conference on Financial Results for First Quarter FY2018
Question

AnswerQ3：

A3：

Reasons for the increase of 2.3 billion yen in SG&A expenses are as follows.

More than half of 2.3 billion yen is due to No.1. The impact of No.2 is not

1． Recording

significant. No.1 and No.2 are temporary factors, but No.3 and increase in R&D

provisions for bad debt to an overseas distributor in Motorcycle &Engine segment
2． Increase in cost to boost our production volume

expense in robot business will continue to increase. We think that they movein Precision Machinery &above fiscal year 2017.

Robot segment
3． Increase in R&D expenses in Hydrogen project
How much is each amount and are these temporary factors?
Q4：

A4：

Have you incorporated recording provisions for bad debt to an overseas

Although it has been a cause for concern, we have not incorporated it.

distributor in Motorcycle & Engine segment within the forecast announced on

However, we believe that we are able to absorb the temporary negative impact

April 26, 2018?

caused by recording provisions for bad debt because motorcycle sales aresteadily growing mainly in developed countries. For this reason we understandthat it is possible to achieve the forecast.

Q5：

A5：

What is the breakdown of the decrease in equity income of unconsolidated

The decrease in Ship & Offshore Structure joint ventures in China was

subsidiaries and affiliates? Do you forecast that it will also decrease on a full fiscal

significant. We think that it does not temporally issue but continue during fiscal

year basis?

year 2018, because the sales for this term are comprised of projects received
when shipbuilding market conditions deteriorated.
In addition, Medicaroid, which is developing medical robots, and Plant
Engineering joint ventures in China decreased as well.
However, these decreases are to be expected.

2Q&A at the Conference on Financial Results for First Quarter FY2018
Question

AnswerQ6：

A6：

Why is the tax rate exceptionally high and how is it on a full fiscal year basis?

Since tax expenses for full fiscal year are allocated to a quarterly period basedon accounting standard, quarterly profit before tax is not always matching withquarterly tax expenses. Tax rate for the current first quarter is exceptionallyhigh, but we believe that it is gradually converging to conventional leveltowards the end of fiscal year 2018.

Q7：

A7：

In Ship & Offshore Structure segment, if there is no additional provision for loss

We are going to record additional retirement benefit expenses due toon construction contracts, will operating income exceed the forecast announced

reorganization of subsidiaries performed within the restructuring of Ship &on April 26, 2018?

Offshore Structure segment, so we think that operating income is in line withthe forecast, 1.0 billion yen.

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