Report of Earnings and Financial Statements
for the Fiscal Year Ended March 31, 2019 (Consolidated)(Prepared pursuant to Japanese GAAP)
April 25, 2019
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:
Ordinary general meeting of shareholders
Commencement date of dividend payments
Submission of financial statements
Supplementary materials to financial results
Earnings presentation

June 26, 2019
June 27, 2019
June 26, 2019
Available
Conducted (for institutional investors, analysts and thepress)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2019
(April 1, 2018 – March 31, 2019)(Amounts in million yen rounded down to the nearest million yen)

(1) Operating Results
Years ended March 31(Percentage figures indicate change compared with the previous fiscal year)
Net income attributable
Net sales
Operating income
Recurring profit
to owners of parent
million yen%
million yen%
million yen%
million yen%
20191,594,743
1.3
64,023
14.4
37,861 (12.4)
27,453(5.0)
2018
1,574,242
3.6
55,92521.6
43,22517.8
28,915
10.3
Note: Comprehensive income Fiscal year ended March 31, 2019: ¥ 23,183 million (41.5%)
Fiscal year ended March 31, 2018: ¥ 39,683 million 56.6%

Years ended March 31
Earnings per share
Return on equity Return on assets– diluted
Yen
Yen
%
%
2019
164.345.8
2.0
2018
173.096.4
2.4
For reference: Equity in income of non-consolidated subsidiaries and affiliates
Fiscal year ended March 31, 2019: ¥ 1,574 million
Fiscal year ended March 31, 2018: ¥ 4,492 million
Earnings per share

Operating income
to net sales
%
4.0
3.5

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, 2018.

1

(2) Financial Condition
March 31
Total assets

Net assets

million yen

million yen

%

Yen

2019

1,838,855

492,26125.9

2,851.84

2018

1,785,028

481,38626.1

2,789.99

For reference: Shareholders’ equity

Equity ratio

March 31, 2019:
March 31, 2018:

Net assets per share¥ 476,387 million¥ 466,061 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, 2018.
(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 year2019

109,762(85,344)(19,771)

68,311

2018

56,050(80,590)

37,77064,362

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

2018

-

3.00

-

30.00

-

10,023

34.6

2.2

2019

-

35.00

-

35.00

70.00

11,693

42.5

2.4

2020
(forecast)

-

35.00

-

35.00

70.00

30.7

Note: The Company conducted a share consolidation with a 10:1 ratio of common shares, with aneffective date of October 1, 2017. The dividend per share for the fiscal year ended March 31, 2018
affected by 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 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, 2020
(April 1, 2019 – March 31, 2020)
Net sales

Full year

million yen
1,700,000%
6.6(Percentage figures indicate change compared with the previous fiscal year)
Net income
Earnings
Operating income
Recurring profit
attributable to owners
per shareof parent
million yen%
million yen%
million yen%
Yen
72,00012.4
61,00061.1
38,00038.4
227.482

*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, 2019:
167,080,532 shares
March 31, 2018:
167,080,532 shares(ii) Number of shares held in treasury as of period-end
March 31, 2019:35,196 shares
March 31, 2018:
33,049 shares(iii) Average number of shares during respective periods
March 31, 2019:
167,046,422 shares
March 31, 2018:
167,051,224 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 average number of shares during respective periods has been calculated assuming that
this share consolidation was carried out at the beginning of the fiscal year ended March 31, 2018.

*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 10 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 25, 2019, 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

9(4) Consolidated earnings outlook

10

2. Basic rationale for selecting accounting standards

10

3. Consolidated Financial Statements

11(1) Consolidated balance sheets

11(2) Consolidated statements of income and comprehensive income13(3) Consolidated statement of changes in net assets

15(4) Consolidated statements of cash flows

17(5) Notes on financial statements

18

Notes on the going-concern assumption

18

Related to consolidated statements of balance sheets

18

Related to consolidated statements of income

18

Segment information

20

Per share data

23

Material subsequent events

23

4. Other23(1) Claim for damages in overseas LNG tank construction work
5. Supplementary information on earnings forecasts for the fiscal year ending March 31, 2020

4

23
24

1. Overview of operating results(1) Consolidated operating results
In the fiscal year ended March 31, 2019, 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. In addition, there continues to be uncertainty about future prospects for the real economy, asa downturn in corporate earnings stemming from U.S.-China trade friction is beginning to emerge,
while there is still a chance of a U.K. split from the EU without an agreement, even though thedeadline for the split from the EU has been delayed. There is a continued need for such risks with thepotential to drag down the global economy to be watched sufficiently closely.
The Japanese economy has been recovering modestly, due to the modest increasing of capital
investment, the improvement in corporate earnings, and other factors. Although overall modest
growth is expected to continue, it is necessary to continue to closely watch foreign exchange rates
since the economic policies of the U.S. and other countries or other factors may trigger a swing to
yen appreciation.
Amid such an operating environment, the Group’s orders received in the fiscal year ended March
31, 2019, decreased overall versus the previous fiscal year due to the decreasing in the Rolling Stocksegment and the Aerospace Systems segment, despite increase in the Ship & Offshore Structure
segment and other segments. Net sales increased overall compared with the previous fiscal year, due
to the increasing in the Motorcycle & Engine segment, the Precision Machinery & Robot and othersegments, despite decrease in the Rolling Stock segment and other segments. Operating income
increased overall, due to the improvement in the Ship & Offshore Structure segment and theincreasing in the Energy System & Plant Engineering segment and other factors. Recurring profit
decreased due to the payments for the in-service issues of commercial aircraft jet engines and otherfactors despite the increasing in the operating income. Net income attributable to owners of parent
decreased as a result of the decrease of recurring profit and other factors.
As a result, the Group’s consolidated orders received decreased ¥22.0 billion versus the previous
fiscal year to ¥1,585.9 billion, consolidated net sales increased ¥20.5 billion year on year to ¥1,594.7
billion, consolidated operating income increased ¥8.0 billion year on year to ¥64.0 billion,
consolidated recurring profit fell by ¥5.3 billion year on year to ¥37.8 billion, and net income
attributable to owners of parent decreased ¥1.4 billion year on year to ¥27.4 billion. ROIC* was
4.5%, while ROE was 5.8%.
* 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, 2019, is summarized bysegment below.
Segment information

Segment net sales, operating income, and orders received (billion yen)
Fiscal year ended March 31

2018 (A)2019 (B)

Orders received

Change (B – A)

Fiscal year ended
March 31

Net

OperatingNet

OperatingNet

Operating

2018

2019

Changesales

incomesales

incomesales

income(A)(B)(B – A)

Aerospace Systems

469.5

30.8

463.9

32.6

(5.5)

1.7

498.9

431.6

(67.2)

Energy System & Plant Engineering

251.6

7.6

253.0

11.6

1.4

3.9

223.6

263.5

39.8

Precision Machinery & Robot

198.9

21.6

222.0

21.3

23.0

(0.2)

207.1

222.4

15.3

Ship & Offshore Structure

95.6

(3.8)

78.9

1.0

(16.6)

4.9

4.7

81.1

76.4

Rolling Stock

141.7(12.4)

124.6(13.7)(17.0)

(1.3)

257.1

136.0

(121.0)Motorcycle & Engine

331.6

15.2

356.8

14.3

25.1

(0.8)

331.6

356.8

25.1

Other

85.0

2.9

95.1

2.5

10.0

(0.4)

84.8

94.2

9.4

-

(6.2)

-

(5.7)

-

0.4

-

-

-

1,574.2

55.9

1,594.7

64.0

20.5

8.0

1,608.0

1,585.9(22.0)

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. The Company has reviewed the method of business segment classification from the first three months of the
fiscal year ended March 31, 2019 and has changed its reportable segments from the previous Ship &Offshore Structure, Rolling Stock, Aerospace, Gas Turbine & Machinery, Plant & Infrastructure, Motorcycle& Engine, Precision Machinery, and Other Operations to Aerospace Systems, Energy System & Plant
Engineering, Precision Machinery & Robot, Ship & Offshore Structure, Rolling Stock, Motorcycle &Engine, and Other Operations.
Consolidated segment information for the fiscal year ended March 31, 2018 has been prepared using therevised segment classification method.

Aerospace Systems
Concerning the business environment surrounding the Aerospace Systems segment, there is acertain level of demand from the Ministry of Defense in Japan amid the tight defense budget, while
demand for commercial aircraft airframes and jet engines is increasing in conjunction with the rise in
the number of air passengers.
Amid such an operating environment, consolidated orders decreased ¥67.2 billion year on year to¥431.6 billion due to the decrease of demand for component parts for the Ministry of Defense andcommercial aircraft, despite increase of demand for the component part for commercial aircraft jetengines.
Consolidated net sales decreased ¥5.5 billion year on year to ¥463.9 billion due to decrease of
demand of component parts for the Ministry of Defense and commercial aircraft, despite increase of
demand of component parts for commercial aircraft jet engines.
Consolidated operating income increase ¥1.7 billion year on year to ¥32.6 billion due toprofitability improvement of component parts for commercial aircraft.
6

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 to theenvironment and energy conservation, among other factors. In Japan, there is ongoing demand for
replacing aging facilities for refuse incineration plants and industrial machinery. Meanwhile, in theenergy and environmental field, although there is large potential demand for distributed powersources in Japan, investment plans are slightly delayed in light of the liberalization of electricity.
Amid such an operating environment, consolidated orders received increased ¥39.8 billion year on
year to ¥263.5 billion, due to the order received of a Combined Cycle Power Plant (CCPP) and a
LNG tank for the Japanese market among other factors.
Consolidated net sales increased ¥1.4 billion year on year to ¥253.0 billion due to the increasing inconstruction work volume in Energy System segment and other factors despite the decline inconstruction work volume on refuse incineration plants for Japanese market and chemical plants foroverseas market.
Consolidated operating income was ¥11.6 billion, ¥3.9 billion increase compared to the previous
year, due to the profitability improvement in the Energy System segment and the other factors.
Precision Machinery & Robot
With respect to the business environment surrounding the Precision Machinery & Robot segment,in the construction machinery market, excavator sales competition in the Chinese market isbecoming increasingly intense, and there are growing concerns and a sense of uncertainty about the
future prospects of the China market, particularly among foreign construction machinery
manufacturers that are losing market share in the Chinese market (especially for small- andmedium-sized excavators). However, demand still exceeds its production capacity, so the Company
is working to increase production. The Company will continue to keep an eye on the situation in the
Chinese market. In the robot market, the current market situation is deteriorating due to thepostponement of capital investment and the putting off of investment by semiconductor
manufacturers in the Chinese market due to the U.S.-China trade friction, and the overseas market is
expected to remain unstable for a while. Still, semiconductor investment is expected to resume in thesecond half of the fiscal year, and demand is expected to recover. In the domestic market, demand is
expected to steadily expand in the industrial sector as a whole, including in human-robot coexistencefield.
Amid such an operating environment, consolidated orders received increased ¥15.3 billion year on
year to ¥222.4 billion, due to the increase in hydraulic components for construction machinery,
despite the decrease in robots in the semiconductors field.
Consolidated net sales was ¥222.0 billion, a ¥23.0 billion increase compared to the previous fiscal
year ended March 31, 2018, due to the increase in hydraulic components for construction machinery,
despite the decrease in industrial robots for semiconductor.
Consolidated operating income was ¥21.3 billion, roughly the same level as the7previous fiscal year, due to the increase in SG&A expenses, including expenses toincrease production as well as R&D costs, along with other factors, despite the increasein net sales.
Ship & Offshore StructureWith respect to the business environment surrounding the Ship & Offshore Structure segment,
while new-build vessel prices are recovering after bottoming out and 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 because of thedelay in LNG development projects and the continuation of policies by the South Korean
governments to support their domestic shipbuilding industries.
Amid such an operating environment, consolidated orders received were ¥81.1 billion, a ¥76.4
billion year on year increase versus the previous fiscal year when the Company terminates a shipbuilding contract for an offshore service vessel, due to receiving the order of submarine for the
Ministry of Defense.
Consolidated net sales fell by ¥16.6 billion year on year to ¥78.9 billion, due to a change in thesales mix between LNG carriers and LPG carriers, and other factors.
Consolidated operating income was ¥1.0 billion, a ¥4.9 billion improvement from the previous
fiscal year due to improvement of shipbuilding cost and other factors, despite decrease of sales.
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, demand for
new and replacement railcars have been increasing in the New York area, which is its core market,
and the other areas. 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 business environment, consolidated orders received were ¥136.0 billion, a ¥121.0
decline compared with the fiscal year ended March 31, 2018, when orders were received for new
generation subway cars from the New York City Transit Authority, despite the fact that an order forcommuter train cars was received from the Port Authority of New York and New Jersey, along withother factors.
Consolidated net sales decreased ¥17.0 billion year on year to ¥124.6 billion, due to the decreaseof sales for overseas market in the U.S., Asia and other countries, and other factors.
Consolidated operating income decreased ¥1.3 billion year on year to ¥13.7 billion of theoperating loss due to a deterioration of profitability in orders for the U.S. since the previous year.

8Motorcycle & Engine
Regarding the business environment surrounding the Motorcycle & Engine segment, the modest
growth in motorcycle markets mainly in Europe is continuing, 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 ¥25.1 billion year on yearto ¥356.8 billion, due to the increase in motorcycles and vehicles for developed countries.
Consolidated operating income deteriorated ¥0.8 billion year on year to ¥14.3 billion despite theincrease in sales, which there was a rise in prices of steel and other materials in the U.S., the impact
of weakness of currencies in emerging countries and other factors.
Other Operations
Consolidated net sales increased ¥10.0 billion year on year to ¥95.1 billion.
Consolidated net operating income decreased ¥0.4 billion year on year to ¥2.5 billion.
(2) Consolidated financial position(i) Assets
Total assets at March 31, 2019, were ¥1,838.8 billion, ¥53.8 billion increase from March 31,
2018. Current assets increased ¥20.5 billion compared to March 31, 2018, to ¥1,136.3 billion, due
to an increase in inventory assets and other factors. Fixed assets increased ¥33.2 billion year on
year to ¥702.5 billion, due to an increase in holdings of property, plant and equipment because ofcapital investment and other factors.
(ii) Liabilities
Overall liabilities increased ¥42.9 billion compared to March 31, 2018, to ¥1,346.5 billion, due
to the rise in net defined benefit liabilities, the posting of the provision for the in-service issues ofcommercial aircraft jet engines, and other factors. Interest bearing liabilities decreased ¥7.2 billion
year on year to ¥439.4 billion.
(iii) Net assets
Consolidated net assets increased ¥10.8 billion year on year to ¥492.2 billion, due to factors
including the increase from the posting of net income attributable to owners of parent and thedecline due to dividend payments and other factors.

(3) Cash flows(i) Cash flows from operating activities
Operating activities provided net cash of ¥109.7 billion, a ¥53.7 billion increase from theprevious fiscal year. Major sources of operating cash flow included income before income taxes of¥37.8 billion and depreciation and amortization of ¥59.0 billion. Major uses of operating cash
flow included expenditure of ¥65.3 billion due to an increase in inventory assets.
9

(ii) Cash flows from investing activities
Investing activities used net cash of ¥85.3 billion which is ¥4.7 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 used ¥19.7 billion, which is ¥57.5 billion more than in the previous fiscal
year when financing activities provided net cash of ¥37.7 billion. This was mainly due to thepayment of dividends.
(4) Consolidated earnings outlook
For the fiscal year ending March 31, 2020, the Company is expecting consolidated net sales of¥1,700.0 billion, a ¥105.3 billion year on year increase, due to expected increases in the Aerospace
Systems segment and Rolling Stock segment and Precision Machinery & Robot segment and othersegments. In terms of profit, the Company is forecasting consolidated operating income of ¥72.0
billion, recurring profit of ¥61.0 billion, and net income attributable to owners of parent of ¥38.0
billion. Furthermore, the Company is expecting ROIC of 6.7% and ROE of 7.8%. These forecasts
are based on the expectation for a recovery in Rolling Stock which posted a large loss in the previous
fiscal year, an increase in profits in conjunction with a rise in sales of Precision Machinery & Robot
segment and other factors.
Consolidated orders received are expected to increase ¥114.1 billion year on year to ¥1,700.0
billion.
Assumed exchange rates of ¥110/US$ and ¥125/Euro were used for the above consolidated
earnings outlook.
Note regarding consolidated earnings outlook
The above earnings outlook is based on information available at the time of preparation, andincludes risks and uncertainties. The Company therefore discourages making investment decisions
depending solely on this outlook. Please note that actual earnings may differ materially from thisoutlook, due to a variety of important factors stemming from changes in 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 in particular the yen/dollar exchange rate, tax codes andother 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.
10

3. Consolidated Financial Statements(1) Consolidated balance sheets
Years ended 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
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

11

2018

2019

70,632
470,11062,385
326,459
115,893
72,542(2,247)
1,115,776

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

186,623
144,399
62,694
2,199
25,724
58,155
479,797
16,178

194,939
148,620
62,705
2,148
18,22759,028
485,669
16,797

14,79888
69,632
92,441(3,685)173,276
669,252
1,785,028

14,501
93
70,179116,696(1,422)200,048
702,514
1,838,855

Liabilities
Current liabilities
Trade payables
Electronically recorded obligations - operating
Short-term debt
Current portion of bonds
Lease obligations, current
Income taxes payable
Accrued bonuses
Provision for product warranties
Provision for losses on construction contracts
Advances from customers
Other
Total current liabilities

245,398
117,772
108,978
20,000283
6,042
19,90313,00018,258194,306
125,454869,398

247,191
123,083
100,023
10,000319
10,39021,16813,096
27,609181,419
129,978864,280

Long-term liabilities
Bonds payable
Long-term debt
Lease obligations
Deferred tax liabilities
Net defined benefit liability

130,000
185,685
1,697
9,187
86,836140,000
187,568
1,513
593
97,602-(*1) 11,468

20,837434,244
1,303,642

43,566482,313
1,346,593

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

104,484
54,542
324,606(130)
483,502

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

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

Provision for the in-service issues of commercial aircraft
jet engines
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
Premeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

12(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
R&D expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Interest on securities
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 jetengines
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

13

2018

2019

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

1,594,743
1,326,668
268,075

52,50245,434
100,665
198,60255,92554,952
48,734
100,364
204,052
64,023

720
291
46
4,492
3,580
9,131

909
294
862
1,574
3,056
6,696

2,794
7,017

3,427
4,721

-

(*1)14,851(*2)2,505-

9,513
21,83043,2259,857
32,85837,861(*3)2,606
2,606-(*4)12,833-

12,83332,99937,861

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

16,704(8,681)
8,022
29,8382,385
27,453

Consolidated statements of comprehensive income
Million yen

Years ended March 31
2018
Net income

2019

31,347

29,838338(864)

Other comprehensive income
Net unrealized gains (losses) on securities
Deferred gains (losses) on hedges

1,616

(675)

Foreign currency translation adjustments(1,085)(796)

Premeasurements of defined benefit plans
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income

5,170

549

2,296

(4,867)

8,336(6,654)

39,68323,183

Owners of parent

37,015

21,220Non-controlling interests

2,668

1,962

Comprehensive Income attributable to:14

(3) Consolidated statements of changes in net assets
Million yen

Years ended March 31
2018
Shareholders’ equity
Common stock
Balance at end of previous year
Total changes during the period
Balance at end of year2019

104,484

104,484--

104,484

104,484

Capital surplus
Balance at end of previous year
Treasury stock disposed
Transfer of loss on disposal of treasury stock
Capital increase of consolidated subsidiaries

54,393(0)
179

54,573(0)0(30)

Total changes during the period

179

(30)

54,57354,542

287,448

308,010(8,352)
28,915-(10,858)
27,453(0)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
Transfer of loss on disposal of treasury stock
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
Treasury stock purchased
Treasury stock disposed
Transfer of loss on disposal of treasury stock
Capital increase of consolidated subsidiaries
Total changes during the period
Balance at end of year15

20,562

16,595

308,010324,606

(96)

(124)

(28)
0

(7)
1

(27)

(5)

(124)

(130)

446,230

466,944(8,352)
28,915(28)
0
179(10,858)
27,453(7)
1(30)

20,714

16,558466,944483,502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

3,232

3,526

293

(843)

293

(843)

3,526

2,682

(1,182)403

Net changes in items other than shareholders’ equity

1,585

(630)

Total changes during the period

1,585

(630)

403

(227)

(341)

719

1,060

(5,275)

1,060(5,275)719(4,556)(10,692)(5,532)

5,160
5,160

517
517

(5,532)(5,014)(8,983)(883)

Net changes in items other than shareholders’ equity

8,099(6,232)

Total changes during the period

8,099(6,232)

Balance at end of year(883)

(7,115)

Non-controlling interests
Balance at end of previous year

14,08015,324

1,244

549

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
Premeasurements 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

1,244

549

Balance at end of year

Total changes during the period

15,324

15,874

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

451,327

481,386(8,352)(10,858)

28,915(28)

27,453
(7)

0
-

1
-

179
9,344

(30)
(5,683)

Cash dividend
Net income attributable to owners of parent (loss)
Treasury stock purchased
Treasury stock disposed
Transfer of loss on disposal of treasury stock
Capital increase of consolidated subsidiaries
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at end of year16

30,058

10,875481,386

492,261(4) Consolidated statements of cash flows
Million yen

Years ended March 31
2018
Cash 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
Increase (decrease) in Payments for the in-service issues ofcommercial aircraft jet engines
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
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
Cash and cash equivalents at end of period

17

2019

32,99956,137
1,093
(387)
814
11,02913,32437,86159,022
(667)
1,245
100
9,336
11,982-

11,468(1,011)
2,794(4,492)(2,606)(1,203)
3,427(1,574)-

12,833-(35,516)(26,443)
21,5696,103(10,092)(22,937)
8,644
(789)
63,066
4,166(2,795)(8,386)56,05058,985(65,383)
6,829
1,202
(14,013)(1,557)
2,299
1,192
120,553
3,859(3,439)(11,211)
109,762(82,238)(82,836)

6,452

605

(512)
342
(3,408)(1,226)(80,590)(1,025)989(3,818)741(85,344)

16,36364,363(42,694)
20,000(10,000)(8,375)(1,433)(454)
37,770410
13,64050,72264,362(10,866)
34,772(30,709)
20,000(20,000)(10,868)(1,950)(149)(19,771)
(696)
3,949
64,362
68,311

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

Related to consolidated balance sheets(*1) The 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
progress on the implementation of long-term solutions and mitigation of the near-term impact on
customers. In the FY2018 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.

Related to consolidated statements of income(*1) The 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
progress on the implementation of long-term solutions and mitigation of the near-term impact on
customers. In the FY2018 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) Payments for contract adjustment for commercial aircraft jet engines
The Company faces one-time expenses in connection with contracts with customers relating toengine programs in which the Company is participating. These expenses arose from the newrequirement to allocate a portion of the engines planned to be delivered to customers for use as spareengines for operational supports. Accordingly, the Company recorded these program expenses as
non-operating expenses.

(*3) Gain on sale of fixed assets
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.

18

(*4) Losses from the termination of a shipbuilding contract for an offshore service vessel
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 promising market overthe 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 theCompany, and certain problems during the engineering stage arose along with an increase inmaterials 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, and Island
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 shared understanding that theenvironment surrounding the offshore service business remained challenging, and that uncertainty
about the future would not be eliminated, the Company and Island 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)

19

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 seven reportable segments are the Aerospace
Systems segment, the Energy System & Plant Engineering segment, the Precision Machinery &Robot segment, the Ship & Offshore Structure segment, the Rolling Stock segment, theMotorcycle & Engine segment, and the Other segment.
From the fiscal year under review, the Company reorganization was carried out in order tofurther enhance Kawasaki-ROIC management in response to changes in the business environment.
Along with this, the Company has reviewed the method of business segment classification fromthe fiscal year ended March 31, 2019 and has changed its reportable segments from the previous
Ship & Offshore Structure, Rolling Stock, Aerospace, Gas Turbine & Machinery, Plant &Infrastructure, Motorcycle & Engine, Precision Machinery, and Other Operations to Aerospace
Systems, Energy System & Plant Engineering, Precision Machinery & Robot, Ship & Offshore
Structure, Rolling Stock, Motorcycle & Engine, and Other Operations. Consolidated segment
information for the fiscal year ended March 31, 2018 has been prepared using the revised segmentclassification method.
Main segment businesses are listed below.
Industry segment
Aerospace Systems
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore
Structure
Rolling Stock
Motorcycle & Engine
Other

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

20

3. Sales, income (loss), assets, liabilities, and other items by reportable segment
Fiscal year ended March 31, 2018 (April 1, 2017 – March 31, 2018)(Million yen)
Sales
Intersegment
External sales
sales ortransfer

Aerospace
Systems
EnergySystem &Plant
Engineering
Precision
Machinery &RobotShip &
Offshore
Structure
Rolling Stock
Motorcycle &EngineOther
Operations
Total
Adjustments
Consolidated
total

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Investment inequitymethod affiliates

Increase inproperty, plantand equipment
and intangibles

469,507

5,030

474,538

30,876

644,719

20,674-

34,613

251,640

19,695

271,336

7,686

288,895

3,337

19,118

3,738

198,996

15,890214,887

21,648188,155

7,165

411

10,974

95,6103,786

99,397(3,820)147,963

1,444

49,7494,774

141,760

105

141,866(12,438)

180,792

2,567

138

2,505

331,659669

332,329

15,255266,550

14,163

1,474

20,54285,066

41,507

126,573

2,925

85,061

1,579

3,336

696

1,574,242-

86,686(86,686)

1,660,929(86,686)

62,133(6,207)1,802,139(17,110)50,932
5,205

74,228-77,844
4,319

1,574,242-

1,574,242

55,925

1,785,028

56,13774,22882,163Fiscal year ended March 31, 2019 (April 1, 2018 – March 31, 2019)(Million yen)
Sales
Intersegment
External sales
sales ortransfer

Aerospace
Systems
EnergySystem &Plant
Engineering
Precision
Machinery &RobotShip &
Offshore
Structure
Rolling Stock
Motorcycle &EngineOther
Operations
Total
Adjustments
Consolidated
total

Other items
Total

Segment
income(loss)

Segment
assetsDepreciation/amortization

Investment inequitymethod affiliates

Increase inproperty, plantand equipment
and intangibles

463,958

12,089476,048

32,611

649,260

21,299-24,022

253,041

19,899272,940

11,634

301,798

3,412

18,552

2,237

222,095

17,151

239,247

21,352

205,199

8,220

634

11,63678,974

4,549

83,523

1,090

121,918

1,559

45,955

2,360

124,68927

124,716(13,797)

211,102

2,615

133

3,358

356,847718

357,566

14,366

283,770

15,317

1,549

18,505

95,136

41,136136,273

2,501

93,601

1,527

3,509

861

1,594,743-

95,572(95,572)

1,690,316(95,572)

69,760(5,737)

1,866,652(27,797)

53,953
5,069

70,334-62,982
3,918

1,594,743-

1,594,743

64,023

1,838,855

59,02270,334

66,90021

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

2018

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

2019

1,660,929(86,686)

1,690,316(95,572)

1,574,242

1,594,743

Fiscal year ended March 31(Million yen)

Income2018

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

2019
62,133(95)(6,112)

69,760(181)(5,555)55,92564,023

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

Assets2018

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

2019

1,802,139(81,949)
64,8381,866,652(102,520)
74,723

1,785,028

1,838,855

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*

2018

2019

2018

Depreciation/amortization

50,932

53,953

5,205

Increase in property, plantand equipment andintangibles

77,84462,982

4,319

2019

(Million yen)Amounts reported on
the consolidated
financial statements
2018

2019

5,069

56,13759,022

3,918

82,163

66,900Note: Adjustments are mainly due to fixed assets not attributed to reportable segments.

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

2018
2,789.99

(Yen)
2019
2,851.84

173.09164.34

Notes:
1. Diluted net earnings per share are 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
2018
Earnings per share - basic
Net income attributable to owners of parent
Earnings not attributable to common shareholders
Net income allocated to the common shares
Average number of common shares outstanding (Thousands of shares)

28,91528,915167,051(Million yen)
2019
27,45327,453167,046

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, 2018.

Material subsequent events
Not applicable.

4. Other(1) Claim for damages in overseas LNG tank construction work
On a certain overseas LNG tanks construction project, overall costs increased from initially
expected due to a breach of contract by the overseas subcontractor. In response, the Company has

claimed compensation for damages (approximately ¥46.0 billion) as of March 31, 2019, withrespect to a portion of the damages incurred by the Company as a result of the breach ofcontract by the aforementioned subcontractor, and the Company is proceeding with procedures
to recover the claimed amount.

23

5. Supplementary information on earnings forecasts for the fiscal year ending March 31, 2020
(1) Net sales and operating income (loss)(Billion yen)

Fiscal year ended
March 31, 2019 (actual)(B)

Outlook for the fiscal year
ending March 31, 2020
(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)

520.0

32.0

463.9

32.6

56.1

(0.6)

255.0

10.0

253.0

11.6

2.0

(1.6)

255.0
70.0
170.0
350.0
80.0

26.0
(2.0)
1.0
12.0
1.0
(8.0)
72.0

222.0
78.9
124.6
356.8
95.1

21.3
1.0
(13.7)
14.3
2.5
(5.7)
64.0

33.0
(8.9)
45.4
(6.8)
(15.1)

4.7
(3.0)
14.7
(2.3)
(1.5)
(2.3)
8.0

1,700.0

1,594.7

105.3(2) Orders received
Outlook for the fiscal year
Fiscal year ended
ending March 31, 2020
March 31, 2019 (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)

420.0

431.6

(11.6)

335.0

263.5

71.5

280.0
100.0
130.0
350.0
85.0
1,700.0

222.4
81.1
136.0
356.8
94.2
1,585.9

57.6
18.9
(6.0)
(6.8)
(9.2)
114.1

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, 2020
March 31, 2019 (actual)(A)(B)
Aerospace System
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore structure
Rolling Stock
Motorcycle & Engine
Total

(%)

Change (A – B)

8.0

5.0

3.0

7.6

9.3

(1.7)

20.4
(1.4)
1.6
8.4
6.7

19.8
3.2
(26.4)
8.4
4.5

0.6
(4.6)
28.0
2.2

Notes: 1. Assumed exchange rates in the fiscal year ending March 31, 2020 would be ¥110/US$ and ¥125/Euro.
2. Before-tax ROIC = EBIT (income before income taxes + interest expense) ÷ invested capital(interest-bearing debt + shareholders’ equity).

24