Kawasaki Heavy Industries
Group Business Plan

April 25, 2013

Kawasaki Heavy Industries, Ltd.

ContentsI.

The Position of the FY2013-2015
Medium-Term Business Plan
“MTBP 2013”

II. Kawasaki Business Vision 2020
III. Medium-Term Business Plan
“MTBP 2013”© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved22

I. The Position of the FY2013-2015
Medium-Term Business Plan “MTBP2013”©
3 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

3

I. The Position of the FY2013-2015 Medium-Term Business
Plan “MTBP 2013”
Environmental Changes During the
MTBP 2010
 The yen rose to and stayed at a higher level
than projected Developed countries, especially in Europe,
had prolonged economic stagnation
 Emerging economies enjoyed remarkable
growth The Chinese economy had rapid growthfollowed by deceleration
 The Great East Japan Earthquake and thegrowth of emerging economies boosted
awareness of energy and resource issues

Basic Objectives of the MTBP 2013
 Ensure efficient business management tosurvive the severe business environment
 Implement measures to reflect changing
business environments
 Implement specific measures to realize the
Vision Promote earlier commercialization of new
products and businesses Aim to be a corporate group that enjoys
sustainable growth, while contributing to thegrowth of society

The Group mission to beachieved

FY2015 Halfway Point
MTBP 2010（FY2010-FY2012）
FY2010・ Return to a growth path・ Strengthen businessfoundations in
preparation for future
growthMTBP 2013（FY2013-FY2015）

Actionplan

KawasakiBusiness Vision
2020

FY2013

FY2016・ Lay out a course to realize
the Kawasaki Business
Vision 2020

・Sustain a growth© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

FY20204

II. Kawasaki Business Vision 2020
- Strategic Moves toward the Future 1．Business Vision
2．Business Visions of Respective
Business Sectors
3．Quantitative Vision©
5 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

5II. Kawasaki Business Vision 2020
1. Business Vision

Group Mission
Kawasaki, working as one
for the good of the planet
Business Vision
The KHI Group aims to be a corporate group that swiftly supplies the products and services that
fulfill a diverse range of needs of people worldwide by utilizing its innovative and advanced
technological capabilities in the principal business sectors of Land, Sea and Air Transportation
Systems, Energy & Environmental Engineering and Industrial Equipment, thereby opening up the
potential of its customers and society

Transportation Systems

Profitability
and growthinvestment
Secure highadaptability tochanging businessenvironments andhigh profitability
with continuous
investment for
future growth

Energy & Environmental
Engineering

Emphasis on
monozukuri(manufacturing)andglobal businessdevelopment
Actively promote
overseas businessdevelopment fromproduction to sales,
while upgrading
domestic plants as
mother factories

Co-existence
andco-prosperity
with society
Contribute to solvingsocial issues andfulfilling stakeholders’expectations throughbusiness activities© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Industrial Equipment

Improvement of
the global
environment
Secure comfortableliving and a betterglobal environment by
providing products
featuring the mostadvanced low
environmental impact
technologies, andsystems composed ofthose products

Greater job
satisfaction
Ensure a safe andpleasant working
environment where
employees can havegreater job
satisfaction withhopes and
ambitions for their
future6II. Kawasaki Business Vision 2020
2. Business Visions of Respective Business Sectors (a) Pursue safety, comfort, andconvenience Reduce environmental impacts byachieving higher efficiency,
electrification, lighter weight andhigher propulsive efficiency
 Accommodate region-specific needs

Transportation
Systems＊Hydraulic equipment formobile components：

Ship and Offshore Structure, Rolling
Stock, Aircraft, Aircraft Engines, Marine
Machinery, Motorcycles, etc.

Hydraulic equipment
for construction andagricultural sectors,
except excavators

Railway
Systems
Offshore
Development
New Energy
Oil & Gas

Energy &Environmental
Engineering

Low-cost
Products

Low
Environmental
ImpactGrowthFieldsRenewable Energy Achieve greater efficiency andadvancement of existing products Develop new products and businesses with afocus on the new energy and offshoredevelopment business fields© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Efficiency
Improvement

Hydraulic Equipment for
Mobile Components*

DecentralizedPower Sources
Next-Generation
ModelsGas Engines forPower Generation, Industrial
Gas Turbines, Steam Turbines,
Aerodynamic Machinery, Energy andEnvironmental Plant Engineering,
Cryogenic Storage,
GIGACELL, etc.

Emerging Markets

Recycling

Medical &HealthIndustrial
Equipment

Industrial Plants,
Tunneling Equipment, Crushers,
General-Purpose Engines, Hydraulic
Equipment, Robots, Construction,
Machinery, etc.
Reinforce the competitiveness of coretechnologies and components
Reinforce existing businesses and explore newmarkets and business fields
7II. Kawasaki Business Vision 2020
2． Business Visions of Respective Business Sectors (b)
2010

2013

2015

2020

■Rolling stock, terminals, Railway systems
maintenance, etc.
■Oil & Gas-related propulsion
Oil & Gas
systems for offshore structure■Global strategic
Emerging markets
motorcycle models■Offshore
support vessels Offshore development

Transportation
Systems■Component parts for Boeing 787

Products related tomultiple businesssectors○CO2- free hydrogen

Next-generation models■Next-generation aircraft engines (TrentXWB for Airbus A350XWB,
PW1100G-JM for Airbus A320neo)■LNG-fueled propulsion ships■ P-1 patrol aircraft■Rolling stock for overseas■C-2 transport aircraft（efSET, K-Star Express)■LNG vessels with next-generation■Superconducting motor
propulsion systems
propulsion system for vessels■Energy-saving and environmentfriendly vessels■Trent 1000 Engine
for Boeing 787■FLNG boilers Oil & Gas■High efficiency gas turbinesand engines

Energy & Environmental
Engineering■GIGACELL for electrical Renewable energy
power systems

Decentralized
power sources■GIGACELL BPS Low environmental
impact■Vacuum Residue
Fired Boilers■ CO2-freehydrogen chain■Tidal Power Generation System
Decentralized
power sources■Hydraulic equipment for construction
machinery (except excavators)

Industrial
Equipment

Renewable energy

Recycle■Energy Solution Business

New energy

Hydraulic equipment formobile components■Human-friendly robots■Medical robots

High efficiency
Medical & health■Automated Cell Culture System(for medical use)

Medical & health© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

chain

・Liquid hydrogen carriers・Liquid hydrogenloading arm
・Hydrogen gas turbines
・Hydrogen gas engines
・Water electrolysis
hydrogen producing
systems○Energy Solution
Business○ Automated cell
culture System○ Energy-saving andenvironment-friendly
vessels (propulsion
systems for marine)○ Gigacell for electrical
power systems

8II. Kawasaki Business Vision 2020

2． Business Visions of Respective Business Sectors (c)CO2-Free Hydrogen Chain
Consumer Country

Resource-Producing
Countries (Australia)(Japan)Industrial use•Semiconductor and solar cell production•Oil refining and desulfurization, etc.

Low-cost production ofhydrogen from unused
resources (brown coal)

Brown
Coal

Tidal Power
Generation System

Hydrogen truck

CO2-FreeHydrogenTransportationequipment•Hydrogen stations•Fuel-cell cars, etc.

Distributed generation
Hydrogen tanker

Gasification/HydrogenProduction
High-Efficiency CCS(CCS: Carbon
dioxide Captureand Storage)

Liquefaction/
Shipment
Electrolysis(Utilization of
low-cost
natural energy)：
Hydrogen
Production

Hydrogencarriers
Liquid hydrogenstorage tanks•Hydrogen gas turbines•Hydrogen gas engines•Fuel cells, etc.

Power generation
for business use•Combined cycle
power plants, etc.

Hydrogen Transportand Storage• Toward the realization of a demonstrationhydrogen chain in 2017－Strengthen alliances with partners－Front-End Engineering
Design started since 2012
• Commercialization in 2025 is envisaged－Accelerate technologicaldevelopments to enable a larger
scale chain and differentiation© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Hydrogen Use

・ Toward the start of ademonstration test in 2015
－Secured a testing field inthe sea off the coast of
Scotland－Working on detailed design

Automated Cell Culture System(for iPS cells, etc.)
・To increase the use of regenerative medicine,starting around 2020
－Start clinical trials in 2013 in Japan andabroad－Quickly acquire the world’s firstcertification for medical use－Accelerate the advancement of thetechnology for high-quality, largervolume cell culture, and its thecommercialization thereof
9II. Kawasaki Business Vision 2020
3．Quantitative Vision (a)Net Sales by Business Sectors
ProfitT rans portation S ys tems

Net sales(Billionyen)

E nergy & E nvironmental E ngineering(Billionyen)

I ndus trial E quipment¥2 trillion line (5 .0 % annual growth)
Weighted- average G D P (I M F forec as t) Consolidated net sales Ratio of recurring profit
to sales ROIC (before-tax)

New products andNew businesses(500）
Existing business (200）¥2 trillion or higher
5.0% or higher
12.0% or higher

120

O perating I nc ome (right s c ale)

2,000

Quantitative Vision (FY2020)（Exchange rate assumption: ¥90=US$1）

Emerging
Countries (380)

R ec urring P rofit (right s c ale)Developed
Countries
(200)
90

1,500

Net Sales●Aim for net sales growth of theworld’s GDP growth rate + α

Exchange
rate
assumption¥90=US$1

1,000

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

60

30

Breakdown ofgrowth inGroup net
sales(2012→2020)

0'09

Capital Investment●Conduct flexible investments worth
3% - 5% of net sales

Exchange
rate
assumption¥95=US$1

500

Areas

Products

Japan (120)

'20

(FY)

R&D investment● Conduct flexible investments worth
3% - 5% of net sales0© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

10II. Kawasaki Business Vision 2020
3．Quantitative Vision (b)●Nurturing new products and new businesses in anticipationof societal needs until around 2030
●Utilize the Group’s overall intellectual assets to create
products and services● Promote global business development incoordination with the government’s
growth strategies● Respond to the demand in emerging
markets

Breakdown of sales by type of new product and businessTidal Power Generation Systems, Vessels
employing LNG-fueled propulsion systems,
Rolling Stock for overseas (efSET, K-Star
Express）, GIGACELL for electrical powersystems, Human-friendly robots, Medical
robots, Automated Cell Culture System, etc.

Full-scale launch of
products by 2020

500

Full-scale launch of
products by 2015

400

Products already on themarket

500 billion yen(billionyen)
600

Breakdown of sales by regionof emerging countries

300

200

Next-generation aircraft engines (TrentXWB
for Airbus A350XWB, PW1100G-JM for
Airbus A320 neo), LNG vessels with nextgeneration propulsion systems, Offshore
support vessels, Energy-saving andenvironment-friendly vessels, Vacuum
residue fired boilers, C-2 transport aircraft,
GIGACELL BPS, Superconducting motor
propulsion system for vessels, Energy
Solution Business, Hydraulic equipment formobile sector, etc.

680
billion yen

South East Asia
China
India

100

0
'12

'15

'20

(FY)

FLNG boilers, Component parts for Boeing
787, P-1 patrol aircraft, Trent1000 engine
for Boeing 787, High efficiency gas turbinesand engines, Railway System, Oil & Gasrelated propulsion systems for offshore
structure, Global strategic motorcycle
models© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

FY2020Central andSouth America

300
billion yen

Oceania
Middle East, North
Afric a and SubSaharan Africa
Russia and NIS

FY201211

III. Medium-Term Business Plan
“MTBP 2013”- Laying out a course to realize the Kawasaki Business Vision 2020 -1. Review of the Previous MediumTerm Business Plan “MTBP 2010”
2. Medium-Term Business Plan
“MTBP 2013”
2-1. Company Section

2-1-1．Key Policies and Measures
2-1-2．Quantitative Plan
2-1-3．Road Map

12 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved©

12III. Medium-Term Business Plan “MTBP 2013”

1. Review of the Previous Medium-Term Business Plan “MTBP 2010”
Results

Objectives
Return to a growth path
Strengthen business foundations in
preparation for future growth■ Achieved the MTBP 2010 target one year
earlier

Profit(Billions of yen)

Net sales(Billions of yen)Net saless ales(left(leftaxis , ¥ bn)
Net
scale)

1,800.0

Recurring(rightscale)
Rec
urringprofit
profit(rights c ale, ¥ bn)
Operating(rightscale)
O
peratingincome
inc ome(rights c ale, ¥bn)
Recurring(at (atan exchange
rateOrdinary profit
inc ome¥ 9 0 /dollarof ¥90/US$,and¥ 1 3 0 /E¥130/€)uro)

1,600.0
1,400.0

Assumedexchange rate
for forecast:¥90=US$1

Original
Original
recurringordinary
incometargetprofit target(¥56.0billion)(¥56 billion)

90.0
80.0
70.0

1,200.0

60.0

1,000.0

50.0

800.0

40.0

600.0
400.0

Original
Originalrecurring
ordinary
profit target
incometarget(¥32.0billion)(¥32 billion)

200.0

Actualexchangerate:¥82.86
=US$1

30.0
20.0
10.0

0.0

0.0
FY2008actual

FY2009actual

FY2010actual

FY2011
actualMTBP 2010

FY2012
actual● Responded to demand in the rapidly growing Chinese
market (Ship & Offshore Structure, Plant & Infrastructure
and Precision Machinery business)● Received railway system orders (Rolling Stock business)● Achieved mass production of large aircraft for Japan
Ministry of Defense and Boeing 787 component parts(Aerospace business)● Participated in commercial-sector aviation projects;
Expanded gas turbine/gas engine businesses (Gas Turbine& Machinery business)● Promoted differentiation strategies and sales expansion in
emerging markets, mainly the ASEAN countries (Motorcycle& Engine business)

Section 1■ Aggressive investments for future growth● Newly set up, enlarged and refurbished production facilities
in Japan and abroad● Participated in joint ventures (Ship & Offshore Structure
and Precision Machinery business)

Issues■ Create more competitive business models less subject toexchange fluctuations■ Accelerate business development in the growth markets ofemerging countries other than China© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

13III. Medium-Term Business Plan “MTBP 2013”
2-1-1．Key Policies and Measures (Summary)

We aim for sustainable growth of the Group by expanding its business foundations,securing future revenue basis and solidifying management system■Efforts to expand business foundations
a.Provide solutions

Secure market superiority and higher added value by
providing optimal solutions

Energy &Environmental
Engineering

Industrial Equipment

Railway System

Dec entralize
power sourc es

Comprehensive
packages for
eme rging nations

a. Solutions

Various plants

b. Expand the range of existing businesses

Achieve differentiation in the global markets by
exploring business opportunities in upstream anddownstream of existing businesses

Transportation
Systems

Advanc ement/Differentiation/Highe r Added Valueb. Business
Range Expansion

Long-te rm
mainte nancec. Accelerate global business development aimed at
growth markets
Accelerate global business development, including
partnerships and joint ventures, to achieve greater
dominance in growth markets

Differentiation

Braz ilc. Global
Strategies

e.Enhance the competitiveness of existing
businesses

Secure market superiority through advancement anddifferentiation, optimize the global production network
by upgrading the domestic plants as mother factories
and enhance cost competitiveness by promoting global
procurement■Efforts to secure future revenue basis

India

Oceania

India

RussiaJapan・Western c ountries・China・South East Asia

d.Encourage early commercialization of new
products and businesses

Encourage earlier commercialization through in-housedevelopment, M&As and business alliances to acquire
the first-mover advantage

EPC
Businessmanagement

Re inforce ment of busine ss
through partnerships and joint ve ntures

Hydrogen- relatedd. Encourage
earliercommercializ ationof new products
and businesses

Development of oc ean resourc es
Renewable energy

Mobile hydraulics
Medic al & Health

Oil & Gas
Advanc ement/Differentiation/Highe r Added Value
Higher effic ienc y and performanc ee. Enhance thecompetitivenessof Existing
businesses

Energy c onservation and low environmental impac ts
Reinforc ement of monozukuri c apabilities
Global produc tion/Global proc urement
Advanc ement/Differentiation/Highe r Pric e Competitiveness● Promote R&D efforts and capital investments■Efforts to solidify the management
on a continuous basis
system● Promote the sharing of intellectual properties and● Reinforce the financial structure
education to develop globally minded personnel,● Increase the efficiency of the execution of common
etc.
duties© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

14III. Medium-Term Business Plan “MTBP 2013”

2-1-1．Key Policies and Measures （Efforts to Expand Business Foundations）～Energy System Solutions～

Provide Solutions

Provide solutions that fulfill customer needs in emerging
counties and local cities in Japan●With a focus on energy-related

products in which we have an
advantage, we provide superior
system solutions

Power Generation &Heat Supply Systems
for Community
Low-cost and energy-conserving
infrastructure suited to theneeds of emerging nations andlocal cities in Japan

Power Generationand Heat Supply
Systems for Factory
Minimize energy consumption,
exhaust gas, and heat,
while meeting the production
capacity of the factory

Decentralized
infrastructure which issafe and secure, andensures lifelines in case ofa natural disaster

Energy-Related Products© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

15

III. Medium-Term Business Plan “MTBP 2013”

2-1-1．Key Policies and Measures (Efforts to Secure Future Revenue Basis)

Promote R & D
To realize the future businesses envisaged in the
Kawasaki Business Vision 2020, we will promote R&D
efforts, which are classified into three categories
according to how soon the target product or businesswill be put on the market© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

16III. Medium-Term Business Plan “MTBP 2013”
2-1-1．Key Policies and Measures (Efforts to Solidify theManagement System)

Increase the Efficiency of
Executing Common Duties■ Streamline services at theheadquarters and reinforce theirfunctions● Streamline the duties and reduce the workforce● Sophisticate the duties and improve the productivity of
individuals■ Increase the efficiency of conductingof services common throughout theGroup

Review the duties and services to be done Group-wide fromthe viewpoint of global and consolidated business
management

Communalize systems throughout the Group, including associated companies,
and increase the efficiency and reliability of services through concentrated management

payroll services● Manage personnel information
Group-wide● Consolidate payroll services● Manage and file personnel-related
information●Financial and● Consolidate accounting services● Consolidate financing and cash
management services● Other support services● IT services● Operate business systems● Consolidate servers

accounting
services

Associated Companies●Personnel andRegulations/
Business Processes

Headquarters
Concentrated
Management
Divisions

Master Codes■Increase the efficiency of conducting

Consider communizing business process and systems regarding
sales, procurement, production control, etc.

■ Maximize the use of managerial
information

Consider sharing information on marketing, procurement,
management finance and human resources for their effective
application

the core corporate functions© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

17III. Medium-Term Business Plan “MTPB 2013”
2-1-2．Quantitative Plan (a)＜Consolidated Quantitative Targets＞(Unit: Billion yen)

FY2012FY2013

FY2015(actual)(forecast)

Net sales

1,288.8

1,380.01,600.0

Operatingincome

42.0

60.0

90.0

(Ratio tosales)

3.3%

4.3%

5.6%

Recurringprofit(Ratio tosales)

39.3
3.0%

53.0
3.8%

(target)

85.0
5.3%

Before-tax
ROIC

6.1%

7.4%

11.0%

Net debtto-equity
ratio

131.9%

130%

110%

Equity ratio

23.0%

22.1%

23.4%

－

¥95=
US$1

¥95=
US$1

Exchange
rate
assumption

Through the continued sustainablegrowth of the Group, secure the realization of
the Kawasaki Business Vision 2020

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

P rofitNet Sales(Billion y en)
2,800

2,400
2,000

140

(Billion yen)

Net Sales

120

Operating income
Recurring profit

100

1,600

80

1,200

60

800

40

400

20

0

0
'09 '10 '11 '12 '13'15'20 (FY)18

III. Medium-Term Business Plan “MTBP 2013”
2-1-2．Quantitative Plan (b)＜Management Resource Allocation Plan＞＜Management Resource Allocation Policy＞(Unit: Billion yen)
FY2010FY2012
average(actual)

FY2013FY2015(plan)

Capitalinvestment

71/year70/year

R&D
investment

40/year46/year

FY2012(actual)

FY2015(plan)

Japan

25,22226,000Overseas

8,788

9,400

No. ofemployees

34,01035,400(purchase orderbasis)© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Capital investment

・ Curtail additional investments byeffectively using existing facilities
・ Make appropriate investments to prepare
future business foundations

R&D investment

・ Develop new products and businesses
centering on system solutions
・ Develop high value-added products using
concurrent engineering
・ Develop fundamental and coretechnologies that become essential in the
futureNumber of employees

・ Japan: Maintain stable employment
・ Overseas: Increase the workforce

especially in North America and Asia

19

III. Medium-Term Business Plan “MTBP 2013”
2-1-3．Road Map (a)A Road Map to Achieve Our Profit Targets

FY2013

FY2015《Profit Targets》《Performance Outlook》

Operating income
Recurring profit

Operating income ¥60 billion
Recurring profit¥53 billion◆Thoroughly employ risk management
regarding orders already received◆Improve operating cash flows andreduce interest-bearing debt
◆Continue R&D and capital
investments¥90 billion¥85 billion◆Accelerate business development inemerging countries and resourceproducing countries◆Enhance the added value of systemproducts, etc.
◆Manage indirect costs by enhancing theefficiency of back-office functionsa) Lay out a clear course to realize the Kawasaki Business Vision 2020
Tap into growth markets

Realize new products
and businesses

Increase the competitivenessof existing businessesb) Remain on a path to sustainable growth
Evaluate the profitabilityof businesses

Perform throughrisk management efforts

Continue R&D andcapital investmentsc) Reinforce the managerial culture
Reduce interest-bearing
debt and improve cash flows

Curtail fixed costs© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Decrease susceptibility
to exchange rate fluctuations

20

III. Medium-Term Business Plan “MTBP 2013”
2-1-3．Road Map (b)Toward the Achievement of ¥90 Billion in Operating Income in Fiscal 2015
【FY2012】Net Sales ¥1,288.8 Billion, Operating Income ¥42 Billion【FY2015】Net Sales ¥1,600 Billion, Operating Income ¥90 Billion(+¥311.2 Billion)(+¥48 Billion)
Commercialize new products
and businesses

Expand the range of thesolution business and tap into
growth markets
Increase thecompetitiveness of existing
businesses and expand therange of businesses+11
Operating
Income¥42 Billion

FY2012 (Actual)+8

Foreign
Exchange+18

Operating
Income¥90
Billion+11
30MW-class high-efficiency gas turbines, offshore
support vessels, next-generation aircraft engines,
hydraulic equipments for mobile components, etc.

・Ensure market superiority and enhance added value by providing optimal
solutions・Tap into growth markets, including emerging countries and resourceproducing countries

・Improve cost competitiveness by optimizing production systems on
a global basis
・Promote differentiation by exploring business opportunities
upstream and downstream of existing businesses© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

FY2015 (Target)21

2-2. Business Segment Section
2-2-1.
2-2-2.
2-2-3.
2-2-4.
2-2-5.
2-2-6.
2-2-7.
2-2-8.
2-2-9.

Review of the “MTBP 2010” Achievements
Ship & Offshore Structure Business
Rolling Stock Business
Aerospace Business
Gas Turbine & Machinery Business
Plant & Infrastructure Business
Motorcycle & Engine Business
Precision Machinery Business
By-Segment Quantitative Plan

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

22III. Medium-Term Business Plan “MTBP 2013”
2-2-1．Review of the “MTBP 2010” Achievements (a)Results

Issues

Ship &
Offshore
StructureExpanded the revenue base of the Chinese
business
Prepared for entry into businesses related tooffshore development
Enhanced LNG carriers technologies andreduced costs

Define the functions of domestic shipyards in worldwide
shipbuilding bases
Reinforce the revenue base of the Chinese business to
prepare for the deterioration of market conditions
Promote a smooth launch of the joint venture business in
BrazilMake a full-scale entry into the offshore structures
business

Rolling
StockReinforced cost-cutting efforts by working on a
project team basis
Increased the profitability in Asian markets,
including China
Organized business bases in North America
Received orders for railway systems

Acquire orders in North America
Improve the capability of project management

Aerospace

Completed the development of the nextgeneration patrol aircraft XP-1, and initiatedmass production of P-1 patrol aircraft and C-2transport aircraft
Proceeded with the Boeing 787 projectReinforced production by enhancing
technologies, introducing new production
systems, etc.

Complete the development of next-generation transport
aircraft XC-2, and proceed to mass production of P-1
patrol aircraft and C-2 transport aircraft, and expand todevelop their derived aircraftCope with increased production rate of Boeing 787
component parts, and expand to their derivative aircraftPromote research on future prime projects and enhance
productivity

Gas
Turbine &MachineryParticipated in new commercial aeroengine
projects
Prepared for increased production of the Trent
XWB
Promoted the development of new gas turbine
for power generation
Launched the gas engine businessExpanded the after-sales service businessPromoted the development of gas engines formarineExpand orders from industrial customers by proposing
energy solutions
Increase the profitability of new commercial aeroengine
projects
Maintain the foundations of Japan Ministry of Defense
business and explore new opportunities
Reinforce efforts to acquire ordersReinforce overseas promotion of the after-sales businessMaintain the foundations for the orders from Japan
Ministry of Defense and explore new opportunities© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

23III. Medium-Term Business Plan “MTBP 2013”
2-2-1． Review of the “MTBP 2010 ” Achievements (b)Results

IssuesPlant &
Infrastructure

Strengthened competitiveness of the existing
technologies through standardization andimprovement
Promoted collaboration with domestic andforeign companies
Accomplished the projects in hand by building
internal cooperation beyond the boundaries ofexisting business units, and secured orders for
projects in new businesses areas

Develop human resources with the ability of project
management
Accelerate the commercialization of new-generation coreproducts

Motorcycle& EngineReinforced business foundations in emerging
markets and enhanced the brand image
Refined systems for global production andprocurement
Improved the breakeven pointEnhance profitability of the businesses in developed
countries
Maintain and enhance competitiveness in emerging
markets
Promote the globalization of R&D, production andprocurement activities

Precision
MachineryBoosted production capacity
Responded properly to an increase in demand forconstruction machinery in China
Increased the five core bases to six for optimized
production on a global basis
Enhanced the competitiveness of products forvehicle assemblyEnlarged the market share of products forsemiconductors
Developed new business fields© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights ReservedDiversify the business structureEnhance the competitiveness of products by improving
systemization technologies
Accelerate business development in global markets
Reinforce cost competitivenessEnlarge the market share for existing business fields
Promote global business development24

III. Medium-Term Business Plan “MTBP 2013”
2-2-2．Ship & Offshore Structure＜Business Vision＞
The world’s leading shipbuilding and marine engineering group by performing businesses along thelines of the Gas-Offshore-Overseas-Defense (GOOD) strategy

MTBP 2013 (Priority Issues and Quantitative Plan)
1. Gas Develop new propulsion plants for next-generation LNG carriers
 Expand the LNG carrier business and reinforce its profitability
 R&D, receive orders for and construct LNG-fueled propulsion ships
 Enter into the offshore development business market

2. Offshore:
3. Overseas
Joint Venture:
4. Defense, Naval:

 Maintain and reinforce profitability of the Chinese business Promote a smooth launch of the joint venture business in Brazil
 Prepare the business foundations to accommodate the government’s policy of

increasing submarines, while ensuring profit growth(Billion yen)

10.0

10%

Operating income
Ratio of operating
income to sales

5.0

5%

0.0

0%
'10

-5.0

'11

'12

'13

340.0

Net Sales
Upper row: Operation in China andBrazil(equity-method affiliates)

290.0

81.4

95.2

118.4

113.5

'10

'11

107.7

150.0

200.0

'15
-5%

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

135.0

90.3

70.0

'12

'13

'15

'20

25

III. Medium-Term Business Plan “MTBP 2013”
2-2-2．Ship & Offshore Structure (Product Development)
For Greater Energy Conservationand Lower Environmental Impacts
Reheat cycle steam turbine plant (REHEAT) Dual fuel diesel electric propulsion system(DFDE)
 Electronically-controlled slow speed twocycle engine (ME-GI)
 Promote the use of natural gas

LNG*1 carrier equippedwith next-generation
propulsion plant

to deal with the exhaust gas
control regulations and a risein heavy oil prices

LNG supply carriers & LNGfueled propulsion ships

Note:*1 LNG：Liquefied natural gas

Marine Resource Development
Sector
 EEP, a joint-operated shipyard inwhich the Company has a stake,received orders for six drill ships
from PETROBRAS.

 Efforts are under way to acquireorders for offshore support
vessels (OSVs), including PSVs*2
and CSVs.*3

Drill Ship

Note: *2 PSV：Platform Supply Vessel*3 CSV：Construction Support Vessel© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

OSV：Offshore Support Vessel
26

III. Medium-Term Business Plan “MTBP 2013”
2-2-3．Rolling Stock＜Business Vision＞

To become a global rolling stock systems manufacturer that takes advantage of its world-classtechnologies and quality to engage in a broad spectrum of businesses that range from high speed rail
(HSR) to light rail transit (LRT)MTBP 2013 (Priority Issues and Quantitative Plan)
1. Domestic Market
2. North American
Market
3. Asian Market(Billion yen)

15.0

 Enhance competitiveness by developing cutting-edge technologies and newrolling stock models to accommodate customer needs
 Steadily implement the projects for which orders have already been received
 Enhance the readiness to meet the demand for new construction andupdated high-speed rail cars and intercity transportation
 Enhance project management abilities to handle railway system projects
 Optimize project implementation through partnerships with local companies

10%

Operating income

260.0

Net Sales
180.0

Ratio of operating
income to sales

10.0

155.0
131.1

132.6

129.9

'10

'11

'12

5%
5.0
0.0

0%
'10

'11

'12

'13

'13

'15

'20

'15

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved27

III. Medium-Term Business Plan “MTBP 2013”
2-2-3．Rolling Stock (Product Development)

Railway System

Rolling Stock for Overseas Customers

Responsible for system integration

The most advanced systems

Railway system for the
Taichung City Government

WMATA Series 7000 subway car

Railroad Truck

Gigacell®

Significant weight reduction wasachieved by using CFRP solebars

Greater energy conservation andlower environmental impact

efWING®

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Gigacell systems that reduce power systemfrequency fluctuation(subsidized by NEDO)

28

III. Medium-Term Business Plan “MTBP 2013”
2-2-4．Aerospace＜Business Vision＞

A leader in Japan’s aerospace industry and an aircraft manufacturer with international
competitiveness in terms of quality, cost, and delivery speed

MTBP 2013 (Priority Issues and Quantitative Plan)
1.Defense Establish a system of mass production for P-1 patrol aircraft and C-2 transport

2.Commercial

aircraft, and expand to develop their derived aircraft Acquire orders for new projects by taking advantage of the capabilities as a system
integrator, thereby increasing market share Cope with increased production rate of Boeing 787 component parts and enhance
the profitability thereof, and expand to their derivative aircraft As a Tier 1 partner responsible for both design and production, achieve greaterinternational competitiveness(Billion yen)

25.0

10%

Operating income

Net Sales

320.0
290.0

Ratio of operating
income to sales

20.0

270.0

239.1
15.0
5%

196.8

206.5

10.0
5.0
0.0

0%
'10

'11

'12

'13

'15

'10

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

'11

'12

'13

'15

'20

29

III. Medium-Term Business Plan “MTBP 2013”
2-2-4．Aerospace (Product Development)

Commercial Sector
Component parts for Boeing 787(responsible component: forward fuselage,
etc.)
Scheduled flights began in November, 2011
Fuel consumption efficiency improved 20%
through the use of composite materials, etc.

Defense Sector
P-1 patrol aircraft
The first mass produced P-1 aircraft wasdelivered to Japan Ministry of Defense in
March, 2013

XC-2 transport aircraft
BK117
Fire-fighting anti-disaster,Emergency medical
service, etc.

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

The first mass produced C-2 is scheduled
to be delivered to Japan Ministry of
Defense in March 201530

III. Medium-Term Business Plan “MTBP 2013”
2-2-5． Gas Turbine & Machinery＜Business Vision＞

Global equipment and system manufacturer in the transport system and energy & environment sector

MTBP
2013 (Priority Issues and Quantitative Plan)
中計2013（重点項目とQuantitative
1.AeroEngines Plan  Ensure a smooth launch of the PW1100G-JM and Passport20 and increase theprofitability of the Trent1000 and TrentXWB
 Continuous participation in new development projects as a module supplier Expand the businesses by strengthening sales to overseas, especially in Oil & Gasrelated offshore markets
 Develop and commercialize the next-generation equipment and systems for marine Strengthen solution business through the establishment of the Energy Solution
Division Capture domestic demand for decentralized power sources utilizing industrial gas
turbines and gas engines, and seek international business development

2.Marine
3.Energy &Environmental
Engineering(Billion yen)

15.0

10%

Operating income

420.0

Net Sales

Ratio of operating income to sales

250.0
202.6 194.6 207.0 185.0

10.0
5%
5.0

'10

0.0

'11

'12

'13

'15

'20

0%
'10

'11

'12

'13

'15

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved31III. Medium-Term Business Plan “MTBP 2013”
2-2-5． Gas Turbine & Machinery (Product Development)
Baseload Power Generation Facility

30MW-class gas turbine

Energy-Saving and EnvironmentallyFriendly Aircraft Jet Engines

8MW-class gas engine

 Maintaining

highest efficiency in its
class(measured as a single unit) Enhance efficiency by heat utilization system

Modules forRolls-Royce
Trent1000/XWB
 Continue participation in new

development projects, through design
and manufacture of IPC(Intermediate
Pressure Compressor) modules.
－Trent 1000 for Boeing 787－Trent XWB for Airbus A350 XWB

Next-Generation Equipment andSystems for Marine
 Gas engines for marine

Environment-friendly
diesel engines for marine－ Develop these engines based on theeconomical and environment-friendly gas
engines for power generation
 Environment-friendly diesel engines formarine－ Develop the technology for combining
water-emulsion fuel and the EGR*1
system to enhance fuel efficiency andreduce NOx emissions

Gas engine for marine

Note *1: Exhaust Gas Recirculation© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

32

III. Medium-Term Business Plan “MTBP 2013”
2-2-6．Plant & Infrastructure＜Business Vision＞

Focus on energy and environment and be an EPC contractor with distinctive features to contribute to
the conservation of the global environment

MTBP 2013 (Priority Issues and Quantitative Plan)
1. Achieve stable sales and profit while enhancing comprehensive project execution capabilities tocover every phase of the EPC project
2. Improve and standardize the existing technologies and accelerate to launch new-generation coreproducts
3. Advance into overseas markets with proven technologies and cross-border collaboration
4. Upgrade Harima Works to be a mother factory
5. Maintain stable profitability
Net Sales(Billion yen)
15.0

15%

Operating income

80.0

Upper row: Operation in China(equity-method affiliate)

270.0

Ratio of operating income to
sales
10%

10.0

35.5

33.2

36.0

122.8

115.8

115.0

'11

'12

'13

37.6
5.0

5%

89.0
0.0

0%
'10

'11

'12

'13

'10

36.0

140.0

'15

'20

'15

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

33

III. Medium-Term Business Plan “MTBP 2013”
2-2-6．Plant & Infrastructure (Product Development)

Development of Next-generation Technologies regarding
Energy and Environmental Engineering Sector
Compact GTL*1 Plant

FPSO (vesselfor oilproduction)

ZEET*2 System

Liquefied Hydrogen Container
for Marine Transport

Onboard
GTL plant

Possible onboard
plant size: 1,400m2
for the 1,000-bpd
class

ReactormoduleNote*1: Gas To Liquid

The GTL technology converts theassociated gas released from oil drilling
into liquid fuel using a reactor to reformand synthesize the gas
 The GTL technology is essential tomeet tighter environmental
regulations
 Downsizing the reactor modules
enable:－ Offshore and onboard processing of
associated gas－ Optimization of facility capabilities
according to the size of the oilfield

Note*2: Zero-Emission Eco Town

The ZEET system conducts hygienic
treatment of waste and sludge, while using
them as the energy and material for
producing cement, thereby eliminating
waste to zero
 The ZEET system achieves zero

emission at a minimum cost
－ Reduce the cost of waste disposal
facilities and their operation© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

 Ensure higher efficiency oftransporting hydrogen to prepare
for a society where hydrogen use
is prevalent－ Advanced heat sealing
technology－ Wide experience in liquefiedhydrogen-related facilities

34III. Medium-Term Business Plan “MTBP 2013”
2-2-7．Motorcycle & Engine＜Business Vision＞

A world-class personal vehicle and engine manufacturer focused on motorcycles that can further
appeal Fun to Ride, supported by advanced environmental technologies

MTBP 2013 (Priority Issues and Quantitative Plan)
1. Improve the profitabilityof businesses indeveloped countries Reinforce non-price competitiveness through branding efforts
 Reduce the fixed costs for production by enhancing the globalized

2. Expand the businesses
in emerging countries

 Establish the premium brand for leisure motorcycles
 Accommodate the growing demand by boosting production capacity

3. Reinforce the earningbase for the generalpurpose engine business Explore new markets through business alliances
 Enhance the performance and quality of products to ensure continuation of

production structure

existing businesses and develop new businesses Reduce the fixed production costs and variable costs by establishing a

global production system centering on the United States and China

Net Sales(Billion yen)
20.0

Operating income

15.0

Ratio of operating
income to sales

10%

290.0
234.4

235.2

'10

'11

300.0

300.0

'15

'20

251.8

5%
10.0

5.0
0%
0.0
'10
-5.0

'11

'12

'13

'15
-5%

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

'12

'13

35

III. Medium-Term Business Plan “MTBP 2013”
2-2-7．Motorcycle & Engine (Product Development)

Motorcycles & Off-Road Four-Wheel Vehicles
Development of products
unique to Kawasaki along the key concepts:
Fun to Ride, Ease of Riding and Environment

Improve the profitability of businesses indeveloped countries

 Enhance the brand value by boosting product strengths
 Update the top priority models in important productcategories
 Promote development of advanced technologies toachieve higher fuel efficiency, electrification, etc.

Expand the businesses inemerging countries
Enlarge the model lineup

Develop strategic models at lower

costReinforce the R&D facilities in Asia

General-Purpose Engine Business
Development of high-value-added engines for professional use

Reinforce the earning base

 Reinforce the relations with existing OEM suppliers through theProducts shown are currently
available models.

development of new engine models
 Reduce costs and acquire new customers through business
operations centering on the United States and China© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved36III. Medium-Term Business Plan “MTBP 2013”
2-2-8．Precision Machinery＜Business Vision＞

A manufacturer of top brands in the motion control sector that provides customers around the world
with drive and control systems, engineering, and services centered on hydraulics technologies(Robots)
A manufacturer of robots that establishes the industry’s leading position in various fields ofapplication, such as automobiles and semiconductors by providing the advanced level of quality andtotal solutions, while addressing emerging needs for automation

MTBP 2013 (Priority Issues and Quantitative Plan)
1. Hydraulic Equipment
Business
2. Robots Business Ensure a continuing high share of the excavator market and step up efforts

for other construction and agricultural machinery Establish an optimal production system on a global basis centering on the motherfactory in Japan Develop robots for emerging markets to prepare for globalization of the business Expand market share in the automotive and semiconductor fields
 Explore and commercialize business opportunities in the medical andpharmaceutical fields(Billion yen)

300.0

200.0

Operating income

20%

Ratio of operating
income to sales

15%

280.0

Net Sales
190.0

175.0

10%
100.0

140.3

130.4

140.0

5%
0%

0.0
'10

'11

'12

'13

'15
'10

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

'11

'12

'13

'15

'20

37

III.

Medium-Term Business Plan “MTBP 2013”

2-2-8．Precision Machinery (Product Development)
High-Performance Hydraulic
Equipment

New swash-plate type pumpfor excavators

Industrial Robots/Automation
Equipment

Controller for excavators

Steel FSJ*2 Robot

Maintain an overwhelming share in theDevelop robots for emerging

excavator fieldIncrease orders by enhancing the ability ofsystemization

Introduce innovative welding

countries

technologies

Envisaging New Applications and NextGeneration Production Technologies

Next-generation production line
HST*1 swash-plate type Robots for medical and（Human-friendly robots）
pumps/motors
pharmaceutical applications© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

Expand sales of hydraulicequipment for construction
machinery and agricultural
machineryPromote medical andhealthcare applications
Develop human-friendly robot
technologies
Note*1 : HST：Hydro Static Transmission*2 : FSJ：Friction Spot Joining
38III. Medium-Term Business Plan “MTBP 2013”
2-2-9．By-Segment Quantitative Plan (a)(Unit: billion yen)
Net sales

Operating income, Ratio of operating income to sales
FY2012(actual)

FY2013(forecast)

FY2015(target)

135.0

4.1

4.5%

0.0

0.0%

6.0

4.4%

155.0

180.0

2.2

1.7%

6.0

3.9%

13.0

7.2%

239.1

290.0

270.0

14.8

6.2%

19.0

6.6%

20.0

7.4%

Gas Turbine &Machinery

207.0

185.0

250.0

7.0

3.4%

11.0

5.9%

13.0

5.2%

Plant &
Infrastructure

115.8

115.0

140.0

9.7

8.4%

7.0

6.1%

8.0

5.7%

Motorcycle & Engine

251.8

290.0

300.0

2.3

0.9%

10.0

3.4%

15.0

5.0%

Precision
Machinery

130.4

140.0

190.0

8.4

6.4%

14.0

10.0%

22.0

11.6%

Other

124.2

135.0

135.0

-6.8

-5.5%

-7.0

-5.2%

-7.0

-5.2%

Total

1,288.8

1,380.01,600.0

42.0

3.3%

60.0

4.3%

90.0

5.6%

FY2012(actual)(forecast)

FY2015(target)Ship & Offshore
Structure

90.3

70.0

Rolling Stock

129.9

Aerospace

FY2013

Exchange rate assumption: 95 yen=US$1© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

39III. Medium-Term Business Plan “MTBP 2013”
2-2-9．By-Segment Quantitative Plan (b)Before-tax ROICFY2012(actual)

FY2013(forecast)

FY2015(target)Ship & Offshore
Structure

17.3%

0.0%

10.0%

Rolling Stock

4.6%

7.5%

15.3%

Aerospace

15.9%

12.9%

12.7%

Gas Turbine &Machinery

5.3%

4.7%

7.5%

Plant &
Infrastructure

21.2%

16.0%

15.0%

Motorcycle & Engine

3.4%

3.8%

14.3%

Precision
Machinery

14.0%

17.1%

26.3%

Total

6.1%

7.4%

11.0%

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved40

Figures recorded in the business forecasts are forecasts that reflect the judgment of the Company based on theinformation available at the time of release and include risks and uncertainties. Accordingly, the Company cautions
investors not to make investment decisions solely on the basis of these forecasts.
Actual business results may differ materially from these business forecasts due to various important factors resulting
from changes in the external environment and internal environment. Important factors that may affect actual
business results include, but are not limited to, economic conditions, the yen exchange rate against the U.S. dollar
and other currencies, the tax system, and laws and regulations.

© 2013 KAWASAKI HEAVY INDUSTRIES, LTD. All Rights Reserved

41