Komatsu

2-3-6, Akasaka, Minato-ku, Tokyo
107-8414, Japan

https://www.komatsu.jp/en

Corporate Communications Department
Sustainability Promotion Divisione-mail: JP00MB_info@global.komatsu

Creating value together

Creating value through manufacturing and technology innovation
to empower a sustainable future where people, businesses and our planet thrive together
Our history has been a century of facing and overcoming challenges, and "manufacturing and technology innovation" has been at the heart of all things we do at Komatsu.
As we enter our new centennial, we will continue to create value together with our partners.

And with this spirit we aspire to help create a future where people lead a safe, healthy and peaceful life in harmony enabling us all to thrive together.

Commitment to “Quality and Reliability”

for continuing to be a company trusted by all of our stakeholders
Our “Management Principle” forms the basis of our efforts to fullfil our mission, and“Sustainability policy” clearly expresses what we do to realize our vision.
Based on these two policies, we will continue to respond to the expectaions from society
and our stakeholders through our business activities, and contribute to realizing a sustainable
society.

Ambition, Preservance, Collaboration and Authenticity
The values we believe in and practice deeply rooted in our history

Based on the Founding Principles laid out by our founder, Meitaro Takeuchi, The Komatsu Way
was developed to convey our shared values cultivated by our predecessors over our century-longhistory of ambition and collaboration.
The corporate cultures passed down from the time of our founding have been sublimated into
four Values, and we use them as the guiding compass for our daily efforts to fullfil our mission.

New value creation for sustainable growth

A positive cycle of solving social issues and improving profitability

In order to achieve our vision of sustainable growth through customer value creation that generates a positive cycle of solving ESG issues and improving profitability, we are striving to create
safe, highly productive, smart and clean workplaces of the future, together with customers.
We are making steady strides toward our vision by advancing daily efforts to create newvalue for our customers’ workplaces.
Komatsu Report 2023

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Our Roadmap to “The Next”

Steady progress toward “safe, highly produtive, smart and clean workplaces of the future”

Solutions that optimize customers’ operation processes through digitalization, together with safe, eco-friendly, and highly efficient products that are compatible with our solutions.
Our business continues to evolve toward its next stage in which it resolves issues of our customers’ workplaces with a sophisticated combination of solutions and products.
We are steadily progressing on the roadmap to workplace of the future together with customers through the development of electrified and automated equipment and the expansion of DX
Smart Construction solutions.

Roadmap to workplace of the future(For Smart Construction)

Maximizing customer value

Level 4

Optimization of
construction planning

Level 3

Data monitoring

Level 2Visualization of
topography / workplace

Level 1

Workplace
digitization

Solutions (Optimization level of customers’ entire operation processes)

Level 5Create work tasks
and work orders

Solutions (Optimization of customers’ entire operation processes)◆ Safe, highly productive, smart andclean workplace of the future◆ Digital transformation◆ Carbon neutrality

Smart Construction Dashboard
application for visualizing job site(constantly updated with new features)

Smart Construction Simulation
application for optimizing
construction plan

Mining open technology platform(under job site trial)(introduced to market in September 2022)
Special Feature: DX Smart Construction Page 46

Products (Automation and autonomous operation)

Remote control cockpit
for construction equipment

Products (Level of automation and autonomous operation)

Conventional(mass-production verification tests underway)

Large-scale ICT bulldozer for mining
D375Ai-8 teleoperation model(commercial operation commenced in May 2023)

Collaborative operation by unmanned
dump truck and ultra-class teleoperated
hydraulic excavator(development completed in March 2023)

Special Feature: Automation development of construction and mining equipment Page 48

Level 1

Limitedoperation
support

Level 2

Advanced
operation
support

Level 3

Advancedsolo
automation

Level 4

Advanced collaborative autonomous operation

Level 5

Advanced decisionmaking autonomous
operation

Products (Improvement of equipment efficiency / Reduction of CO2 emissions)

Products (Improvement of equipment efficiency / Reduction of CO2 emissions)Level 1

Internal
combustion

Level 2

EnergyrecoveryLevel 3

Micro-mix hydrogen combustion
Energy recovery

Level 4

Full electric
Plug-in / Battery

Level 5

Fuel cells

Innovate manufacturing technology and develop new value chain

PC200LCE/210LCE-11
electric hydraulic excavator(to be introduced to market in FY2023)

Battery-powered haul truck(concept machine)

Medium-sized hydraulic excavator
equipped with a hydrogen fuel cell(concept machine)

Special Feature: Challenges to carbon neutrality Page 50

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About Komatsu Report

Contents

Komatsu Report 2023

We publish our integrated report, Komatsu Report annually, for our stakeholders to introduce Komatsu Group’s efforts torealize sustainable growth. The Komatsu Report mainly describes on our value creation business model of working for sustainable growth by turning a positive cycle of improving earnings (financial indexes) and solving ESG issues (non-financial indexes)
as we implement growth strategies in the mid-term management plan.

Komatsu’s vision

3 Sustainability

6

56

14

Structure of Komatsu Annual Reports

16
18
20

Komatsu Report (Integrated Report)

Annual Securities Report(Financial conditions)

CEO Message

12	History of value creation through ambition andcollaboration

Corporate identity

60

Business portfolio

62

Material issues for sustainability (Materiality)
Value creation process

With people—Human resource initiatives—Business and human rights
With business—Social contribution activities
With the planet—Disclosure based on TCFD recommendations

ESG Databook(Social activities and Environmental performance)* Komatsu Report, Annual Securities Report and ESG Databook, in both Japanese and English, are uploaded on Komatsu’s website.
* Komatsu Ltd. issues Komatsu Report only on the website.

Please refer to “Annual Securities Report” for morecompany and financial information.

Please refer to ESG Databook for more information
concerning environmental and social initiatives.

• Overview of the Company and Its Consolidated
Subsidiaries• Business Overview• Property, Plants and Equipment• Information on the Company• Financial Information• Sustanability policy and management of sustainability•W ith people (human resource development, diversity andinclusion, etc.)• With business (corporate governance, risk management, etc.)• With the planet (climate change, environmental­initiatives, etc.)

https://www.komatsu.jp/en/ir/library/annual-security-report

1 Business overview

4 Corporate governance24

Komatsu at a glance

72

Discussion with Outside Board Members—Business outline of Komatsu

84

Risk management

26—Overview by business segment—Overview by region

https://komatsu.disclosure.site/en/themes/121

32
Cautionary notice regarding forward-looking statements

This report contains predictions, plans, forecasts, and other forward-looking statements that have been judged by management to be rational based on the information available
at the time of publication. Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are not limited to,changes in economic conditions or product demand in major markets, foreign exchange rate fluctuations, regulatory revisions, or changes to accounting standards or practices

Business overview(Construction, Mining and Utility Equipment)• This report also includes information on activities after the reporting period in order to provide readers with the latest information.
• “FY2022” refers to the period from April 1, 2022 to March 31, 2023, unless otherwise noted.

2 Mid-term management plan
DANTOTSU Value

Together, to “The Next” for sustainable growth44	ESG solutions through growth strategies

Editorial policy

Komatsu Report 2023 was published for the purpose of providing clear explanations for all stakeholders on Komatsu’s medium- to long-termbusiness strategies and the positive cycle generated as Komatsu resolves environmental, social, and governance (ESG) issues through its busi-

ness activities. In preparation of this report, we referenced the International Integrated Reporting Framework released by the IFRS Foundation and
the Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation: ESG Integration, NonFinancial Information Disclosure, and Intangible Assets into Investment released by the Ministry of Economy, Trade and Industry.

88

KPIs of mid-term management plan

Corporate governance

Stakeholder engagement90	Directors and Audit & Supervisory Board
Members

CFO Message 40	Mid-term management plan (FY2022–FY2024)

Reporting period: April 1, 2022–March 31, 2023

76

DATA94

11-years summary97

Non-financial highlights

96
98
99

Financial highlights

External recognition

Corporate information

46	Special feature: Growth strategies of the midterm management plan

—DX Smart Construction—Automation development of construction andmining equipment

Komatsu has signed the United Nations Global Compact (UNGC).
Click this link for more information about the Ten Principles
advocated by the UNGC and how they pertain to Komatsu’s
initiatives.

Komatsu has joined the World Business Council
for Sustainable Development (WBCSD).

—Challenges to carbon neutrality—Evolution of value chain strategies https://komatsu.disclosure.site/en/themes/129

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Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

CEO message“Creating value through manufacturing and technology innovation
to empower a sustainable future
where people, businesses, andour planet thrive together”

Together, to “The Next”
for sustainable growth
To achieve a sustainble future,

Komatsu is now advancing to the next stage
together with all of its stakeholders
Hiroyuki Ogawa

President and Representative Director
Chief Executive Officer (CEO)6

Komatsu Report 2023

Since its founding in 1921, Komatsu has continued to embraceits Management Principle, “We will maximize the trust given to
us by our stakeholders and society through a commitment to
Quality and Reliability.” This principle has guided our growth todate through a process of rising to challenges by transforming
adversity into opportunities. In 2021, when we celebrated the100th anniversary of Komatsu’s founding, we articulated our
mission and vision as our purpose together with our longstanding values. Our purpose is meant to share with all of our
stakeholders our commitment to fulfilling our mission andvision of creating value through manufacturing and technology
innovation to empower a sustainable future where people,
businesses, and our planet thrive together. This mission andvision will be a constant in Komatsu’s operations, no matter
how the times may change.
In addition, we have established our Sustainability policy,
which is meant to guide us in practicing sustainability management for contributing to the realization of a sustainable
society while growing our business as we aspire toward our
purpose. Komatsu’s Management Principle has always
inspired our basic stance toward contributing to society
through business activities. Today, further, we must acknowledge the increasing expectations for companies to contributeto the realization of a sustainable society. The Sustainability
policy illustrates our earnest stance toward living up to the
expectations of society while also representing our pledge tolend our strengths to the quest for a sustainable society.
Let me reiterate, under the guidance of the Management
Principle that serves as our basic stance toward fulfilling our
purpose as well as our Sustainability policy, we are dedicatedto living up to the expectations of society and all other stakeholders and helping realize a sustainable society.
The previous mid-term management plan, which waslaunched in 2019, defines Komatsu’s long-term vision as
to create the safe, highly productive, smart and clean workplaces of the future together with customers and to generate
a positive cycle for improvement of earnings and ESG resolutions to achieve sustainable growth through the creation ofcustomer value. Our path toward this vision, which we referto as our Roadmap to workplace of the future, forms the basis
for Komatsu’s long-term business strategies.
DANTOTSU Value – Together, to “The Next” for sustainable growth, the current mid-term management plan, which
was launched in April 2022, is centered on three pillars ofgrowth strategies: 1) Accelerate growth by means of innovation, 2) Maximize earnings power, and 3) Enhance corporate

resilience. The pillars were defined based on backcastingfrom Komatsu’s vision and Roadmap to workplace of the
future, the achievements and ongoing challenges from theprevious mid-term management plan, and management
issues stemming from changes in the external environment.
The three pillars of growth strategies also incorporate
Komatsu’s material issues, which need to be addressed if weare to contribute to the realization of a sustainable society
while achieving business growth, and medium- to long-term
challenges identified for each business segment throughbusiness portfolio reviews.
Turning to Komatsu’s operating environment, the global
economy showed signs of recovery following the dissipation of
the impacts of the COVID-19 pandemic. However, the outlook
remains uncertain and opaque due to factors including thesituation in Ukraine and other geopolitical risks, foreignexchange rate fluctuations, rising material prices and distribution costs, and supply chain instability. Under these conditions,
Komatsu will need to address climate change and other social
issues while also building frameworks for flexibly responding tovarious operating environment changes so that it can continue
to chase its ambitions in its pursuit of growth. Our forebearers
continued to tackle new challenges and grow, even in times ofgreat uncertainty and volatility. We too must view such operating environment changes as opportunities, as opposed torisks, and capitalize on these opportunities to grow.
In this integrated report, Komatsu Report 2023, we will lookat Komatsu’s vision and its current position, as illustrated
through its business activities and growth strategies, with ourRoadmap to workplace of the future as a central focus. We will
also examine Komatsu’s sustainability initiatives in relation topeople, business, and the planet as well as its corporate governance measures, which support its vision and position. I hope
you will stick with us until the end so that this report can function as a tool for facilitating a constructive dialogue.

Impending future and growththrough innovation today
In FY2022, the first year of the mid-term management plan,
the construction, mining and utility equipment business benefited from strong demand for mining equipment seen centered on North America and Asia, although this business did
feel some impacts from rising material prices and distribution
costs. At the same time, we moved forward with cross-sourcing initiatives that allow us to change the manufacturing
plants or product destinations in response to demand fluctuations as well as with multi-sourcing initiatives that entail
procuring the same parts from multiple suppliers. These
efforts to build a supply chain that is resilient to operating
environmental changes enabled us to cater to demand for
new equipment. Meanwhile, higher equipment operating rates

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Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

CEO message
led to increased sales of parts and service. The businessresults also benefited from increases to product selling prices
instituted around the world and from the effects of yen depreciation. As a result, Komatsu was able to post new record
highs for both net sales and operating profit in FY2022.
At the same time, the construction equipment industry is
only growing by about 1% each year on average, which could
lead one to conclude that this is a mature industry. Given thisreality as well as the growing presence of Chinese manufacturers on the global stage, it is clear that Komatsu’s survival
will be called into question if we cannot move beyond ourcurrent business model, which is limited to the production
and sales of construction equipment. This is where ourRoadmap to workplace of the future comes in. As indicated bythis map, the path toward Komatsu’s ongoing growth lies in
evolving our business model to resolve issues seen acrosscustomer workplaces by combining solutions that connect
and optimize all customer processes with products that arehighly compatible with those solutions. Of the three pillars ofgrowth strategies of the mid-term management plan, accelerate growth by means of innovation is the most directly related
the Roadmap to workplace of the future. Priority measures
implemented in line with this strategy produced a certain
degree of results in FY2022.
1. P romote DX Smart Construction and its overseas expansion / Business promotion using mining open technology
platforms
Looking at our solutions businesses, Smart Construction,
which we launched in 2015, has achieved rapid growth over the
past eight years. In fact, this solution is currently used by over
10,000 companies in the Japanese market and has been introduced at more than 20,000 workplaces. This rapid growth has
also driven increases in related products and services.
In 2020, the new and evolved version of this solution, “DX
Smart Construction,” was launched featuring new functions
for linking all of the operation processes via data. “DX Smart
Construction” is a revolutionary solution that organically links
all stages of every construction process at a given workplace,and this solution represents a major business opportunity for
Komatsu.
Overseas deployment will be key to the growth of “DX
Smart Construction.” Construction projects overseas tend
to be larger than those in Japan, meaning that the introduction of this solution has the potential to realize even greater
improvements in productivity in such projects. Specifically,
the high level of digital literacy among customers in Europe
and the United States is anticipated to be a boon to thegrowth of “DX Smart Construction.” The overseas deployment of this solution is also a pressing task when it comes todifferentiating ourselves from Chinese manufacturers.
In our mining equipment operations, meanwhile, we havecompleted phase one of the development of an open technology platform for optimizing all processes at mines. This platform combines our Autonomous Haulage System (AHS) withfleet management systems for assigning tasks to dump trucks.

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Komatsu Report 2023

Trials of this platform are currently underway at customer
workplaces and we are planning a phased expansion of thenumber of customers using this platform. At the same time, wewill look to develop a business model that combines this platform with relevant products and solutions to increase earnings.
2. Advanced product development and market introduction
with high compatibility with platforms
In 2008, Komatsu launched the AHS, and this system has
been used on more than 650 pieces of mining equipment to
date. The demand for this system is so robust that it
prompted us to institute upward revisions to the targets for
key performance indicators (KPIs) set for FY2024, and weanticipate that the market for unmanned dump trucks willcontinue to grow going forward.
At the same time, we are moving forward with thedevelopment of mining equipment other than non-dump
trucks that can be operated remotely or autonomously withthe goal of automating mine operation in its entirety. We
have completed development of a 700-ton class largescale hydraulic excavator that can be operated remotely,
and we are in the process of negotiating with customers tocommence trial introduction of this piece of equipment at
actual workplaces. This excavator is anticipated to contribute to further improvements in safety and productivity at
customer workplaces when combined with our alreadyavailable AHS.
3. Development and market introduction of electrified
machinery
Komatsu is moving ahead with the development and market
introduction of electrified equipment with the aim of accomplishing its management target of reducing CO2 emissions
from product use by 50% in FY2030 from FY2010 and thechallenging goal of achieving carbon neutrality by 2050. In
FY2022, we exhibited a 20-ton class electric hydraulic excavator at construction equipment trade show held in Germany
and the United States. We also advanced development andearly-stage research on new types of electrified equipment.
FY2023 has been positioned as the first year for the market
introduction of electric construction equipment, and we areaccelerating market introductions and other electric equipment initiatives accordingly.
There is an incredibly broad scope of models when it
comes to construction and mining equipment, ranging fromthe micro excavators used for urban civil engineering
projects to the ultra-class dump trucks found at mines. The
output levels, usage conditions, and daily operating hours ofsuch equipment can vary radically by type. Accordingly, we
will need to look at battery-powered equipment as well as
equipment that uses fuel cells and hydrogen engines if weare going to achieve carbon neutrality while maintaining thelevels of quality that customers demand of our products.
The market for electrified equipment is still in its infancy, due
in no small part to the massive technological hurdles
presented by factors such as costs and the need to installcharging infrastructure. Nevertheless, Komatsu believes thatit has a responsibility as a manufacturer to provide its customers with the widest possible range of options for theimpending era of electrified equipment, and we are advancing research and development toward this end together with
our partners.
We anticipate that markets for electrified equipment will
first begin to take shape in the utility equipment sector, where
the technological hurdles to be overcome are relatively low,
and particularly in Europe, where environmental awareness ishigh. Accordingly, our first priority will be the development ofutility equipment for the European market, where we will seek
to secure a competitive advantage by being an early entrant
into the emerging market. Our next priority will be the market
introduction of middle-sized electric hydraulic excavators
represented by our mainstay 20-ton class models. The development of models equipped with fuel cells, hydrogen engines,
and other next-generation power sources will be advanced
alongside these launches.
The development of next-generation models takes time.
As we develop these new models, we will encourage customers to use our currently available hybrid, diesel-electric, tethered-electric, trolley, and other equipment that uses so-called
bridge technologies meant to fill the gap between existingmodels and next-generation models. We will also utilize carbon-neutral fuels like hydrotreated vegetable oil and biodiesel
to reduce CO2 emissions from product use.

Changing component strategies
and evolving value chain
strategies
Up until now, we have been talking about Komatsu’s position on
our Roadmap to workplace of the future. Now, I would like tomove on to talk about the future, specifically about the component and value chain strategies that relate to the roadmap.

1. Component strategies
A major strength of Komatsu is how it develops and produces
the Key Components that determine the performance of equipment in-house. This allows us to incorporate technologicalprogress to differentiate the performance of our products andalso to manage quality, delivery timing, and costs on a global
scale through means such as cross-sourcing. In addition,
Komatsu remotely tracks the operating status of components topredict their lifespans. This information is used to generate
stable earnings from post-sale equipment through aftermarket
businesses, such as the remanufacturing components and thesale of genuine parts through extended waranty with maintenance contracts. I am confident that the strength granted by thein-house development and production of Key Components willtranslate to competitiveness and differentiation for Komatsu.
Accordingly, this component strategy is something that
Komatsu should continue going forward. However, I also cannot
deny the possibility that progress in the automation and electrification of equipment could give rise to components for which
Komatsu lacks technological insight. Such a situation would
make it difficult to continue to develop and produce all components in-house. This recognition casts light on a need to makeslight changes to our current component strategies.
For example, Komatsu does not have the insight necessary
to produce batteries in-house. For this reason, we are currently
conducting development and production of battery systems
together with partners. As we take part in such partnerships, itwill be important to think about the degree to which Komatsu
can accumulate insight to be used for in-house production
through these undertakings. I suspect that we will have no
choice but to purchase automotive battery cells from somewhere. When it comes to modules and packs, however, I believethat we might be able to generate synergies between the construction equipment business and the industrial machinery
business by capitalizing on the expertise of group company
Komatsu NTC Ltd., which entered the automotive battery manufacturing equipment business in 2022.
Collaboration with partners and M&A activities will be more
important than ever if we are going to work toward the in-house

Komatsu’s component

strategies are advancing to

the next stage in conjunction
with technological progress.

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Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

CEO message
production of batteries. It is anticipated that there will be competition from across the industrial sector to acquire battery cells in
the future. There is usually demand for about 300,000 construction and mining equipment units each year. The figure fordemand for automobiles is two digits more. For this reason, if wewant to be able to source battery cells reliably, we are going toneed to form relationships with dedicated manufacturers possessing such advanced technologies.
I used batteries as an example, but the truth is that we plan
to use a combination of in-house production and partnerships
with regard to other components as well. It will not be feasible todevelop and produce all components entirely in-house. We may,therefore, adopt an approach of producing components formainstay models with high sales volumes in-house to ensurethat we can accommodate demand for after-sales services inaftermarket businesses, while also procuring from other companies. Such model-specific component strategies might be one
way we can change. Flexible component strategies will, ofcourse, create new business opportunities for our partners. In
cases when we are unable to use the insight gained throughpartnerships to conduct in-house production, it may be an
option of transitioning to external procurement for components
previously developed and produced in-house. Going forward, weshould continue partnering with other companies while maintaining a healthy sense of tension, in order to drive growth forboth partners and Komatsu.

The next-generation Komtrax system, the latest iteration of
the Komtrax system that has been standard on Komatsu products since 2001, allows for operating data on equipment andcomponents to be acquired in essentially real time. This allows
us to propose optimal preventive maintenance services basedon the condition of each individual piece of equipment.
This data-based business is only possible because
Komatsu develops and produces Key Components in-house,
which allows us to design these components with monitoring
technologies in mind. Thinking about future value chain strategies thus also points to the importance of continuing ourcurrent component strategies. However, the technologicalstrength of Komtrax is not the only asset Komatsu has forevolving its value chain businesses; we can also capitalize on
the last-mile contact points with customers provided by our
distributor network. To ensure that Komatsu can always be an
indispensable partner to customers, capable of resolving
their issues through open communication, it will be crucial for
us to ramp up our efforts across the value chain.

2. Value chain strategies
Komatsu is transitioning to a business model focused on combining solutions and products, but this change in approach will
not change the fact that Komatsu’s core offering—its source of
earnings—is its products. We are working to improve the valueof our products through means such as automation and electrification. However, if we are to ensure that customers cancontinue to use Komatsu products with peace of mind from themoment they purchase to the day they give away, we will needto develop value chain businesses in areas such as sales ofparts for post-sale equipment and maintenance and repair
services.

Since I assumed the role of the President in 2019, we havecontinued to face unexpected contingency, such as the
COVID-19 pandemic and the materialization of geopoliticalrisks. In these uncertain situations, I have endeavored toquickly and flexibly judge the circumstances, make decisions,and then effectively explain these before enacting them andtaking responsibility for creating results. This is the process I
have emphasized in fulfilling my role as the President.
The Komatsu Way, which describes the guiding principles
for our actions at Komatsu, stresses the importance of anemphasis on workplaces to exercise good judgment based on
the reality thereat. Komatsu has continued to grow by

Role of the President in navigating
uncertain waters to reachenvisioned future

Komatsu will continue togrow by creating new value
through teamwork amongits diverse people.

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Komatsu Report 2023

capitalizing on the strength of its frontline capabilities, whichenable us to identify issues, exercise good judgment based onreality, make decisions, and execute reforms based on thesedecisions. If I look back at my career thus far, I cannot help but
see that my capacity for judgment, decision-making, andaction needed in corporate management was honed throughthe wisdom I gained from experience and from action, by
immersing myself in a given situation and truly engaging withthe reality of its conditions.
At the same time, the role of the President is not something I can carry out entirely on my own. Acting based on
judgments and decisions requires that I comprehensively
explain my reasons to the relevant parties. After the collapseof Japan’s bubble economy, the decision was made to close aplant in response to the decline in demand in Japan and totransfer the production operations of this plant to another. I
was the leader of this project. This gave me the opportunity
to experience the perspectives of both those to be transferred and those at the plant set to receive this transfer. This
experience taught me the true importance of thinking fromthe other party’s perspective. I was later assigned to a position as the U.S. plant manager. In this position, I had to oversee all areas of management, not just the production
technologies in which I specialized, but also tasks outside of
my area of expertise like production, quality, and cost management. As I spoke with employees with various areas ofexpertise, I was always careful to turn an attentive ear toward
their input, sometimes prioritize the proposals of others
above my own. Through this process, I sought to ensure that
we could function as a healthy team and organization.
As the President, I will seek to exercise flexible judgment andmake quick decisions and to offer earnest explanations before
moving to cooperative action, all while being mindful of the actual
circumstances and taking responsibility for the results. This is how
I will work to fulfill my role and ensure we can reach our envisioned
future, even in the changing operating environment.

People as the drivers ofsustainable growth
As Komatsu seeks to continue to create value and grow in thecurrent era of volatility and uncertainty, there can be no doubtthat its greatest asset will be its people. The ongoing growth ofKomatsu will require that we can develop human resources withfrontline capabilities built on the four Values (Ambition,
Perseverance, Collaboration, and Authenticity) that support us
in acting in accordance with the Komatsu Way and fulfilling our
purpose. Just like the good judgment exercised in corporate
management, frontline capabilities need to be honed throughthe act of accumulating wisdom based on experience andaction taken by tackling new challenges in one’s everyday work.
I have had the opportunity to experience many such challenges.
For my ability to grow through such varied experiences, I havemy talented supervisors from the past to thank. All of mysupervisors were people who would give me challenging andambitious goals while granting me a fair degree of responsibility
and authority. This challenging and motivating environment
helped me gain a great deal of insight while also feeling a strong
sense of accomplishment. The growth of one’s subordinates
hinges on the degree to which a supervisor can prepare opportunities to tackle new challenges and entrust these to theirsubordinates. I believe that stimulating such growth is one of
the most important tasks of management.
For creating new value it will be more essential to build ateam assembled based on the principles of diversity and inclusion. Each member of this team should embrace the values
handed down from our forebearers while also respecting theindividuality and skills of their diverse team members. It is myhope that our employees will be able to work with satisfaction
and pride and to grow together with Komatsu by creating newvalue through teamwork. For this reason, I am committed toadvancing initiatives based on the priority measure of “enrich
human resources base with diversity” defined in the mid-term
management plan. We will thus be conducting ongoing investments in human capital, the human resources that are our mostimportant management resource for creating new value.

Advancement to the next stage
together with all stakeholders
It is my goal to cultivate within Komatsu a corporate culture inwhich diverse people—, each one capable of exercisingautonomy in identifying issues and implementing the necessary reforms and improvements—, exercise teamwork toinnovate our technologies and business model and thereby
create new value and resolve social issues. To foster such a
corporate culture, I will share information on a global basis
and expedite the process of making and executing management decisions. This is how I aim to make Komatsu a company that maintains the trust of society and all of its otherstakeholders as a leading global company.
Building on the foundations our forebearers fostered overthe past century, Komatsu will continue to create new value
through manufacturing and technology innovation as it pursues Quality and Reliability over the next century. On this quest,
we will need to pursue “Creating value together” through working with all of our stakeholders. I hope you will join us in our
ongoing efforts to advance to our next stage to empower asustainable future for the next generation where people, businesses, and our planet thrive together.

Hiroyuki Ogawa
President and Representative Director
Chief Executive Officer (CEO)Komatsu Report 2023

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Data

History of value creation through ambition and collaboration
COVID-19
pandemic

Since its founding in 1921, Komatsu has continued to adhere to its Management Principle, which states:“We will pursue "Quality and Reliability" and maximize the total trust of the society and all stakeholders.”
By taking an earnest approach toward addressing the social issues that change with the times, we have kept growing until today through the creation of new value to resolve these issues.
Committed to improving lives and enriching societies around the world while preserving a sustainable environment
for future generations, Komatsu will continue creating value through manufacturing and technology innovation toempower a sustainable future where people, businesses, and our planet thrive together.

Bankruptcy ofLehman Brothers

Net sales and operating profit in Japan and overseas

Sharp rise in demand forconstruction equipment■ Net sales in overseas

'66

'67

'68

Operating profit

3,500

700

3,000

600

2,500

500

2,000

400

1,500

300

1,000

200

500

100

(Billions of yen)

Joy Global acquisition

History of global consolidated management■ Net sales in Japan
Operating profit

Net sales(Billions of yen)

Plaza Accord

'69

'70

'71

'72

'73

Competition with foreigncompanies

'74

'75

'76

'77

'78

'79

'80

'81

'82

'83

'84

Expansion of exports

'85

'86

'87

'88

'89

'90

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

'21

'22（FY）

Global consolidated management

Expansion of overseas production
Diversification

Customer value
creation

Selection and concentration

1921

1931

1961

1972

2008

2015

2023

Komatsu Ltd. was established to carry on
the operations of Komatsu Iron Works Ltd.
(established in 1917), which manufactured
mining machines for use in the Yusenji
copper mine located in Komatsu City,
Ishikawa Prefecture developed by Meitaro
Takeuchi, founder of Komatsu Ltd. Based ona firm belief that developing the machineryindustry in rural areas and promoting its
growth, as well as looking to transcend
national boundaries with high-quality
products, Meitaro Takeuchi emphasised theimportance of developing technology andmanufacturing products with an eye tointernational markets, even when hefounded Komatsu. The four "Founding
Principles" put forth by Takeuchi continue
to live on in the DNA of Komatsu today.

In response to a request from the Ministry ofAgriculture and Forestry, Komatsu succeeded indeveloping the Japan’s first crawler-type farm
tractor. While competitors gave up this challenge
at the prototype stage, Komatsu continued its
efforts with a strong commitment to developing
a unique product that others could not imitate.
Subsequently in 1932, Komatsu released the“G25 farming tractor” equipped with in-housedeveloped engine, thereby creating the foundations for the construction equipment operations
that are now Komatsu’s core business.

As the Japanese economy became more global,
market deregulation prompted the world’s largest
construction equipment manufacturer to enter
the Japanese market. In order to compete against
this major rival, Komatsu undertook the Project “A”
quality improvement project with a Companywide
commitment to improving everything, from thelevel of a single screw. This project culminated in
the development of a bulldozer that could compete with the U.S.-made bulldozers in only two
years. This commitment to overcoming adversity
through Quality and Reliability has been passed
down the generations in the form of ourManagement Principle.

As Komatsu began to expand its overseas
operations in a full-fledged manner, it came toface a rising need from harash overseas workplaces, of improving “Reliability on Machine
Availability” that is a comprehensive reliability
including after-sales service in addition to thereliability of machine such as durability. In the
Project “B” activities that kicked off in 1972,
Komatsu disasembled and analyzed equipmentthat had been operated for extended periods andotherwise collected actual operating data fromthe market for use in product development. These
activities form the basis for the business modelemphasizing relationships with customers that
Komatsu uses today.

Komatsu’s Autonomous Haulage System (AHS) is
the world’s first unmanned trucks with highprecison GPS and obstacle detection sensors
and controlled remotely from the central control
room. Previously, the mining operation required
multiple operator changes to operate dump
trucks on a 24-hour basis, but the introduction of
AHS has both ensured safety and improved
productivity under harsh operating conditions byeliminating operators. Today, more than 650
AHS-equipped units are in operation at largescale mines in Chile, Australia, and other locations, where they are contributing to massive
improvements in the safety, productivity, andeco-friendliness of customer workplaces.

Smart Construction is solutions that organicallyconnects construction workplaces data such as
land features, people, equipment, and materials
through ICT and visualize the customers’ entire
operation processes from survey to inspection.
This solution thereby contributes to the creationof the safe, highly productive, smart and clean
workplaces of the future. Through the combination of 3D data surveyed and generated bydrones and other IoT devices with high-quality
operations performed by ICT-intensive equipment, Smart Construction helps address various
issues surrounding customers’ workplaces suchas labor shortages.

To guide its efforts to contribute to the realizationof a decarbonized society, Komatsu declared its
challenging goal of achieving carbon neutrality,
virtually zero carbon emissions, by 2050. To
accomplish this goal, we are advancing various
initiatives, especially in electrification of construction equipment. Through the introduction ofelectric construction equipment that uses newbatteries and high voltage conversion units
developed based on the insights and technologies accumulated through the development ofhybrid equipment and electric forklifts, we arecontributing to reductions in society’s CO2
emissions.

Founding

Produced Japan's first crawler-type farm
tractor

Challenge to global level quality—
Entry of U.S. construction equipment
manufacturer into Japan

Realignment of awareness toward
customer perspective—
Transition from Reliability of Machine to
Reliability on Machine Availability

Succeeded in the world's first commercial
deployment of the Autonomous Haulage
System (AHS)

Starting Smart Construction
digital solutions for a workplace of the
futureChallenges to carbon neutrality
The first year for the market introductionof electric construction equipment

Founding Principles• Global Expansion• Quality First• Technological Innovation• Employee Development

Meitaro Takeuchi,
Founder

Challenge

Development of Japan's first farm
tractorValue ontribution to Japanese economy withC
the first made-in-Japan farm tractor

12

Komatsu Report 2023

Challenge

 ealization of quality on par with globalRlevel for competing with overseas
companies
Value


Improvementof global competitivenessof Japanese products

ChallengeI mprovement of Reliability on
Machine Availability(customer satisfaction)
Value xpansion of presence inEinternational market as
Japan-based global company

ChallengeI mprovement of safety and productivity
at mine sites
Value

• M
 itigation of accident risks throughunmanned equipment• Contribution to reliable resource supplies
by addressing labor shortages at mines•R eduction of CO2 emissions from minesite operation

Challenge

 esponse to labor shortages and improveR
ment of safety and productivity at construction job sites
Value

• E
 nhancement of process efficiency to
reduce accident risks• I mprovement of supply–demand balanceof construction industry by addressing
labor shortages•R eduction of CO2 emissions fromconstruction job site operation

Challenge

Contribution to the realization ofa decarbonized society
Value

Reduction of CO2 emissions throughdevelopment and market introduction of
low-carbon products
Komatsu Report 2023

13

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Corporate identity
As our business and strategies diversify further, we will strive to deliver our corporate identity through our global operation.

StrategyManagement
Principle

Management
Strategy

Corporate Social
Responsibility

Sustainability Policy

Komatsu’s Worldwide
Code of BusinessConduct
Founding Principles

The Komatsu Way

Komatsu’s Worldwide
Code of Business Conduct

ActionOur purpose

Our values

Sustainability policy

Our mission and vision

The values we cherish

Ambition
Strategy and Action

Perseverance

Collaboration

Authenticity

Management Principle

We will maximize the trust given to us by our stakeholders
and society through a commitment to quality and reliability.
Management Principle shows our basic stance regarding
business administration.
Management Strategy

Our current mid-term management plan, DANTOTSU

Value— Together, to “The Next” for sustainable growth(FY2022–FY2024), aims to generate a positive cycle forFounding Principles“Global Expansion,” “Quality First,” “TechnologicalInnovation,” and “Employee Development.” These are thefounding principles laid out by our founder, Meitaro
Takeuchi (1860–1928), and they continue to be upheld byour organization to this day.
The Komatsu Way
The Komatsu Way was developed to convey our sharedvalues and practices across different cultures, customs,
and generations.

Corporate Social Responsibility

We believe that our very business is a Corporate Social
Responsibility.

The work that we do directly supports the growth andimprovement of our communities and society in general.

With people

With business•W e provide an environment where diverse•W e contribute to society through our busi-•T hrough all of our business activities, we

healthily as one team, with respect for eachwith safe and highly productive products,

and preserve the global environmentand global employees can work safely andindividual, and with satisfaction and pride.

•W e nurture employees who can take onchallenges in various jobsites and regions,create new value together with customers,
and contribute to the realization of a sustainable society.

•A s Komatsu Group, we shall respect humansustainable growth.

Komatsu Report 2023

What we do to empower a sustainable future where people, businesses,
and our planet thrive together

Actionresolving ESG issues and improving earnings to achieve

14

Since Komatsu's founding, we have always pursued "Quality and Reliability", and have made efforts to build strong relationships of trustwith our stakeholders based on our "Management Principle" of maximizing the total sum of trust from all stakeholders, including society.
Our pursuit of coexistence has been handed down through generations, and our basic stance is to contribute to society throughbusiness activities.
Our purpose is "Creating value through manufacturing and technology innovation to empower a sustainable future where people,
businesses, and our planet thrive together".
We will continue to address issues that are important to both a sustainable society and our business, grow as a corporate groupthat can flexibly respond to changes in society and the external environment, further enhance our corporate governance, and contribute to society with our stakeholders.

Guidelines shaping shared understanding behind business activities

Strategy​

Business continuity guidlines for business activities

Komatsu’s Worldwide Code of Business Conduct
Compliance with the rules of business community is
considered a top priority at Komatsu. The rules are notlimited to laws and regulations but also include rules thatare generally recognized and respected in society.

rights related to all of our businessactivities.

ness activities by providing our customers

services, and solutions that realize sustainable infrastructure development, resource
development, and a recycling-oriented
society.

•W e build relationships with our business

partners and local communities that enablemutual trust, fairness, co-existence, andco-prosperity.

•W e comply with the rules of society, includ-With the planet
strive to reduce our environmental impact
through the use of advanced technologies.
•W e strive to increase both global environ-mental conservation and business growththrough manufacturing and technologicalinnovation.

•W e pursue collaboration and value creation
with our stakeholders toward a sustainable
planet and future.

ing laws and regulations, and strive to

respond sincerely to the requests andexpectations of all stakeholders, including
society.

Komatsu Ltd.
President and Chief Executive Officer
Komatsu Report 2023

15

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Material issues for sustainability (Materiality)

Changes in external environment and of ESG issues

Environment & energy

Politics & economy
Growing competition between US and China andeconomic security risks
China: impacts of domestic policies and economic/
diplomatic policies
Growing geopolitical risks (Ukraine situation etc.)
Unstable supply chains
Need to increase ability to address contingencies(including infectious diseases and natural
disasters)

 rowing momentum toward climate change andG
decarbonization(COP26: 1.5° Celsius target confirmed)
Acceleration of carbon neutrality
Shift to EVs (automobile industry)Water security and biodiversity conservation
Growing green investments and rising demandfor information disclosure

Technologies

Society & values

Acceleration of digital transformation
Advancements in leading technologies and open
innovation (automation, electrification, andremote-controlling, AI, etc.)
Expansion of SaaS (Software as a Service)Evolution of Data Analytics
Growing cybersecurity risks

 revalence of diversity and inclusionP(gender, people with disabilities, LGBTQ, etc.)
Progress with diverse workstyles
Growing importance of employee engagement
Rising societal demands for human rights andcorporate ethics
Strengthened governance and risk management

Komatsu’s material issues (materiality)
Relationship with SDGs
With people
With businessWith the planet

16

Material issues (materiality)

Employees
Genderequality

Industry,
innovation,andinfrastructure

Affordable
and cleanenergyKomatsu Report 2023

Decent work
andeconomic
growthSustainable
cities andcommunities

Industry,
innovation,andinfrastructure

Reducedinequalities

Responsible
consumption
andproduction

Responsible
consumption
andproduction

Partnerships
for the goals

Partnerships
for the goals

ClimateactionLife on land

Partnerships
for the goals

 ccupational safety and health and well-beingOEmployee engagement and job satisfaction
Diversity and Inclusion
Skills development and workplace retention

Human Rights

Respect for human rights

Customers roduct safety and quality
PProvision of solutions

Ethics /Governance orporate governanceCCompliance

Communities

Contributions to local communities

Environment

 eduction of energy usage and GHG emissions
RDevelopment of low-carbon/low-emissions
products, solutions, and business models
Forest conservation through business activities
Resource recycling and remanufacturing

Process of revising material issues
Komatsu utilized the following process in establishing its material issues while receiving third-party aid from Business for Social
Responsibility, a U.S.-based NPO.

1. Identification of sustainability issues

From a medium- to long-term perspective, sustainability issues that could have a material impact on corporate value creation
activities and business performance were identified based on past materiality analyses, international targets and standards,
reporting frameworks, management philosophy and strategies, and the importance and relevance to stakeholders, resulting in
the compilation of a list of 46 items.

2. Evaluation of identified sustainability issues

Meetings were held with the internal and external individuals* with regard to the identified sustainability issues in order to assess
and map the issues from the perspectives of business importance and impacts on sustainability (importance to stakeholders +environmental, social, and economic impact).
* The internal individuals included domestic and overseas officers (Directors, Global Officers, and other executive officers). The external individuals included institutional
investors and representatives from World Business Council for Sustainable Development, World Wide Fund for Nature Inc., Business & Human Rights Resource Centre,
customers, and partners.

3. Definition of material issues

Based on these analyses, the Company defined six material issues—environment, customers, employees, ethics and governance,
human rights, and communities—that were deemed to have material importance in terms of their impact on sustainability andtheir business importance.
Furthermore, the four areas of environment, customers, employees, and ethics and governance were identified as being ofparticularly high priority among these issues, and initiatives for addressing these areas have been incorporated into the growthstrategies of the mid-term management plan.

4. Approval of mid-term management plan by Board of Directors

The identified material issues were examined from the perspective of compatibility between our Sustainability Policy and the
SDGs. The issues were then approved by the Board of Directors based on the judgment that they were issues needing to beaddressed in order for Komatsu to achieve its business goal of generating a positive cycle for resolving ESG issues and improving
earnings to achieve sustainable growth.
Furthermore, key performance indicators (KPIs) were identified to guide progress toward the resolution of ESG issues throughthe advancement of growth strategies. The degree of accomplishment of targets for these KPIs is disclosed via the Company’s
integrated reports.
The KPIs of the mid-term management plan page 44

Development of low-carbon/
low-emissions products,
solutions, and businessmodelsHigh

The most importantareas• Provision of solutions• Product safety and quality

Impact on Sustainability(Importance to stakeholders)

In recent years, Komatsu’s operating environment has been becoming increasingly volatile and opaque. Trends seen in thischanging environment include the moves to promote digital transformation, carbon neutrality, and diversity and inclusion.
Komatsu views these trends as representing business opportunities, and we are developing foundations for sustainablegrowth based on this understanding. At the same time, we recognize the growing importance for us to contribute to the resolution of social issues through our business activities.
Based on this outlook, we revised our material issues over the three-month period from November 2020 to February 2021,
prior to the launch of the current mid-term management plan. Through this revision, Komatsu sought to increase its resilience
to changes in the operating environment and to business risks.
Initiatives for addressing these material issues have been reflected in the growth strategies of the mid-term management
plan in order to speed us toward our business goal of generating a positive cycle for resolving ESG issues and improving earnings to achieve sustainable growth.
Moreover, we examined the identified material issues from the perspective of compatibility between our Sustainability Policy
and the United Nations Sustainable Development Goals (SDGs). Through this process, we indicated relationships between 10
goals from among the 17 goals of the SDGs that have a strong connection to the Komatsu Group’s material issues.
Going forward, the Company will undertake regular materiality analyses and reflect the identified sustainability-related business risks and opportunities in management initiatives in order to respond flexibly to changes in the operating and management environment.

Corporate
governance• Occupational safety and health and well-being• Diversity and Inclusion• Employee engagement and job satisfaction• Skills development and workplace retention

Compliance

Employees

Human rights• Reduction of energy usage
and GHG emissions• Resource recycling andremanufacturing

Customers

Ethics / GovernanceCommunities

Low

Business ImportanceHigh

Environment

Komatsu Report 2023

17

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Business portfolio
We have continued to promote the selection and concentration of businesses since early 2000s. Today, we are working to
improve growth and profitability by concentrating our management resources on Construction, Mining and Utility Equipment;
Retail Finance; and Industrial Machinery and Others. Especially, for evaluating profitability, we emphasize the operating profit
ratio as an indicator of the earnings power of our business.
In our mainstay construction, mining and utility equipment business, we are continuing both investments in growth areas
and fixed cost management. At the same time, we are advancing toward sustainable growth by improving growth and profitability through the expansion of solutions business and value chain business. We are also considering M&A as one of theoptions to achieve this goal. In particular, we will cultivate the forestry machinery business into a third pillar of our businesses,
following the construction equipment business and mining equipment business.
In the semiconductor manufacturing equipment business, we are working to maintain and improve our high-profitability
foundations by promoting investment to capitalize on sharp rise in demand for the semiconductor manufacturing equipment.
In the industrial machinery business, our central customers are in the automotive industry. Accordingly, we are striving toenhance our earnings through incorporating the new demand arising from the changes in the external environment represented by CASE (connected driving, autonomous driving, sharing, and electrification).

High
Growth (% of net sales growth vs. previous year)

shows medium- to long-term direction of each business segment

Smart Construction

Semiconductor manufacturing
equipment
Forestrymachinery

Low

Battery-powered mining haul truck and members ofKomatsu GHG Alliance

Construction
equipment

Profitability (Operating profit ratio)

To contribute to sustainable, recycling-oriented forestry business, we are working on mechanization of all processes other than harvesting and forwarding, which have conventionally been manufactured and sold, such as planting and silviculture. In July 2022, we acquired Bracke Forest AB, amanufacturer of tree-planting attachments.

Mining Tunnel Boring Machine (TBM) for underground hard rock mining

Smart Construction

Miningequipment

We have introduced new applications, and developed the system for overseas expansion of Smart
Construction. In addition, we have developed a remote control system for medium-sized hydraulicexcavators, which can be linked with Smart Construction, and begun offering to customers.

Retail finance

Retailfinance

The retail finance business is expanding its coverage of growth markets in Europe as well as in
Asia, Africa, and Latin America. Financing of forestry machinery is also being accelerated as we
endeavor to expand the retail finance business in step with the growth of the construction,mining and utility equipment business while maintaining sound financial position.

Crawler planter equipped with Bracke-made attachments on Komatsu-made bulldozer

Semiconductor manufacturing equipment

High

•T
 he size of the colored bubbles indicates average sales for each business segment over the past 10 years(FY2012–2021).
• Forestry machinery and Smart Construction indicates the direction from FY2021 with construction equipment inparentheses.
•S mart Construction indicates solutions-related portion.

Komatsu Report 2023

Mining equipment

Medium-sized hydraulic excavator equipped with ahydrogen fuel cell (concept machine)

Forestry machinery

Industrial
machinery

18

Construction equipment

In traditional markets, we are promoting the electrification of construction equipment to achievecarbon neutrality and focusing efforts for the joint developments with our partners and the earlymarket introduction of different models. At the same time, research and development is being
advanced on fuel cells, hydrogen engines, and other new power sources.
As for strategic markets, sales promotions for CE series hydraulic excavators designed
for urban civil engineering were conducted centered on Asia. We also reviewed our organizational structure in Africa to transition to a structure that allows for quick responses to customer needs.

By promoting the introduction of mining equipment with automation technologies, the mining
equipment business is steadily expanding. We have deployed more than 650 units of Autonomous
Haulage System (AHS) have been deployed (aggregate as of June 30, 2023) and started automated operation trials of a large ICT bulldozer at customers’ site.
Meanwhile, we have formed the Komatsu GHG Alliance together with mining industry leaders
to work toward a shared goal of delivering zero-emissions equipment solutions. Alliance members
have since been working to advance Komatsu’s power agnostic truck concept for a haulage
vehicle that can run on a variety of power sources. In addition, we are also working to expand
solutions business by developing mining open technology platforms, which optimize the entire
mining operations.
In the underground mining field, we have advanced M&A related to hard rock mining equipment, the development of new products including new mining methods, and the structural reforms,
including the partial sale of production facilities for the underground coal (soft rock) business,
which are expected to shrink over the medium to long term.

Medium- to long-term direction of business portfolio transformation

Low

Major initiatives of each business segment

In response to global demand growth, semiconductor lithography light source production company Gigaphoton Inc., a Group company, constructed a new production facility that is anticipatedto its total production capacity by 2.5 times in comparison to the level from FY2020.

Industrial machinery

Group company Komatsu NTC Ltd., a manufacturer of machine tools and industrial machinery,received its first order for multiple cell tab molders and module production lines following its
full-fledged entry into the automotive battery manufacturing equipment business.

IL221-7 cell tab molder with slitter

Komatsu Report 2023

19

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Value creation process

InputsFinancial capital¥2,539.6 billion
Interest-bearing debt:¥1,053.8 billion
Growth strategy investments* ¥150.0 billion
Shareholders’ equity:* Figure represents aggregate total for period fromFY2022 to FY2024.

Human capital

64,343
Overseas employee ratio:
68%
Training investments per employee: ¥108,000
Number of employees:

Intellectual capital
Development bases:
Nine mother plants
R&D expenses: ¥90.6 billion (2.6% of net sales)
Utilization of information:

Approx.

730,000 units equipped with Komtrax** Figure as of June 30, 2023

Manufactured capital

Komatsu production bases:
Capital investment

69¥100.8 billion(excluding rental assets):

Social capitalBusiness Activities and Strengths (Construction and Mining Equipment Operations)

In the pursuit of sustainable growth, companies are expected to build robust yet flexible earnings structures that respond tochanges in the operating environment while addressing the increasingly more important ESG issues. With the strength of the
manufacturing platform it has forged over the years, Komatsu will respond to social needs by linking customers, distributors,
partners, and communities and all Komatsu workplaces through its DANTOTSU excellence.

Machine population over past 10 years: Approx.

Research anddevelopment

Procurement andproduction

Operations at customer workplaces

Product
cyclesin150 countries (construction, mining andutility equipment business)

Suppliers:

Approx. 2,700

Social contribution investments: ¥2.0 billion

216,078

Shareholders:Natural capital

9.9 PJ
Of which, renewable energy use: 1.3 PJ

Energy use:

Sustainability Policy

Sales and service distributors: 211 distributors

Products• In-house development and production of• Collaboration with suppliers (Midorikai)

performance

1. Midorikai (improvement of product quality,

key components underpinning product(engines, hydraulic components, electronic

enabling the following:

reliability, and competitiveness)

control units, etc.)

2. Stable supply of high-quality materials• Accelerated technological innovation• Linking plants (visualization) utilizing ICT

nologies with external insight• Cross-sourcing:achieved by merging core Komatsu tech(Open innovation)• Digital transformation• Product development systems ­tailored to
global market needs

Flexible global production and procurement
systems that are resilient to demand andforeign exchange fluctuations• DANTOTSU
Products:
Unrivaled products
in terms of environment and safety
standards, ICT
capacity, andproductivity• Full lineup of
construction andmining equipment• Product creation
focused on quality
and reliability• Mother plant structure enabling improve-

Steel (iron) use:

3.1 million m
1,484,000 tons
3

Profitability
Improvement

Resolution ofsocial issues• Enhancement of maintenance contract services

¥3,543.5 billion

Solutions
Construction
equipment• Improvement of QCD• Smart Construction(Quality, Cost, Delivery)
Mining equipment
achieved through closealignment of sales forecasts • Autonomousand production of spare parts
Haulage System• Global supply ofhigh-quality usedequipment, etc.

• Expansion ofReman business

Construction equipment• Skill transfer and TQM (Total Quality
Management)

Mining equipment

Human rights

With business

Customers

Ethics andgovernanceWith the planet

Environment

Founding Principles

The Komatsu Way• Free cash flow:¥37.0 billion• Total assets:¥4,875.8 billion

40.3%

Creation of
the safe,
highly productive,
smart and clean
workplaces ofthe future

Carbon neutrality
by 2050

Reduction of CO2
emissions from
customer
workplaces

Employees

CO2 emissions from product use (Scope3 Catgory11): 30.4 million tons (87% of total)

Employees

¥490.7 billion• Utilization of informationacquired through Komtrax
Plus• Global distributor network• Cultivation of distributor personnel• Brand management

With people• Operating profit:• Consolidated payout
ratio:• Utilization of informationacquired through Komtrax• Detailed support fromdirectly owned distributors

ment of QCD (Quality, Cost, Delivery)

Climate change impacts—Total CO2 (Scope1+2+3) emissions: 34.7 million tons

Services• Ongoing reductions to
occupational accidents• Employee engagementscores• Ratio of female managers

Human rights• Human rights due diligence

Customers• Number of workplaces
using Smart Construction• Number of AHS units
deployed• Development of automatedconstruction and mining
equipment

Ethics andgovernanceCommunities• Enhancement of governance• Entrenchment of compliance

Communities• Social contributions
through business activities

Environment

Note: 1 PJ (petajoule) = 1015J (joules)

Water use:

Outcomes• Consolidated
net sales:

570,000 units** Estimate of construction equipment operational atcustomer workplaces based on aggregate 10-yearsales volumes

Outputs

Komatsu’s Worldwide Code of Business Conduct• Plants with zero environmental impacts• Launch of eco-friendly
products• Growth of forestry machine
business• Expansion of Remanbusiness

Note: Amounts are consolidated-basis and either for FY2022 or as of March 31, 2023, unless otherwise noted.

20

Komatsu Report 2023

Komatsu Report 2023

21

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Businessoverview
Contents

24 Komatsu at a glance
26 Business overview—Business outline of Komatsu—Overview by business segment—Overview by region(Construction, Mining and Utility Equipment)

32 CFO Message

1
22

Komatsu Report 2023

Komatsu Report 2023

23

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Komatsu at a glance
Business

Global operations

Sustainability

Founding

Start of exports from Japan

Number of units equipped with
Komtrax

Decision-guiding priority

May 13, 1921

1955

Komatsu was quick to advance onto
the global stage beginning with theexport of construction equipment toArgentina and continuing with theestablishment of the first overseas
liaison office in India in 1964 andthen the start of overseas production in Brazil in 1975.

730,000

Komatsu introduced its first piece ofequipment with the Komtrax construction equipment operation
management system in 2001, andthis system has been supporting
global traceability of vehicle information and efficient operation forcustomers ever since.

SLQDC

Consolidated net sales

Ratio of overseas sales

Aggregate number of units
equipped with Autonomous Haulage
System (AHS)

Komatsu was founded in Komatsu
City, Ishikawa Prefecture by Meitaro
Takeuchi, whose aim was to contribute to the local economy.

3,543.5 billion¥

Komatsu’s consolidated net sales
have tripled since FY2001.
Approximately 90% of these sales
are attributable to the construction,mining and utility equipment
business.

239 bases*

1

Komatsu has developed a global
business through a network comprising 69 production bases, 89
sales bases, and 81 parts, training,
and remanufacturing bases.
*1Total for the construction, mining and utility
equipment business and the industrial
machinery and others business

Komatsu Report 2023

90%*

2

Traditional markets: 46%; Strategic
markets: 54%*3
Komatsu is characterized by a globally balanced distribution of sales.
*2 Construction, Mining and Utility Equipment*3 Traditional markets: Japan, North America,
Europe; Strategic markets: Latin America, CIS,
China, Asia, Oceania, Middle East, Africa

Global network

24

Innovation

661(As of June 30, 2023)(As of June 30, 2023)

Komatsu launched the world’s first
AHS in 2008, after which this system
has continued to contribute to thesafety and productivity at many
mines.

Komatsu makes decisions prioritizing the principles of SLQDC (Safety,
Law, Quality, Delivery, and Cost) tomaximize the total sum of trust given
to it by all stakeholders.

CO2 emissions
from product use

Down

21%

(Compared with 2010)

Komatsu is proactive in its efforts todevelop electrified equipment andother low-carbon products for contributing to reduced environmental
impacts. We aim to achieve a 50%
reduction from FY2010 by FY2030
and carbon neutrality by 2050.

Consolidated number of employees

Aggregate number of workplaces
using Smart Construction

Selected for the Dow Jones
Sustainability World Index*4

64,34328,51417consecutive years

70% of employees are nonJapanese, and 70% of Global
Officers are foreign nationals (locally
hired). We contribute to the successof customers through coordination
among our global team of diverse
individuals.

(As of June 30, 2023)

Since being introduced as an industry-first in 2015, Smart Construction
has continued to help address various issues surrounding workplaces
such as labor shortages.

Komatsu has been recognized as acompany exhibiting excellence interms of economic performance,
environmental conservation efforts,and social activities.
*4 A leading socially responsible investment
index compiled by S&P Global Inc. of theUnited States

Komatsu Report 2023

25

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Business overview
Business outline of Komatsu 
The Komatsu Group develops a global business centered on the manufacturing and selling machinery that is used in construction
and mining workplaces around the world. In FY2022, consolidated net sales amounted to ¥3,543.5 billion, of which more than
90% was generated by Construction, Mining and Utility Equipment. The remaining amount was attributable to Retail Finance andto Industrial Machinery and Others, which provides equipment for semiconductor and automobile industry.
In Construction, Mining and Utility Equipment, we have 60 production bases around the world. The hallmark of the business is
an appropriate global balance with approx.90% of sales coming from overseas and 10% generated in Japan. Komatsu positions
Japan, North America, and Europe as traditional markets while Latin America, CIS, China, Asia, Oceania, Middle East, and Africa
are considered strategic markets. Product and sales strategies are tailored to the characteristics of the respective regions. Of the¥3,286.7 billion in net sales for Construction, Mining and Utility Equipment in FY2022, 46% came from traditional markets while
54% was associated with strategic markets.

Breakdown of net sales by segment54%3,543.5 billion¥

Competitive position established by developing and producing “Key Components” in-house

Sales by region for FY2022 Construction, Mining and Utility Equipment (to outside customers)
Strategic markets

FY2022
Consolidated net sales

Komatsu’s strengths

46%

17%

Latin America

FY2022

4%

CIS

2%

China

14%

Asia

3,286.7 billion¥

10%

Oceania3%

Middle East

5%

AfricaConstruction, Mining, andUtility Equipment¥Traditional markets

3,286.7 billion*

Construction, Mining and Utility Equipment conducts the manufacture and sale ofmachinery used at a variety of workplaces such as construction and mining equipment,
forklift trucks, forestry equipment. In addition to the equipment itself, we also provide
maintenance, repair, and other services as well as solutions that improve workplace
productivity. Komatsu has thereby been able to establish a solid position as a global
leader in the construction and mining equipment field.

Retail Finance

¥

67.8 billion*

Komatsu conducts a retail finance business to help customers reduce their financing
burdens when purchasing products. We are able to offer optimal financial plans because
we are an expert in construction equipment, and we are exercising our unique strength incredit management by utilizing data from Komtrax, the system that collects machine
location and operating status.

Japan

North America
Europe

10%
26%
10%

1. In-house development and production of Key
Components
Komatsu defines important components that determine the performance of equipment, suchas engines, power trains, and hydraulic equipment, as “Key Components.” These components
are developed and produced in-house, and this policy on components has enabled us to
improve their performance like durability and fuel efficiency ourselves by incorporating various
innovative technologies, and to add value enhancing the Quality and Reliability of our products
such as the monitoring of component conditions by using ICT technologies.
Our policy on components has also been linked to our customer-centered development
and production system. In-house development and production of Key Components allows
us to produce the same quality products anywhere in the world, and to feedback customers’
evaluations and requirements for components to development promptly.

EngineControl valve

Piston pump
Travel motor
Major Key Components

2. Production system resilient to environment changes
By preparing a system to produce the same quality products at each plant around the world,
we are able to flexibly alter manufacturing plants or product destinations in response tochanges in the external environment. With this operation we call “Global cross-sourcing,” weare minimizing the impact of changes in the external environment on production and sales.
The benefits of this operation extend beyond ensuring business continuity in the eventof contingencies such as natural disasters. Global cross-sourcing also enables strategic
sourcing in response to fluctuations in regional demand, foreign exchange rates, or production loads. When demand for a given product suddenly spikes, we can avoid losses of sales
opportunities by supplementing products from another plant in addition to those from thedefault plant. When exchange rates increase manufacturing costs at a particular plant, we
can mitigate the impacts by altering the manufacturing plant.

Main units
Parts

Global cross-sourcing

3. Profitability of aftermarket business
Construction and mining equipment is generally used for around 10 to 15 years, and periodic
maintenance and repairs are imperative over this period. The monitoring technologies
installed in in-house-developed components enable us to offer extended warranty programwith maintenance contracts, and to propose parts replacements or overhauls at the ideal
timing according to the condition of a given piece of equipment. These measures reduce therisks of sudden breakdowns and contribute to flattening operating costs.
The aftermarket business through these measures is highly profitable, and its businessmodel, which generates stable revenues after equipment sales, is one of our strengths.

4. Reman (Remanufacturing components) businessIndustrial Machineryand Others¥188.9 billion*

Komatsu supplies light sources for semiconductor lithography system (Excimer lasers),
temperature-control equipment for semiconductor manufacturing, and wire saws for
cutting silicon wafers to the semiconductor industry. We also manufacture and sellmachinery for the automotive industry such as large size presses, sheet-metal machines.
Others include the production of ammunition for Japan Ministry of Defense.

We promote the “Reman business” at our Reman plants and centers in 11 countries aroundthe world. In this business, we collect components like engines and transmissions fromconstruction and mining equipment that has been operating at customer sites for long
periods of time. Through various processes involving disassembly, cleaning, salvage orreplacement of parts, reassembly, painting, and shipping inspections, these components arerestored to be like-new.
The Reman business is possible because we develop and produce Key Components
in-house. By supplying Reman components with the same quality assurance as new components at a lower cost, we contribute to both our customers’ business and the reduction ofenvironmental burden, such as the reduction of waste and CO2 emissions.

* Net sales to outside customers

26

Komatsu Report 2023

Komatsu Report 2023

27

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Business overview

Overview by business segment 
Construction, Mining and Utility Equipment

Business characteristics and strengths

Construction equipment represents a large portion of
the demand for the construction, mining and utility
equipment business, and is used at a wide range of
workplaces such as civil engineering and construction,etc. We offer products in a variety of models withdiverse specifications in classes ranging from lessthan one ton to more than 50 tons.
In hydraulic excavators, our mainstay product of
this business, we deploy a product strategy to provide
standard series model demonstrating power andproductivity also in high-burden workplaces, and CE
series model centering on operations in low-burden
workplaces according to customer applications. We
are also introducing advanced models that use
automation and electrification technologies.
We also supply Smart Construction, a solutionthat improves safety, productivity, and eco-friendliness on customer workplaces through the combination of 3D data surveyed and generated by drones
and other IoT devices with high-quality operations
performed by ICT-intensive equipment.

TopicsMain productsElectric
equipment
launches

Availability of“CE series” hydraulicexcavators(FY2021–2023*)* Includes projected launches(As of June 30, 2023)

8 models

Hydraulic excavators

Our aftermarket business is the provision of various service for the equipment
on site such as parts sales, periodic maintenance, overhauls, etc. Compared toconstruction and mining equipment itself, the aftermarket business has lessfluctuation in demand. Over the past decade, its sales have come to represent
around half of the total sales of the construction, mining and utility equipment
business and have become a stable source of revenue.
We are witnessing growth in the Reman business and genuine parts sales
through extended warranties with maintenance contracts, both of which are madepossible by our in-house development and production of Key Components.
In addition, our service proposal at the ideal timings that utilize themachine operating data collected through Komtrax is a source of strength.

26 countries

Wheel loaders

Overseas sales of
ICT-intensive
equipment

Aggregate numberof job site using
Smart Construction(FY2022)(As of June 30, 2023)

2,448 units
Bulldozers

In the mining equipment market, there are fewer
competitors than in the construction equipment
market, and the demand is centered on large-sized
equipment such as dump trucks. We have been
growing sales of high-value-added solutions suchas our Autonomous Haulage System (AHS).
Mining methods include “surface mining” used
when ore deposits are near the ground surface, and“underground mining” used when they are in the
deep strata. Depending on mining methods, thenecessary mining equipment differs.
In the medium to long term, demand for coal(soft rock) is expected to shrink, while that for hardrock such as copper and nickel will increase and its
deposits will move deeper underground. In responseto these changes in mining method and resource
demand, we are strengthening the underground hardrock mining business by developing new products
and mining methods and expanding our productlineup through M&A.

28,514Through sales activities conducted in the construction, mining and utility equipment business, we areable to identify our customers’ financing needs in atimely manner. In addition, Komtrax, which monitors
equipment location and operating status andremotely stops engines, is our unique risk mitigation
measure. We also have unique channels for reselling
end-of-lease equipment. As indicated above, thegreatest strength of our retail finance business is its
synergistic operation with our core business.

Komatsu Report 2023

Remanufacturing components(Reman)Sales growth rate(incl. parts andservice)

Aggregate numberof units equippedwith AHS(Compared with FY2021,
foreign exchange rates fixed)(As of June 30, 2023)

11.8%

Komatsu GHG
Alliance* members

10 companies

661units

LHDs(for underground mining)

Ground Engagement Tools(Bucket tooth, Undercarriage)

Periodic replacement parts(Oil, Filters, etc.)

Attachments(Hydraulic breakers, etc.)

TopicsUndergroundhard rock mining
product launches(As of June 30, 2023)

2019

421.8

9 models(Aggregate as ofMarch 31, 2023)

48%(FY2022)* Framework for sharing information and practicing
coordination among Komatsu and major mining
companies with the goal of realizing zero-emissions
mining operations

2020

2021

Growth rate ofReman business

Sales growth rate

13.5%(Compared with FY2021,
foreign exchange rates fixed)

Approx.

3 times(Compared with FY2010)¥443.6 billion
2022

(FY)

242.0

390.6

2018

2019

275.1

787.8

272.7

291.3

¥1,421.5 billion

1,082.3

954.6

358.3

421.8

¥376.8 billion¥588.5 billion

424.7

324.3

2020
Parts

587.5

390.6

¥456.1 billion

382.5

221.4

2021

2022

(FY)

Service, etc.

¥877.8 billion

Sales of parts
627.5

Portion of net sales forConstruction, Mining
and Utility Equipment

275.8

143.8

Net sales
Segment profit
Segment profit ratio

Equipment

Rope shovels

650.3
507.9
324.3

¥588.5 billion

424.7

205.8

196.8

183.6

225.6

2018

2019

2020

2021

Construction equipment¥289.3 billion
2022

(FY)

Mining equipment

Industrial Machinery and Others
Segment sales and profits
27.5%
17.9%

63.6

17.5

2018

70.9

23.9%
15.9%

66.4

12.7

10.6

2019

2020

71.9

Net sales
Segment profit
Segment profit ratio

28

2018

¥3,296.6 billion

2,564.4

1,976.0

227.3

13.5%

10.8%

7.3%

2,211.3

365.3

273.3

TopicsUltra-class hydraulic shovels

2,479.0

1,053.5

Main products

Dump trucks

10.3%

Sales of mining equipment(incl. parts and service)

Main products

Motor graders

Retail FinanceBusiness characteristics and strengths

14.7%

Business characteristics and strengths

Mining equipment
Business characteristics and strengths

Segment sales and profits

Parts and service (aftermarket business)​

Construction equipment

Business characteristics and strengths

31.8%¥85.6 billion
¥27.3

17.2

2021

billion2022(FY)

In the semiconductor manufacturing equipment field, we anticipate medium- to longterm growth centered on excimer lasers. This
growth is projected to be driven by the
popularization of 5G, AI, and Advanced
Driver-Assistance Systems and threedimensional structures for semiconductors.
As for the automobile manufacturing
equipment field, the automotive market ischanging amid trends like the rising investment in EV-related equipment. We areresponding to these trends through developing new products and entering into new
businesses.

TopicsMain products

Segment sales and profits

GIGAPHOTON INC.
production capacity
after constructon of
new production faciliity

Approx.
Light sources forsemiconductor
lithography system(Excimer lasers)

Wire saws for
cutting siliconwafers

Large size AC servo
presses for forming
automotive body panels

2.5 times(Compared with level fromFY2020)Komatsu NTC Ltd.

Entry into EV
battery
manufacturing
equipment
business

9.2%
203.2

18.6

2018

7.7%
177.6

13.7

2019

12.0%

9.5%

171.3

188.4

16.3

2020

22.6

2021

11.8%
190.9 billion¥22.6 billion
2022 (FY)Net sales
Segment profit
Segment profit ratio

Komatsu Report 2023

29

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Business overview

Overview by region (Construction, Mining and Utility Equipment) In traditional markets, we are aiming to further expanding
our presence through providing customer value by introducing automated, electrified, and other high-valueadded products, generating earnings through theaftermarket business, and transitioning toward solution
business.
In strategic markets, we are maintaining the highprofitability of our mining equipment business. At thesame time, we are deploying product and sales strategies
matched to market characteristics of each region in orderto steadily capture the increasing demand for construction equipment due to population growth andurbanization.

We are committed to delivering new value
by taking an earnest approach toward

Sales by region (to outside customers)(Billions of yen)
3,500

Middle East

Japan
North America
EuropeLatin America
CIS
China
Asia

Oceania

Middle East

Africa30

Komatsu Report 2023

indispensable partner to customers,

Oceania

2,500

Asia

Komatsu will continue to march toward the

China

2,000

CIS

1,500

Latin America

Europe1,000

North America

500

Japan
2018

2019

2020

2021

2022

(FY)

Market characteristics and Komatsu's initiatives by region
RegionTo ensure it can always be an

Africa3,000

0addressing customer needs.

Market characteristics / Komatsu's initiatives

Japan is a mature and relatively stable market with low volatility in demand. Here, Komatsu is deploying sales strategies focused onvalue chain businesses that take advantage of previously sold equipment. For example, we are steadily incorporating demand foraftermarket services with Komtrax and our extended warranties with maintenance plans. At the same time, we are transitioning tosolutions businesses centered on the Smart Construction solution, used and rental businesses.

North America is a market where customers are eager to pay high prices for high-value products and in which companies are rated notjust based on new equipment but on their total value proposition, including services, secondhand equipment, and financing. The
construction, mining and utility equipment business accounts for a large portion of Komatsu’s sales in this market, where we arepromoting sales of ICT-intensive equipment for construction, road, rental, and energy applications while also introducing the Smart
Construction solution.

Europe is a market with high awareness of and interest in CO2 emissions and other environmental issues as well as cutting-edge
technologies. Komatsu premiered electrified equipment models that use lithium-ion batteries in this market. This is also the first market
in which we began using hydrotreated vegetable oil, biodiesel, and other carbon-neutral fuels. Meanwhile, Smart Construction is being
introduced into countries such as Germany, France, and England.
Brazil accounts for the majority of demand in the Latin American market. When including other countries,
overall economic growth in Latin America is being driven by resource development, agriculture, and infrastructure investment. In Chile,
the world’s foremost producer of copper, Komatsu is strengthening component, service, and other aspects of the mining equipment
business that is a major source of its earnings. We thereby aim to capitalize on the robust demand for copper anticipated to emerge inconjunction with the global trend toward electrification.

With its rich mineral resources, the CIS region is a market representing substantial potential for Komatsu’s mining equipment business.
The region is also expected to see growth in demand for infrastructure development in conjunction with the urbanization trends being
seen in CIS countries. Seeking to capitalize on this demand, we established Komatsu Central Asia LLP in Kazakhstan in 2023, thereby
strengthening our structures for providing sales and services to CIS countries and other countries in central Asia.
China is a market populated by a wide range of manufacturers, including local Chinese manufacturers as well as foreign manufacturers
from Japan, the United States, Europe, and South Korea. Moreover, demand in this market is heavily influenced by government policy.
Komatsu’s sales strategies are focused on promoting sales of medium-sized and large equipment and on expanding its value chain
businesses.

In Indonesia, the largest market in the Asia region, demand is centered on mining equipment, whereas construction equipment is theprimary focus of demand in markets such as Thailand, Malaysia, and the Philippines. Demand in the region is easily influenced by the
economic measures of the region’s various countries. Komatsu seeks to accommodate the needs of a wide range of customers in Asia
through a product strategy that includes both standard models for high-burden work as well as models specially designed for lowburden jobs.
A majority of demand in the Oceania region is attributable to Australia. Komatsu caters to more than half of the construction equipment
demand in Australia associated with major urban centers in the southeast portion of the country. There is also strong demand formining equipment in the mineral-rich northeastern and western portions of Australia. Komatsu is serving this market by promoting
sales of ICT-intensive construction equipment in urban areas and introducing its autonomous haulage system (AHS) for mining
operations.
Demand in the Middle East is focused on construction equipment. There is a strong correlation between the price of crude oil anddemand for construction equipment in this region. Accordingly, brisk demand is being seen for construction equipment centered on
oil-producing countries against the backdrop of the soaring price of crude oil. In this region, Komatsu is taking an aggressive approach
toward sales activities targeting infrastructure development and other large-scale land-forming projects spearheaded by the national
governments of countries such as United Arab Emirates, Egypt, and Saudi Arabia.
Africa is an important market where sales of both construction equipment and mining equipment are expected to show strong growth.
Factors behind this growth are anticipated to include demand for developing road, power, and other infrastructure in conjunction withpopulation growth and urbanization. Another factor will be demand for development of the region’s wealth of mineral resources.
Moreover, many customers from areas outside of Africa, including Europe, China, and Turkey, are entering the African market.
Accordingly, Komatsu is working to accommodate such customers through the establishment of global support systems that spread
across the boundaries of different countries and regions.

Yasuji Nishiura

future together with its customers.

Senior Executive Officer
President, Construction Equipment Marketing Division

In FY2022, sales to outside customers in the construction,mining and utility equipment business amounted to ¥3,286.7
billion, a year-on-year increase of 28.4%. We faced a challenging operating environment due to factors including theongoing serious consequences of the situation in Ukraine aswell as supply chain disruptions, rising energy and raw material prices, and the global inflation trend. Even faced withthese challenges, the construction, mining and utility equipment business was able to achieve sales growth in all regions,
except for China and Russia, by improving product selling
prices and practicing cross-sourcing.
In this business, 46% of sales come from traditional markets while the remaining 54% is generated in strategic markets. The construction equipment business is expected to bea growth business. This outlook is baed on the projecteddemand for maintaining and upgrading basic infrastructure in
traditional markets as well as the rising demand associatedwith population growth and urbanization in strategic markets.
Higher safety and productivity as well as lower lifecycle
costs have always been things customers in traditional markets expect. Recently, however, we have also been seeing arise in demand from these customers for eco-friendliness andimproved workplace efficiency through ICT usage and digitaltransformation. To accommodate the increasingly sophisticated and complex needs of such customers, Komatsu is
working toward the automation, autonomous operation, electrification, and remote control of construction equipment witha focus on eco-friendliness, safety, and ICT. We are alsoendeavoring to optimize all processes across customer workplaces. Smart Construction, a solution we first launched in theJapanese market, is a prime example of these efforts. Thissolution is now being used to provide new value to customers
in a myriad of overseas markets, including North America,
Europe, and Australia.
Customers in strategic markets, meanwhile, primarily careabout fuel efficiency, costs, and durability. In certain regions,
we are seeing a rise in market participation by Chinese manufacturers, who compete by capitalizing on their low-priceproducts. Komatsu, however, seeks to remain above the frayof price competition by maintaining the same focus on
improving value across the value chain, encompassing
financing, parts and services, and rental and secondhand

equipment, as it does in traditional markets. Asia and Africa
are the strategic markets where we expect to see the mostpronounced growth. This is why strengthening of marketingstrategies in Asian and African markets has been defined as apriority under the mid-term management plan.
Komatsu is deploying a two-model line strategy to address
the diverse needs of customers in the Asian market. Based on
this strategy, we have introduced into this market the PC21010M0 standard series 20-ton class hydraulic excavator as wellas the PC200-10M0 CE series hydraulic excavator, whichboasts specifications optimized for urban civil engineering andother work. We have received a great deal of praise from customers for our provision of multiple high-quality and reliableoptions that can be chosen based on workplace applicationneeds. Based on this praise, we have introduced these products in China, Latin America, and other regions.
Africa is a market anticipated to experience rapid economic growth fueled by its rising population numbers andwealth of resources. To allow us to better cater to this market,
the Africa Division was set up at Komatsu Europe International
N.V. in FY2022. This department integrates organizations andfunctions related to main equipment units, parts and services,and financing to provide swift, one-stop support to customers
with a wide range of solutions.
Meanwhile, in our aftermarket business, which deals inparts and services and thereby generates 48% of the salesof the construction, mining and utility equipment business,
we are promoting global efforts to enhance digital marketingthrough the use of ICT such as online parts sales. At the sametime, we aspire to improve value across the entirety of thevalue chain for aftermarket service by promoting digital transformation for purposes such as AI-powered failure diagnoses.
Lastly, I would like to talk about Komatsu’s Brand
Management activities. These activities are part of our efforts
to make Komatsu an indispensable partner to customers anda fundamental aspect of our marketing efforts across theglobe. Going forward, Komatsu will continue these activities
based on the perspective of the customer and a commitment
to aiding in the achievement of its customers’ goals with theaim of realizing the safe, highly productive, smart and clean
workplaces of the future.

Komatsu Report 2023

31

Komatsu's vision

CFO Message

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Figure 2: F
 actors influencing net sales in construction, mining and utility equipment businessfrom FY2021 result to FY2023 projection(Billions of yen)

3,400

Foreignexchange
rates+421.0

3,200
3,000

Selling New additions
prices to consolidation
3,296.6＋9.3＋121.2

Volume＋180.7

Selling
prices＋116.8Foreignexchangerates(234.0)2,800

2,564.4

2,600

Takeshi HorikoshiNewadditions to 3,138.0
consolidation
̶Salesvolumes(41.4)

2,400
2,200

Director and Senior Executive Officer
Chief Financial Officer (CFO)

Net sales

FY2021¥112.1/USD¥130.4/EUR¥82.7/AUD

Positive factors

FY2022+732.2billion yen
Negative factors

FY2023 (Forecast)(158.6)billion yen¥134.8/USD¥140.3/EUR¥92.5/AUD¥125.0/USD¥133.0/EUR¥83.0/AUD

Figure 3: Factors influencing segment profit in construction, mining and utility equipment businessfrom FY2021 result to FY2023 projection
Selling prices＋121.2(Billions of yen)600

1. Review of FY2022 and Outlook for FY2023

500(1) Overview

operating profit, because of the strong demand in the construction, mining and utility equipment business centered on
North America and Asia as well as improved selling prices andyen depreciation.
As for FY2023, the second year of the mid-term management plan, we intend to once again institute large increases to
product selling prices in order to further heighten profitability.
This move will be made in light of the conservative foreignexchange outlook projecting yen appreciation, the expected
growth in wages in reflection of inflation, and the forecast risein forward-looking project expenses.

In FY2022, the first year of our mid-term management plan,
DANTOTSU Value – Together, to “The Next” for sustainablegrowth, we were forced to operate under difficult conditions,particularly in terms of production. These conditions were aresult of global supply chain disruptions and rising material
prices and distribution costs seen against the backdrop
created by the war in Ukraine and the economic recovery inconjunction with the dissipation of the impacts of the COVID19 pandemic. Nevertheless, Komatsu was able to deliver arecord-breaking performance with new highs of ¥3,543.5
billon for consolidated net sales and ¥490.7 billion for

450
400

300

113

70

Net sales (1.3%)(Billions of yen)

2.3%

2.6%

117

114

101

14.8%

12.9%

10.1%

7.1%

93

7.5%

85
12.1%

4.7%

79

83

12.9%

11.2%

100

12.3%

121

110

12.2%

11.2%

109

111

9.7%

10.7%

111

14.6%

109

106

10.3%

7.6%

135

112

11.3%

200

800

2,500

2,243.0

1,035.9

1,027.3500
01,127.3

23.9

1,356.1

1,612.1

2,501.1
2,021.7332.9

1,843.1
1,431.6

244.7

1,981.8

222.9

1,885.0

256.3

151.9

95.8

1,953.7 1,978.7

211.6

240.5

2,725.2

242.1

208.6

600

2,802.3
2,444.9397.8

1,855.0 1,803.0

490.7

2,189.5

250.7

174.1

200

167.3

0

(13.2)

2001

2002

2003

Komatsu Report 2023

491.0

400

317.0

268.5

3,382.0

67.0

2004

2005

Consolidated net sales (left scale)32

1,893.3

163.4
29.8

Positive factors+167.8billion yen

FY2022

Segment profit ratio
13.5%

+19.4
billion yen

FY2023 (Forecast)

14.8%

Negative factors

A. Foreign exchange influences

14.5%

3,543.5

3,000

1,000

463.0

I would now like to explain our analysis of segment profit in the construction, mining and utility equipment business from theperspectives of foreign exchange influences, increase in selling prices and production costs, and fixed cost management..

Operating profit(Billions of yen)

3,500

1,500

FY2021

10.8%

125

13.8%

4,000

2,000

̶

(2) Analysis of segment profit in construction, mining and utility equipment business

114

108

100

Foreignexchange Volume,
rates product(33.5) mix, etc.
(18.5)

275.8

Segment profit(JPY/USD)

121

Production
Costs
Fixed
(13.8)
costs(31.6)

250

Exchange rate​
126

Production
Costs
Fixed
(118.2)
costs(32.4)

New
additions toconsolidation

Selling prices+116.8New
additions toconsolidation
+0.8
443.6

350

Figure 1: Business results

130

Volume,product mix,etc.
Foreign +63.4
exchange
rates+133.0

550

2006

2007

2008

2009

2010

Operating profit (right scale)

2011

2012

2013

Operating profit ratio

2014

2015

2016

Exchange rate

2017

2018

2019

2020

2021

2022

2023
(Forecast) (Fiscal year)

In FY2022, the rapid yen depreciation trend sparked by theworldwide inflation and the policy interest rate hikes instituted in
multiple countries was beneficial to our financial result. Currently,
sales to Japan only accounts for about 10% of net sales in theconstruction, mining and utility equipment business. Conversely,around 40% of production is conducted in Japan where we
produce key components like engines and hydraulic equipment.
This difference between the 40% for production and the 10% forsales in Japan is the reason why foreign exchange influences
have such a notable impact on export sales denominated inforeign currencies (overseas sales). In terms of the value of the
yen against the U.S. dollar, a fluctuation in the exchange rate of¥1 is estimated to have an impact of ¥4.0 billion on segment
profit. Komatsu’s accounting and finance divisions are thus
taking steps to mitigate the impacts of foreign exchange rate
fluctuations by developing local financing frameworks to match
assets and liabilities based on currency.

Figure 4: I mpact of foreign exchange influences on
segment profit in construction, mining andutility equipment business
Domestic
production
Domestic
sales

Domestic
production
Overseas
sales

Overseas
production
Overseas
sales

Denomination of production of items for export from Japan in yen and sales in foreign
currencies → Impacts on segment profit from foreign exchange influences

Komatsu Report 2023

33

Komatsu's vision

CFO Message

B. Increase in selling prices and production costs

Turning next to Increase in selling prices and production costs,
the rise in material prices that began in the second half of
FY2021 drove up production costs, and thus had a negative
impact on financial result. Komatsu began instituting increases
to the selling prices of its products in FY2022 to counter therising material prices, and, by late in the fiscal year, the increase
in selling prices had come to surpass that of cost of sales.
However, selling price increases had not yet been able to absorb
the entirety of the impact of higher cost of sales from the period
encompassing both FY2021 and FY2022. Accordingly, in
FY2023 we intend to institute selling price increases of a similarlevel to those conducted in FY2022, and these increases are
expected to produce benefits that exceed the aggregate
impacts of the rise in cost of sales when looked at over thethree-year period from FY2021 to FY2023.

C. Fixed cost management

Last in our analysis of segment profit in the construction,mining and utility equipment business, I would like to talkabout fixed costs. Sales have fluctuated over the period from
FY2017 to FY2021. Komatsu has managed to keep fixed
costs flat, regardless of fluctuations in sales. Wage increases
and inflation are pushing up fixed costs with each coming
year. Even though, we have been able to absorb the impactsof the rising costs by pooling the insight of both frontline andmanagement organizations to move forward with steadfast
structural reforms and rationalization.
However, we are unable to completely mitigate the impact ofmassive increases in personnel and other expenses that
stemmed from the global inflation trend seen in FY2022 andFY2023. At the same time, there is a need for us to steadily
invest in future growth to accelerate the growth strategies of the
mid-term management plan. We will thus be prioritizing theallocation of our funds to the development of electrified equipment to achieve carbon neutrality as well as to products-­
automation and the DX Smart Construction solution. The rise in
fixed costs associated with these investments will also be amajor reason that we need to institute increases to selling prices.
In fact, Komatsu’s ability to secure profitability thus far has been
the result of instituting selling price increases in reflection ofrises in fixed costs and cost of sales.

(3) D evelopment of structure that is resilient todemand fluctuations

Komatsu has continued to develop an earnings structure thatis resilient to fluctuations in demand. Looking back at thishistory, we will see that sales of parts and other products
have grown to represent an increasingly larger portion of thesales of the construction, mining and utility equipment business over the period from FY2010 to FY2022, while the portion represented by sales of construction equipment tostrategic markets has gradually shrunk. This change is a
result of a rise in the portion of sales attributable to parts,
which see reliable sales volumes even in the construction andmining equipment markets that generally experience highdemand volatility. The increased emphasis on parts hashelped us develop an earnings structure that is resilient tofluctuations in demand. Going forward, we will further expand
aftermarket businesses in order to reinforce our value chain
to grant it even greater resilience to demand fluctuations.
34

Komatsu Report 2023

(1) Financial initiatives—Improvement of ROE

＋67.5

＋60

＋20
0
(20)

＋16.8

＋3.3

(0.7) (1.9)(12.3)(0.7) (2.6)(14.9)(40)(7.6) (9.5)(23.6)(38.5)(35.6)(46.1)(55.6) (52.3)

(60)
(80)
1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q

Selling price increases
Cost of sales increases
Net of selling price and cost of sales increases
Net of selling price and cost of sales increases (aggregate)

2Q

3Q

FY2023(Forecast)

4Q

Figure 6: Fixed costs(Billions of yen)
600
500
400
300
200
100
0

2017

2018

2019

Figure 7:
Inflation rates
2020(Source: International Monetary Fund)

Japan
North
America
Latin
America
EuropeAsia
Oceania
China
Other

2022

2023

2.0%

1.4%

7.5%

3.9%

9.7%

6.7%

8.3%
5.7%
6.5%
2.2%
8.2%

6.2%
4.3%
4.8%
2.2%
5.5%

2021

2022

FY2023 (Fiscal year)(Forecast)

Figure 8:
R&D expenses(Billions of yen)
120
100
80

74.8 73.8 77.5

90.6 93.5

60
40

0

2019

2020

2021

2022

2023 (Fiscal year)(Forecast)

Figure 9: Distribution of sales in construction, mining
and utility equipment business
(%)

80

XX

60

40

20

0

37%
14%
16%
33%
FY2010

Corporate governanceData

We took an accounting approach toward verifying improvements in corporate value. In this verification process, we looked
at two indicators: the increase in the total of market capitalizationand net interest-bearing debt with a focus on invested capitaland aggregate EVA® (Economic Value Added; Net Operating
Profit After Tax – Cost of capital) with a focus on ROIC and WACC
(Weighted Average Cost of Capital). We were thereby able toverify that corporate value was indeed improving from a longterm perspective as well as on a single-year basis in FY2022.

B. Improvement of free cash flow

To improve Komatsu’s corporate value, we remain mindful of
cost of equity as we monitor return on equity (ROE), a comprehensive indicator that accounts for profitability, asset
efficiency, and financial leverage, as our management indicator. Accordingly, estimating that our cost of equity is around
8% on a global level, we have set up ROE of 10% or higher as
the management target, which is exceeded the cost of equity
estimated. To expand equity spread (ROE – cost of shareholders’ equity), Komatsu works to both improve ROE and reduce
cost of shareholders’ equity.
As part of our pursuit of ongoing improvements to ROE,
we have used ROIC as an internal management indicator tomeasure improvements to asset efficiency since FY2017. To
control working capital appropriately in response to the volatility of market demand, we periodically monitor the cash
conversion cycle of working capital through ROIC, for whichinvested capital in the ROIC formula is defined by the corresponding working capital plus property, plant andequipment.
Looking at our balance sheet for FY2022, a massive
increase in inventories was seen due to production hikes
meant to accommodate sales growth as well as to supply
chain disruptions. The higher inventories had an adverse
impact on free cash flow.

(Billions of yen)

(Billions of yen)

4,500

2,000

4,000

1,500

3,500

1,000

3,000

500

2,500

0

2,000
1,500
1,000
500
0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Fiscal year)

Market capitalization (left scale)Aggregate EVA® (right scale)

Net interest-bearing debt (left scale)In light of this situation, free cash flow was introduced
among the internal management indicator used by Group
companies in FY2023 in order to facilitate improvements in
ROIC. The goal of this move was to make group companies
more conscious of changes to their asset efficiency in termsof rate, or better yet, amounts. As ROIC is an indicator thatcombines both profitability and efficiency, it has the flaw ofshowing improvements even in cases when profitability has
increased but asset efficiency has decreased. We break free
cash flow down to its components, namely 1) profit, 2) working capital, 3) investments in fixed assets, and 4) M&A investments, and display values for these components specifically.
This clarifies the absolute amounts and sources of free cash
flow needing to be improved. We will therefore be focusing on
improvements with regard to these components as we seek
to maximize future cash flows. Through this approach, we
expect to be able to generate free cash flow of approximately¥350.0 billion in FY2023.

20

 onstruction, mining and utilityCequipment businessIndustrial machinery and others

100

Sustainability

Figure 10: Corporate value and EVA®

A. Verification of corporate value(Billions of yen)

＋40

Mid-term management plan

2. Corporate value improvement initiatives of accounting and finance divisions

Figure 5:
Increase in selling prices and production costs＋80

Business overview

14%
23%
14%

 onstruction equipment
C(strategic markets) onstruction equipment
C(traditional markets)

FY2022

Parts, etc.

Figure 12: Free cash flow

(Billions of yen)
1,400

1,227.2

1,200

837.6

805.3

Free cash flow = (Operating profit × [1 – Effective tax rate] + Net working capital +1) Profit
2) Working capital[Depreciation and amortization – Investments in fixed assets] – M&A investments)
3) Investments in fixed assets4) M&A investments(Billions of yen)

988.0

1,000
800

Mining equipment

48%

Figure 11: Inventories

＋400

793.9

＋200

152.0

161.9

171.0

［

Excluding Joy

Global acquisition

191.1
104.3

43.7

600

］

122.8

157.4
37.0

15.3

0

400

(200)

(229.4)

200
(400)
0

19/3

20/3

21/3

22/3

23/3

(600)

2013

2014

2015

1) Profit
2) Working capitalFree cash flow

2016

2017

2018

3) Investments in fixed assets

2019

2020

4) M&A investments

2021

2022
(Fiscal year)

Komatsu Report 2023

35

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

CFO Message
C. Cash allocation policy

Komatsu has continued to act in accordance with a cash
allocation policy of allocating the cash we have generated inwell balanced manner to 1) capital investments (growth strategies), 2) debt reduction (maintaining financial soundness),and 3) shareholder returns. Investments for growth are imperative to our ability to continue issuing consistent shareholder
returns. For this reason, our basic approach is to allocate
around 50% of operating cash flow to capital investments. In
addition to these investments, we will conduct shareholder
returns targeting a consolidated payout ratio of 40% or morewhile maintaining our industry’s top-level financial position.
Komatsu also recognizes that M&A activities are an
important option for pursuing growth and therefore takes aproactive approach toward M&A activities. We will not rely
purely on internal resources to address any insufficiencies inour business portfolio when compared to the portfolio we
envision; technical partnerships, M&A activities, and othermeans of incorporating external resources are also constantly
examined as a viable option for addressing suchinsufficiencies. At the moment, the principal targets for M&A
activities are solutions business, the underground hard rockmining business, the Forestry machinery business, and electrification and other components.
Hard rock refers to minerals other than coal, such ascopper or nickel. Demand for hard rock minerals is expected
to grow in the future. Forestry, meanwhile, is drawing global
attention as a growth industry. This is because of the steadyincrease in global timber production volumes anticipated for
purposes such as securing alternative materials to plastic
amid rising environmental awareness. In FY2022, weannounced a total of three M&A activities in these two fields.
Komatsu will continue to aggressively expand its businessthrough M&A activities based on the principle of choosing
candidates that promise synergies with its existing businessportfolio. After an acquisition, we compare the ROI and WACC
of the acquired company and confirm the synergy benefits aspart of the process of monitoring their contributions toimprovements in corporate value.

Operating cash flow

Capitalinvestments

Figure 13: Basic cash allocation policy for period of mid-term management plan (FY2022–2024)
Standard investments

35–45%

Lease/rental investments

5–15%

Total

50%

Shareholder returns

25–35%

Debt repayment

15–25%

Allocate 50% of operating cash flow toinvestments for growth

Consolidated payout ratio of 40% or more
Industry’s top-level financial position+
M&A activities+αFigure 14: M&A activities announced in FY2022
Field

Underground hard rock mining

Forestry equipment

Company name

GHH Group GmbH

Mine Site Technologies Pty Ltd
Bracke Forest AB

D. Support for suppliers related to funds

Overview

Manufacture of underground hard rock mining equipment

Provider of operational optimization platforms for undergroundmining that leverage communication devices and position­tracking systems

Development, manufacture, and sale of application-specificattachments for silviculture

A standard approach toward improving cash flows is toextend payment terms for payables. Komatsu, however, actually shortens the terms on which it pays suppliers. In FY2023,
we stopped issuing notes and checks to suppliers applicable
under subcontractor-related legislation and transitioned to100% cash payments. This may seem to be a move that is
disadvantageous in terms of cash flows. However, atKomatsu, we recognize that the suppliers of the materials,
parts, components, and other items we use are importantpartners underpinning the success of our manufacturing
operations. Particularly critical suppliers have been invited tojoin the Midorikai, a collaborative organization comprised of
Komatsu and key suppliers. Of our roughly 1,400 suppliers
across Japan, 156 are members of the Midorikai, and items
sourced from these members account for around 80% of
36

Komatsu Report 2023

Constant examination of possibility ofutilizing external resources

Location

Germany
Australia
Swedentotal procurement amounts. Moreover, roughly 60% of thesemembers are applicable under subcontractor-related legislation. Based on its vision of working toward growth together
with the important partners that are its suppliers, Komatsu
takes a number of steps to aid these partners. Shortening
payment terms is a means of supporting our partners.
Looking ahead, we will continue to work together with
Midorikai members to achieve higher levels of quality, reliability, and product competitiveness.
Moreover, the transition to 100% cash payments to suppliers applicable under subcontractor-related legislation lines
up with the policies for payments to subcontractors
described in the future-oriented transaction practices proposed by the Ministry of Economy, Trade and Industry and theJapan Fair Trade Commission.

(2) Non-financial initiatives—Resolution of ESG issues
A. First foreign currency-denominated SustainabilityLinked Bonds issued by a Japanese company

As part of its efforts toward the challenging goal of achievingcarbon neutrality by 2050, Komatsu became the first Japanesecompany to issue foreign currency-denominatedSustainability-Linked Bonds (U.S. dollar-denominated seniorunsecured straight bonds) in October 2022. SustainabilityLinked Bonds are bonds for which the terms and conditions are
subject to change depending on the achievement status of thetargets for key performance indicators (KPIs) predetermined by
the issuer. Through its growth strategies, Komatsu aims togenerate a positive cycle for resolving ESG issues and improving earnings by creating value for customers. The issuance ofSustainability-Linked Bonds is anticipated to help accelerate
sustainability management for the purpose of achieving sustainable growth. The KPIs defined for these bonds relate notjust to reduction of CO2 emissions from Komatsu bases anduse of Komatsu products but also to contributions to reductionof CO2 emissions from the greater society, which is to beachieved by extending our efforts throughout customer workplaces to optimize the processes thereat.

B. Quantification of ESG impact

The foundation of Komatsu’s management is to maximize its
corporate value through the pursuit of Quality and Reliability.

We believe that corporate value represents the total trustfrom society at large and all stakeholders surrounding us. This
principle coincides with the idea that management emphasizing both financial and non-financial information is more effective at improving corporate value, an idea that has been
gaining traction amid the shift away from focusing primarily
on financial information to place greater importance on ESG
and other non-financial information.
Based on this recognition, we use the Yanagi Model, whichlooks at the relationship between ESG factors and a company’s price-to-book ratio, to determine how Komatsu’s
efforts to address ESG issues are contributing to its corporate value. Analyses based on this model have revealed acorrelation between Komatsu’s corporate value and a part ofnon-financial initiatives like human capital investments andCO2 emissions reductions.*
At the moment, we are utilizing the impact-weighted
accounts approach proposed by Harvard Business School tomeasure the monetary impact on society from Komatsu’s
business. I believe that tracking the impacts of our ESG initiatives in such manners and using this information to propel
efforts to resolve ESG issues and thereby drive improvements
in corporate value is a new and important role for our
accounting and finance divisions.
* Analyses conducted jointly with ABeam Consulting Ltd.

Figure 15: Overview of Sustainability-Linked Bonds
1. Currency

U.S. dollars

3. Format

144A / Reg S

5.Issuance date /payment date

October 6, 2022 / April 6 and October 6 every year beginning with April 6, 2023

2. Issuance amount / term US$600 million / 5 years
4. Type of bonds

6. KPI / SPT*

7. Interest rate
8. Credit rating

ESG bonds (Sustainability-Linked Bonds)

SPT1.1: 45% reduction of the Scope 1+2 CO2 emissions (Intensity) (KPI1) from production by March 31, 2025 from2010 baseline
SPT2.1: 24% reduction of the Scope 3 CO2 emissions (Intensity) (KPI2) from use of products by March 31, 2025 from2010 baseline
5.499% per year during the period from and including October 6, 2022 until October 5, 2025
From and including October 6, 2025, the interest rate shall be increased by 10 bps if SPT 1.1 has not been satisfied
and increased by 15 bps if SPT 2.1 has not been satisfied as of March 31, 2025.
A2 (Moody’s Investors Service)
A (S&P Global Ratings)* Sustainability performance targets, which are measurable target figures of KPIs over the specific time period as stated by the issuer.

Figure 16: Impact-weighted accounts calculation framework for products
Framework

Major impact indicators
Quantity

Impact type

• Sales volume

Reach

Impact assessment dimensions
Dimensions of customer usage

Duration

Access

Quality• Period of
impact(period of use)

• Affordability• Additional
impact onsocially disadvantaged
individuals• Basic needs• Effectiveness• Health andsafetyOptionality

Environmental use

Use•A lterability of
products•A vailability of•G as emissions
information•E nvironmental• Excessivenesspollutionof profits due
to market
monopolization

Post use• Recyclability

Note: Prepared by ABeam Consulting Ltd. based on A Framework for Product Impact- Weighted Accounts, George Serafeim and Katie Trinh, 2020, and Accounting for
Product Impact in the Consumer-Packaged Foods Industry, Amanda Rischbieth, George Serafeim, and Katie Trinh, 2020 and 2021

Komatsu Report 2023

37

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Mid-termmanagement plan
Contents

40 Mid-term management plan (FY2022–FY2024)
DANTOTSU Value

Together, to “The Next” for sustainable growth

44 ESG solutions through growth strategies—KPIs of mid-term management plan

46 Special Feature: Growth strategies ofthe mid-term management plan
—DX Smart Construction—Automation development of construction andmining equipment—Challenges to carbon neutrality—Evolution of value chain strategies

2
38

Komatsu Report 2023

Komatsu Report 2023

39

Komatsu's vision

Mid-term management plan
(FY2022–FY2024)

Business overview

Mid-term management plan

A new chapter of value creation to the next 100 years

Create work tasks andwork orders◆ Safe, highly productive, smart
and clean workplace of the future◆ Digital transformation◆ Carbon neutrality

Solutions (Optimization level ofcustomers’ entire operation processes)

Ensuring a sustainable future for the next generation

Maximizing customer value

Level 5To the next stage for the workplace of the future

Level 4

Optimization of
construction planning

Level 3

Data monitoring

Level 2Visualization of
topography / workplace

Level 1

Workplace digitalization

Products (Level of automation and autonomous operation)

Conventional

We have defined our purpose to be “creating value through manufacturing and technology innovation to empower a sustainable
future where people, businesses, and our planet thrive together.” Our basic approach to achieving this is to pursue "Quality andReliability” and to maximize the total trust from society at large and all stakeholders surrounding us.
In our mid-term management plan that has been formulated as a strategy to implement this management principle, we are
striving to create safe, highly productive, smart and clean workplaces of the future with customers, in order to achieve our longterm vision of creating a positive cycle of solving ESG issues and improving profitability through the creation of customer value,
thereby achieving sustainable growth.

Toward achievement of our vision—
DANTOTSU Value and Roadmap to workplace of the futureIn order to achieve our vision, we are working to create DANTOTSU Value (New Customer Value) which integrates DANTOTSU
Products (advancement of machines), DANTOTSU Service (advancement of machine operations), and DANTOTSU Solutions(advancement of workplace operations).
Our roadmap to workplace of the future shows such a value proposition toward creating the workplaces of the future andachieving carbon neutrality, resolving our customers' issues with a sophisticated combination of solutions that optimize their
entire operation processes and products that are highly compatible with those solutions.

DANTOTSU Value

Customer value creation that generates a positive cycleof ESG solutions and improvement of earnings(Optimization platform and advanced solutions)Sustainable growth40

Komatsu Report 2023

Level 3

Advanced solo
automation

Level 4

Advanced collaborative autonomous
operation

Improvementof earnings

Level 2

Internal combustion

Energy recovery

Level 3

Micro-mix hydrogen
combustion
Energy recovery

Level 4

Full electric
Plug-in / Battery

Level 5

Fuel cells

Innovate manufacturing technology and develop new value chain

Approaches to growth strategyAs we march toward achievement of our vision, the current external environment has been becoming increasingly volatile and uncertain.
The market environment for our mainstay construction and mining equipment business is expected to experience moderate growth in the medium to long term as a result of population growth and urbanization, primarily in emerging countries,
together with steady investment in infrastructure renewal in developed countries. In the short term, however, demand is
expected to be highly volatile due to various external environmental risks.
In order to achieve sustainable growth in this environment, we recognize that a key point of the growth strategies will be
responding to three management tasks: 1) Continuing investments in growth areas such as electrification, automation, forestry
equipment, and underground hard rock mining, 2) Further improving profitability in our existing businesses, and 3) Enhancing
corporate resilience less susceptible to the changes in the external environment such as demand fluctuations.

SustainablegrowthBoosted range by
growth strategy

Joy Global
acquisition

Assumed range along withdemand changes

Pandemic

DANTOTSU
Service(Visualization of machine operations
and preventive maintenance)

Level 5

Advanced decisionmaking autonomous
operation

Products (Improvement of equipment efficiency / Reduction of CO2 emissions)Level 1

(1) Continue investments in growth areas(2) Further improve profitability(3) Enhance capabilities to respond to external
environmental changes

Advancement of machine
operations(Automation, autonomous operation,
electrification, and remote-controlling)

Level 2

Advanced operation
support(Net Sales)

Advancement of workplace operations

Advancement of machines

Level 1

Limited operation
supportManagement tasks in the new mid-term management plan

DANTOTSU
Solution

DANTOTSU
Product

Data(For Smart Construction)

Together, to “The Next ” for sustainable growth

Develop safe, highly productive,
smart and clean workplaces ofthe future with customers

Corporate governanceRoadmap to workplace of the future

DANTOTSU Value

ESG
solutionsSustainability

Growthinvestment
areas

FY16

FY17

FY18

Mid-term management
plan before last

FY19

FY20

FY21

Previous mid-term
management plan

FY22

Technology enhancement areas
Components, Systems/Software, Automation, autonomous
operations, electrification, and Remote-controlling, etc.
Growth business areas
Solution business, Value chain business, Forestry machinery business, and Underground hard rock business, etc.

FY23

FY24

Period of new mid-term
management plan
Komatsu Report 2023

41

Komatsu's vision

Three pillars of growth strategies

1. Accelerate growth

2. Maximize

by means of innovation• Create new customer values
by optimizing workplaces• Tackling the challenge ofcrafting values (products andsolutions) for carbon
neutrality

earnings power

Growth Strategies

Creating DANTOTSU ValueManagementfoundationCorebusiness• Expand presence in key­emerging markets• Further growth from evolutionof value chain business

3. Enhance corporate
resilience• Drive efficient business operations and reinforce risk management• Enrich human resources base with diversity

Common tasks among the three pillars• Expand partnerships• Promote DX in all areas

In our pursuit of future growth, we continue to focus investment on­strategically critical technology and business areas as it accelerates­initiatives to achieve practical application and commercialization of new
innovations therein.
We are making steady progress in the promotion of DX Smart
Construction and other digital solutions for construction workplaces andin the development and market introduction of electrified construction
equipment, which is being advanced together with partners like Proterra
Inc. of the United States. In the mining equipment business, meanwhile,
the aggregate number of units equipped with our Autonomous Haulage
System (AHS) is showing smooth growth. We are also moving forward withthe automation of mining equipment and development of mining open
technology platforms. Through these efforts, we are forging ahead with afull-fledged rollout of digital solutions for optimizing mining workplaces.

Corporate governance

Data

In order to achieve further growth and improve profitability, we will maximize profit-earning opportunities in our existing businesses by expanding
our presence in growth markets and evolving our value chain business.
Impressive growth is being seen in sales of the hydraulic excavatorswith urban civil engineering specifications (CE series) introduced mainly in
Asian markets. In order to build a business structure less susceptible tofluctuations in demand, we are also strengthening our aftermarket­business by expanding extended warranties incorporating maintenancecontracts that draw on our strengths in in-house manufactured­components and IoT (Komtrax) use, and expanding the product lineup
including attachments, etc.

With regard to the management foundation supporting business activities
in the uncertain external environment, we are working on structuralreforms such as company integration and operational integration, as wellas building a supply chain that is resilient to environmental changes byfurther strengthening cross-sourcing structure and increasing multisourcing ratio of parts. Through these efforts, we are continuously­improving the efficiency of our business operations and enhancing ourability to respond to external environmental risks.
In human resource measures, we are actively working to deploy talentmanagement measures centered on the promotion of diversity and­inclusion and developing human resources with digital knowledge andtechnologies.
As a common theme among the three pillars of growth strategies, we areworking on M&A and open innovation activities. In FY2022, we haveentered into an agreement to acquire three companies in the forestry
machinery business and underground hard rock mining business. We will
explore further growth opportunities with these companies by creatingsynergies in future.
In addition, we are working on business reform and productivity
improvement by promoting DX in all areas, from the digital solutions forcustomers, to the internal processes including R&D, production,­procurement, sales, marketing, services, and administration functions.

Global HANSEI Operation Center

The GHH MK-42 truck manufactured by GHH Group GmbH ofGermany (acquired in June 2023)

Concerning management targets in the mid-term management plan, we have set the same targets from the previous plan, thatis, industry-leading “Growth,” “Profitability,” “Efficiency,” and “Financial position” in light of the market environment that is highly
volatile in the short term. In the retail finance business, we have also maintained the targets of financial position and efficiency.
In ESG targets, we have set the prior targets of reduction of environmental impact and a new target of “Carbon neutral by2050” as challenging goal. With respect to shareholder returns, while placing priority on focusing investments in growth areas,
we will continue to work for stable dividends for shareholders and maintain the policy of keeping a consolidated payout ratio of
40% or higher.
Item
PC210LCE-11 electric hydraulic excavator(to be introduced to market in FY 2023)

2. Maximize earnings power

Komatsu Report 2023

Sustainability

Management targets

1. Accelerate growth by means of innovation

42

Mid-term management plan

3. Enhance corporate resilience

The three pillars of growth strategies defined in the mid-term management plan were formulated in light of the achievements
and challenges from the previous mid-term management plan, backcasting from our vision and roadmap to workplace of the
future, and the management issues arising from changes in the external environment.
We are enhancing our foundation for sustainable growth by positioning trends like digital transformation (DX), carbon­neutrality, and diversity and inclusion as business opportunities, and incorporating these opportunities into growth strategies.
Value
creation

Business overview

GrowthProfitability

Efficiency

Sales growth rate

Operating profit ratio
ROE

Financial position

Net D/E Ratio

Retail financebusiness

Net D/E Ratio

ESG

Shareholder
returnPC200-10M0 hydraulic excavator with urban civil engineering
specifications (CE series)

Index

ROA

Reduction of environmental impact

TargetGrowth rate above the industry’s average

FY2022 result+26.4%

An industry’s top-level profit ratio

13.8%

Industry’s top-level financial position

0.30

10% or higher
1.5% to 2.0%

5 times or less• CO2 emissions: Decrease by 50% in 2030 from 2010
Reduction of CO2 emissions from product use
Reduction of CO2 emissions from production
Become carbon neutral by 2050 (Challenging goal)•R enewable energy use: Increase to 50% of total energy use in 2030

13.7%
2.6%

3.77

21% reduction
43% reduction
17%

Evaluation by external organizations•S elected for DJSI* (World & Asia Pacific)•S elected for CDP** A List (Climate Change and Water Security)

Selected for DJSI
Selected for CDP A List
(Climate Change and Water
Security)

Consolidated payout
ratio

•K
 eep a fair balance between investment for growth and shareholder return (incl. stock buyback), while placing main priority on
growth investment•4 0% or more

40.3%

* Dow Jones Sustainability Indices: SRI indices generated by S&P Dow Jones of the United States and RobecoSAM of Switzerland** International non-profit organization that advocates the reduction of greenhouse gas emissions and protection of water resources and forests by companies and governments

Komatsu Report 2023

43

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

ESG solutions through growth strategies—KPIs of mid-term management plan
Based on its Sustainability Policy, Komatsu seeks to contribute to society through its business. Under the current mid-term
management plan, we have selected 10 new goals from among the 17 goals of the United Nations Sustainable Development Goals thatare highly related to the Komatsu Group’s material issues (materiality).
Moreover, key performance indicators (KPIs) have been defined to guide efforts for resolving ESG issues aligner with Komatsu’s
three pillars of growth strategies, and progress toward accomplishing the targets for these KPIs will be tracked and disclosed throughthe integrated report.

SDGs

Materiality

Key activity themesNo.

• Occupational safety andhealth and well-being

Build workplaces that are safe and secure1• Employee engagement andjob satisfaction

Increase employee engagement

With people

Decent work andeconomic growth

Reduced inequalities• Diversity and Inclusion• Skills development andworkplace retention

Promote diversity and inclusion

Engagement survey scores

3

Indicators related to female employees
1. Ratio of full-time female employees (consolidated)
2. Ratio of female managers (consolidated)• Respect for human rights

With businessWith the planet44• Product safety and quality• Provision of solutions

Sustainable cities andcommunities

6

Development of human resources with digitaltransformation and AI skills

7

Cultivation of Smart Construction consultants

1. Digital transformation: 5,341 for entry level*, 44 for practical
2. AI: 30 for entry level, 10 for practical* Entry level digital transformation course administered to a wider range of employees via video lectures

Promote human rights due diligence8

Human rights due diligence activities

Enhancement of product safety

9

Development of safety devices and expansion ofrange of marketed models equipped with safety
devices (KomVision, etc.)

1112Provision of products and solutions thatenable sustainable resource development(mining equipment)

Responsible consumption andproduction

Partnerships for the goals

Building of value chain adaptable to environmental and demand changes

Affordable andclean energy

Climate action

Industry,
innovation, andinfrastructureLife and land

Responsible
consumption andproduction

Partnerships
for the goals

Komatsu Report 2023

Overseas sales of ICT-intensive models

2,700 units (single year)

Aggregate number of AHS units deployed

643

15

Augmentation of hard rock mining product lineup

16

Expansion of hard rock mining businessNet sales: US$100 million

Net sales: US$300 million (threefold increase)17

Development of automated construction and mining
equipment• Hydraulic excavators: Tests conducted on equipment jointly developed with customers• Mining bulldozers: Remote control trials at customer workplaces completed, automated operation trials
underway

Expansion of number of marketed models (including new
developments)

18

Expansion of aftermarket business (pursuit ofbusiness growth and response to volatility)

Sales growth rate: 13.5% (compared with FY2021, foreign exchange rates fixed)

Sales growth rate: 15%(compared with FY2021, foreign exchange rates fixed)

85%

92% (82% in FY2021)•E nhancement of disclosure based on Japan’s Corporate Governance Code (business portfolio, skill matrix)•G lobal e-learning program on Komatsu’s Worldwide Code of Business Conduct (conducted in 12 languages)

Disclosure of initiative results

19

Multi-sourcing ratio (Implementation of business
continuity measures across supply chain)

Ongoing social contribution activities

22

CO2 emissions from production(compared with FY2010)

Enhancement of governance and entrenchment ofcompliance

Completion of phase 1 development and commencement of trials at customer workplaces

790 units (aggregate, upward revision from prior target of 740 units)

Optimization of mining operations

21• Load haul dump machines: Completion of development of one model• Mechanical cutters: Advancement of trials at customer workplaces and launch targeting specific customers• Mining Tunnel Boring Machine: Production of trial units underway

Introduction and promotion of open technology platforms

Expansion of product lineup and execution of trials including those fornew methods (mechanical cutting)• Continuation of demining project• Provision of ¥
 30 million in relief support following earthquake in Turkey and Syria• Continuation of forest restoration projects at former mine sites in North America• Ongoing provision of support for regional human resource development programs with Cummins Inc.
(Chile, Peru, South Africa, and Australia)

Disclosure of activity results

43% reduction

45% reduction (compared with FY2010)

Water consumption (compared with FY2010)

69% reduction

70% reduction (compared with FY2010)25

CO2 emissions from product use(compared with FY2010)

21% reduction

24% reduction (compared with FY2010)

26

Electrification of construction and mining equipment

23

24

Promotion of recycling-oriented business

2,448

14

Communities• Resource recycling andremanufacturing

Expansion of range of marketed models equipped with safety devices

20%

Contributions to communities throughbusiness and disaster relief support

Provision of solutions that support sustainable, cyclic forestry businesses

Completion of introduction in three small sized wheel loader models

Enhancement and optimization of processes• Contributions to local
communities• Forest conservation throughbusiness activities

Due diligence activities conducted for following three areas
1. Internal 2. Procurement supply chain 3. Sales

13,000 workplaces (single year)

20

Environment

1,000 (aggregate)

Ratio of workplaces using Smart Construction that employ Solution
Level 3 or higher: 15% (single year)

Strengthen governance and ensure thorough compliance

Reduction of CO2 emissions at customer
workplaces

1. Internal: Online survey targeting all Group companies
2. Procurement supply chain: Online survey targeting major suppliers
3. Sales: On-site impact assessment in South Africa

Numbers of training recipients (three-year aggregate)
1. Digital transformation: 900 for entry level, 180 for practical
2. AI: 90 for entry level, 30 for practical

8,955• Corporate governance• Compliance• Development of lowcarbon/low-emissions
products, solutions, andbusiness models

867

Increased succession planning for senior management positions atoverseas Group companies

Number of workplaces using Smart Construction(global total)

Ethics /Governance

Plants with zero environmental impacts

1. Domestic score: 75 or more (69 in FY2021)
2. Global score: 85 or more (79 in FY2021)
Notes: 1
 . Score represents rate of favorable responses.
2. Global engagement surveys are conducted once every two
years (next survey to be conducted in FY2023).

2.5% or more (domestic, single fiscal year basis, legally mandated levelof 2.3%)

Definition of global key positions and formulation of succession plans

10

Ongoing decrease from three-year average frequency rate of 0.65 fromperiod of previous mid-term management plan (Performance disclosed)

1. 17.0% or more (13.9% as of March 31, 2022)
2. 13.0% or more (10.0% as of March 31, 2022)

Succession plans

Develop individuals’ skills and achievebusiness growth

FY2024 Targets

1. 14.1% (as of March 31, 2023)
2. 10.3% (as of March 31, 2023)

5

Solutions for improving safety and productivity at customer workplaces(automation, autonomous operation, remote
operation)• Reduction of energy usage
and GHG emissions

Implementation of action plan based on FY2021 survey results

2.42%

13

Customers

0.80

Ratio of employees with disabilities(surpassing legally mandated rate)

Improve productivity of construction
workplaces by promoting Smart
Construction

Industry, innovation, andinfrastructure

FY2022 Results

4

Partnerships for the goals

Human Rights

Frequency rate of lost work time accidents(per 1 million hours)

2

Gender equality

Employees

KPI

Rate of renewable energy use

17%• Launch of one model• Completion of development of one model

20%

Expansion of models in development phase and on market

27

Growth of forestry machinery business(process mechanization)

1. Sales growth rate: 22.1% (compared with FY2021, foreign exchange rates fixed)
2. 5 units

28

Promotion of forest management solutions(Development of business model combining forestry
and decarbonization)

1. Sales growth rate: 50%(compared with FY2021, foreign exchange rates fixed)
2. Number of tree planting machines introduced: 30 (single year)

Completion of proof of concept test for remote sensing solution and selection of partners

Forest area: 60,000 ha(forest management solutions applied)

29

Expansion of Reman business

Sales growth rate: 16.5% (compared with FY2021, foreign exchange rates fixed)

Sales growth rate: 25%(compared with FY2021, foreign exchange rates fixed)

Komatsu Report 2023

45

Komatsu's vision

Special feature

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Growth strategies of the mid-term
management plan

Solution for creating new cutomer value through workplace optimization

DX Smart Construction

Smart Construction was embarked for addressing various issues surrounding the construction industry in Japan such as serious
labor shortages with digital technologies.
Smart Construction has been improving operation efficiency on customers’ sites through the combination of 3D data surveyed and generated by drones and other IoT devices and applications with high-quality operations performed by ICT-intensive
construction equipment. This solution is now evolving into DX Smart Construction that organically connects c­ ustomers' entire
operation processes to achieve further improvements in customers' productivity.
We are globally expanding DX Smart Construction in order to resolve our customers’ issues with a sophisticated combinationof solutions that optimize their entire operation processes and products that are highly compatible with those solutions.

DX Smart Construction solutions with a digital twin of a job site
DX Smart Construction provides integrated cloud-based
management of digital data collected from construction
equipment and IoT devices, which it then uses to create adigital twin that faithfully reproduces the topography of a jobsite in a digital space. Through reflecting the results of various analyses and simulations performed on the digital twin ina real job site, DX Smart Construction achieves safe andhighly productive next-generation job site management.
The devices that connect job site data of land features,
people, equipment, and materials to a digital twin as well as
the applications that analyze such digital data are developed
and provided by EARTHBRAIN Ltd., established as a joint
venture, together with NTT DOCOMO (currently NTT
Communications Corporation), INC., Sony Semiconductor
Solutions Corporation and Nomura Research Institute, Ltd. in
2021. Combining the four companies’ expertise, know-how,and technologies, EARTHBRAIN is working on developmentemphasizing non-conventional approach of backcasting fromits vision “creating safe, highly productive, smart and clean
workplaces of the future.”
The core application of DX Smart Construction solution is
Smart Construction Dashboard, which was introduced tomarket in November 2021, a visualizing application connecting job site data generated by various devices to a 3D viewer
on a digital twin. Its functions as a digital twin platform areconstantly being expanded to allow it to link data fromdevices and applications developed after it. Smart
Construction Simulation which was released in September
2022 provides AI optimization for formulating and managing
construction plans. These offerings have contributed tofurther improvements in the safety and productivity on customers’ sites.

Global expansion of DX Smart Construction
Since Komatsu first began offering Smart Construction solutions in 2015, we have proceeded to introduce solutions at morethan 20,000 job sites in Japan, demonstrating its values tonumerous customers. In the Japanese market, we will continue
to grow our business by supporting customers who endorse theconcept of Smart Construction going forward.
Overseas, Smart Construction is being deployed in markets
such as North America, Europe, Australia and Southeast Asia,and support systems are being put in place in these regions by
EARTHBRAIN and local distributors. Especially in the North
American market, we are actively working to expand the numberof job sites using Smart Construction by taking advantage ofthe fact that the majority of bulldozers in this market are ICTintensive models.

Together, toTogether,to "The"TheNext"
Next"
Expansion of Smart Construction
solutions in the North American
marketConcept diagram of DX Smart Construction solution with a digital twin

IoT devices and applications for visualising job sites

Image of a job site where Smart Construction has been introduced

The construction industry in North America has traditionally lagged behind in terms of technology innovation,
but within the last few years the industry has been
undergoing rapid change, and the market is now
demanding new and better technologies. Many drivers
have contributed to this changing environment including
worker shortages, high inflation, and increased expectations to reduce CO2 emissions, improve operation efficieny
and keep costs low. During the COVID-19 pandemic,
companies forced to adopt new technologies were
surprised by some of the benefits of these technologies,
so now they are seeking out even greater technologicaladvantages. All these factors mean that the North
American customers are now more open and proactive
than ever to embracing innovative technologies toachieve their goals.
Komatsu is well positioned to help our customers inthis area with digital solutions such as Smart Construction,a collection of brand-agnostic solutions that help customers operate their job sites more efficiently andaddress their various issues. Smart Construction
focuses not only on improving equipment productivity,
but on optimizing customers’ entire job site processes,
which differs from the traditional Komatsu way of thinking. While lots of companies offer similar solutions,

Michael Gidaspow

VP, Products, Service and Solutions
Komatsu America Corp.

Komatsu differentiates itself by also providing othertechnology focused on equipment, such as My Komatsu,
which can offer integrated management of both their
Komatsu and non-Komatsu fleets and a 24-hour connection to Komatsu.
While customers greatly appreciate the values that
Komatsu’s solutions bring, this doesn’t mean we don’t
have any challenges. Moving from an equipment-centric
to a job site-centric mindset is not easy for both
Komatsu and our distributors. Many of our talented sales
representatives can professionally communicate value
when it comes to equipment but may struggle to talkabout value in technologies. In addition, our customers
don’t typically think of Komatsu as a digital solutions
provider optimizing job site processes. However, we areseeing some success. In North America, we have soldmore than 10,000 ICT-intensive construction equipment,
which bring technology innovation to the market. In
FY2022, we also introduced Smart Construction at over
1,000 job sites and My Komatsu service has been usedby a wider range of customers. These successes are
merely a prelude to a long but exciting journey to create
more value for our customers.

Smart Construction Simulation application for optimizing construction plan

46

Komatsu Report 2023

Komatsu Report 2023

47

Komatsu's vision

Special feature

Automation development of­construction and mining equipment

Creating new customer value by solutions that optimize customer’ entire operation processes, the products that are highly
compatible with those solutions are essential.
We succeeded in the world’s first commercial deployment of Autonomous Haulage System (AHS) in 2008 and launched theworld’s first ICT-intensive equipment in 2013. Komatsu’s automation development efforts of construction and mining e­ quipment are
steadily marching toward the next stage in pursuit of further enhancement of customers’ job site safety and productivity.
We are rapidly approaching the job sites of the future, where one might see a hydraulic excavator operated from an officehundreds of kilometers away excavating and loading earth and sand into an autonomous dump truck as if it is being operated
by a skilled operator.

There are four steps to our automation development of construction and mining equipment: semi-automation functions, remotecontrol / teleoperation models, remote control / teleoperation models equipped with semi-automation functions, and autonomous equipment. In ultra-class dump trucks for mining, unmanned trucks with high-precision GPS and obstacle detection sensors are controlled remotely form the central control room. In addition, we have finished development of remote control models ofa hydraulic excavator with automatic bucket control functions and a bulldozer with automatic blade control functions. These arejust some of the milestones on the path toward higher levels of automation and autonomy in equipment.
By deploying its automation technologies to various models of various classes of equipment, We will expand our lineup of
automated construction and mining equipment, contributing to improvements in workplace safety and productivity.

Step2

Remote control /Teleoperation

Step3

Semi-automation + Remotecontrol /Teleoperation

930E-5 dump truck (AHS-equipped)

Autonomous hauling

PC200i-11 hydraulic excavator

PC200-11 hydraulic excavator with aremote controll system

Remote control

D71PXi-24 bulldozer

PC7000-11 hydraulic excavator
teleoperation model

Teleoperation + Semi-automatic loarding

D375Ai-8 bulldozer teleoperation model

Automatic blade control

Teleoperation + Automatic blade control

WA470-8 wheel loader

Automatic bucket control

48

Komatsu Report 2023

Corporate governance

Data



Automation of Construction Equipment
The need for automation of construction equipment is increasing as the labor shortage and aging ofoperators at construction sites in Japan become more serious.
We have been developing equipment that enables high-precision operation without relying
on skilled operators such as bulldozers and hydraulic excavators equipped with functions for­automatically controlling their blade or bucket. In addition, we have jointly developed a remote­control system for construction equipment and begun offering it to customers with EARTHBRAIN
in March 2023.
Going forward, we are working to combine this remote control system with the automatic control
technologies accumulated over the years via the development of ICT-intensive bulldozers andhydraulic excavators. Through this merging technologies, we are going to help customers improve
the safety and productivity of their workplaces.
Hydraulic excavator with a remotecontroll system (top) and ­remotecontrol cockpit (bottom)

Since we launched the world first commercial application of AHS in 2008, we have deployed over
650 trucks at twenty-two sites in five countries (as of June 30, 2023). Komatsu AHS has entered ahigh reputation for its safety and productivity from major global resource companies. Recent efforts
to expand our lineup of AHS products have been the development of an autonomous water truck
based on AHS. We have also launched of a joint project with Toyota Motor Corporation to develop
an Autonomous Light Vehicle (ALV).
In addition to AHS-equipped dump trucks, we are also advancing a number of other initiatives toimprove safety and productivity across the mining operation. Examples of these initiatives include
development of ultra-class hydraulic excavator, PC7000-11 teleoperation model and the commercial operation of large-scale ICT bulldozers for mining, D375Ai/475Ai-8 teleoperation model.

Step4

Autonomous operation

Collaboration

Automatic bucket control

Sustainability

Automation of Mining Equipment

Roadmap for automation development of construction
and mining equipment

Step1

Mid-term management plan

Growth strategies of the mid-term management plan

Toward further enhancement of customers’ job site safety and productivity

Semi-automation*

Business overview

Large-scale ICT bulldozer for mining,
D375Ai-8 teleoperation model

Together, to "The Next"
United effort for customers—
Development of teleoperation
system for mining bulldozer
The large bulldozers used at mines are constantly exposed
to hazardous environments, such as when pushing ore
materials in a stockpile with the potential to collapse orwhen ripping the ground on rocky areas subject to intense
vibration. Given these realities, ensuring the operator
safety and improving productivity are important issues
for our customers, and many of them have been requiring the development of teleoperation technologies.
The teleoperation model of D375Ai/475Ai-8 largescale ICT bulldozer for mining application was developedwith involvement by members from product planning,system development, and marketing from the planningphase. This approach was taken to guarantee that we

Komatsu autonomous haul truck
and Toyota concept ALV

Project members of teleoperation
bulldozer development andintroduction
Yuuichi Kadono (left)
Yasuhiro Kawamoto (center)
Takanobu Tanimoto (right)

could find the most ideal product specification. Even
though this model is put into commercial operation
following trial at customer site, we continue to provide
technical support in collaboration with support teams ineach region of the world, in accordance with the site
network infrastructure, the dozer application and use
case, and the operation rules that differ from site to site.
Moreover, customers who have cooperated with theteleoperation trial have requested for additional dozers
and development of new functions. Komatsu therefore
will continue to enhance its teleoperation and automation technologies in order to help customers meet thechallenge of optimizing mining operations.

* Automation functions for certain tasks performed by construction or mining equipment

Komatsu Report 2023

49

Komatsu's vision

Special feature

To achieve carbon neutrality by 2050, we are advancing various initiatives, especially in the area of electrification of
construction equipment.
In addition to conventional efforts for reducing CO2 emissions from products due to optimal combination of components developed and produced in-house, we are striving to focus on development new products and technologies by expanding our partnerships.
“Providing many options developed to meet the unique requirements of a diversity of customers’ environmental needs.”
We have positioned FY2023 as the first year for the market introduction of electric construction equipment, and we are
steadily working to create a market for the impending era of electrification.

Electrified equipment exhibited at bauma 2022

Development roadmap for carbon neutrality by products

Large-sized / Ultra-class

High

Roughly 90% of Komatsu’s CO2 emissions are attributable to product in use. We have therefore been making efforts to reduce
CO2 emissions from product use through the development of highly fuel-efficient products, including hybrid hydraulic excavators.
With the goal of achieving even greater reductions in emissions, we are now developing construction and mining equipment thatuses batteries and other new power sources.
The customer needs for products with regard to output and operating time vary based on the size and application. To addressthese varied customer needs, we are advancing phased R&D approach of equipment models that use new power sources such asbatteries, fuel cells, and hydrogen engines.

Small to medium-sized

OutputMajor
applications:
Mining andquarry830E ultra-class dieselelectric dump truck

PC3000-6E tethered electric
hydraulic excavator

P&H 4100 tethered
electric rope shovel

Hydrogen engine

Battery-powered haul truck(concept machine)

Fuel cells

Tethered electricBattery / Trolley

Diesel electric / Trolley

Majorapplications:
General civilengineering,land development, waste
and recycling,
demolition

PC78USE-11 tethered
electric hydraulic excavator

HB205-3 hybrid
hydraulic excavator

PC138USE-11 tethered
electric hydraulic excavator

WA475-10 medium-sized wheel
loader equipped with KHMT

Medium-sized hydraulic excavator
equipped with a hydrogen fuel cell(concept machine)

PC210LCE-11
electric hydraulicexcavator

Fuel cells

Battery

Tethered electric

Tethered + Battery

Hybrid / KHMT*

Utility

Corporate governance

While next-generation equipment models are being developed, it is important to utilize existing
technologies to accommodate market needs. We are currently deploying models using bridge
technologies that have already been brought to practical application, such as hybrid, diesel electric, tethered electric, KHMT, etc. We thereby are working on rapid reductions in CO2 emissions
from product use. In this area, the hybrid hydraulic excavators, the world’s first equipment
launched in 2008, have been rated higher than standard models.
Furthermore, we are actively embracing carbon-neutral fuels in our efforts to reduce CO2
emissions such as a shift of factory-fill fuel from diesel oil to hydrotreated vegetable oil (HVO)
for equipment produced in Europe.
Utilization of carbon-neutral fuels Page 65

Major
applications:
Urban civilengineering,
construction,road pavement,
agriculture andlivestock,
gardenining

Data

PC30E-5 electricmini excavator

PC30E-6 electricmini excavator

Fully electric mini excavator(concept machine)

Fully electric wheel loader(concept machine)

Fully electricBattery

PC01E-1 electric
micro excavator

PC05E-1 electric
micro excavator

Bridge technology
Carbon neutrality* Komatsu Hydraulic Mechanical Transmission: Transmission system that realizes a 30% improvement over conventional systems by combining a highefficiency mechanical transmission with a hydro static transmission that is capable of continuously variable transmission and that uses a motor and avariable capacity hydraulic pump

②

③

①
④

Components in hybrid equipment① Electric generation motor② Electric rotation motor③ Inverter④ Capacitor

Latest models and status of market introduction

In utility equipment, we introduced the PC05E-1 electric micro excavator to the Japanese market,
which uses the same system as the PC01E-1 introduced in FY2022 as a rental model, and thePC30/33E-6 electric mini excavator equipped with a lithium-ion battery, a fully remodeled version of
the PC30E-5 introduced in FY2019, to the Japanese and European markets.
In medium-sized equipment, we plan to introduce PC200LCE/210LCE-11 electric excavator into
the European and Japanese markets in FY2023. This model features long operating times and performance similar to the conventional model made possible through a combination of large-capacity
batteries and high-efficiency hydraulic systems.
Battery-powered equipment requires chargers and other peripheral equipment, meaning that
it is crucial to introduce the equipment itself and tools needed for its operation as a set. To expand
our range of options for such sets, we are working on research and development of a mobile
battery bank with storage battery functionality for use in mountains and other areas where powersources might not be available.

Toward further energy efficiency

Hydrogen engine

Low

Sustainability

Utilization of bridge technologies and carbon-neutral fuels

Challenges to carbon neutrality

Komatsu Report 2023

Mid-term management plan

Growth strategies of the mid-term management plan

New value creation for realizing a decarbonized society

50

Business overview

A major challenge faced regarding battery-powered equipment is extending operating times.
One way we are working to tackle this challenge is through the PoC (Proof of Concept) tests ona medium-sized hydraulic excavator that is equipped with a hydrogen fuel cell, which has greater
energy density than a standard battery.
We also exhibited concept machines of fully electric equipment with high-efficiency electric
cylinders (excavator and wheel loader) at the international construction equipment trade show(bauma2022, CONEXPO-CON/AGG 2023). Bringing these concepts to practical application, we areadvancing research and development to further extend operating times and improve operability.

PC210LCE-11

Mobile battery bank

Fully electric wheel loader(concept machine)

Together, to "The Next"

Toward carbon neutrality—
Development of fully electric
equipment
In the European Union, there is a high awareness of reducing
CO2 emissions and cities in Europe already strongly recommend to use zero emission machines for inner city construction sites.
At bauma 2022, we exhibited a concept machine of our
first fully electric wheel loader. The machine generated astrong response and its fast and fine controlled movements
impressed several customers. When I got aware of electric
actuators presented by Moog Inc. in October 2021, I immediately realized their capability to move high loads at highspeed to be a core technology that can eventually be used
to replace hydraulic cylinders on electrified machines.

Joerg Hermanns

GM, R&D Construction / EUTC 2
Komatsu Germany GmbH - Construction

There are a lot of benefits to fully electric machines, like
extending operating cycle indoors and at a wide range ofother work places, providing operators with a “fatigue-proof”
and comfortable environment, and lowering burden of
everyday management tasks. We are currently advancing
the joint test with Moog aimed at proving these benefits andimproving the concept machine’s productivity further.
Envisioning a future in which Komatsu’s fully electricmachines are working all over the world, thereby contributing to CO2 reduction in society, we will continue to pushforward with the development of electrified machines
toward accomplishing this vision.
Komatsu Report 2023

51

Komatsu's vision

Special feature

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Growth strategies of the mid-term management plan

Lifecycle support
Lifecycle-long value provision through digital technologies

Evolution of value chain strategies

We provide our customers with various service and solutions throughout the entire lifecycle of their equipment. This lifecycle
support (value chain business) is founded on highly reliable products equipped with components developed and produced
in-house, operating data collected and visualized by our unique digital technologies represented by Komtrax, and our skilledservice engineers.
In this section, we will look at the initiatives that support our value chain business, which account for roughly half of sales
in the construction, mining, and utility equipment business, and the current state of our evolving value chain strategies.

Construction and mining equipment is used for around 10 to
15 years, and periodic maintenance and repairs are imperative over this period. From the moment they purchase to the
day they give away, we provide a wide range of services
throughout the entire lifecycle of our customers’ equipment.
These services include periodic maintenance, supply of
spare parts, repairs, overhauls, and instructions on machine
operation. The mission of the Construction Equipment
Solution Division is to support our customers’ businessproviding such lifecycle-long services, which leads to safeand highly productive workplaces, and our customer satisfaction with the indispensable values of our products, service, and solutions.
Over the years, we have responded to the needs ofcustomers with various services that utilize the machine
operating data collected from around the world as represented by Komtrax data accumulated over two decades. Our
data-driven solutions such as diagnosis of equipment failures, overhaul proposal, and optimization of machine operation are only viable when skilled service engineers add theirinsight to the collected and analyzed data. In other words, amajor strength of our service is that we possess a wealth ofoperating data from around the world and numerous service
engineers proficient at transforming that data into solutions.
Our competitors have a long road ahead of them if they look
to replicate this strength.
However, it is definitely not the case that we are able toexercise this strength anywhere in the world. There aredisparities in the rate of digitalization between regions

52

Komatsu Report 2023

Value up ofusedequipment

Capitalinvestment
based on fleet
ROI and LCC• Fromunscheduled
repairs toscheduled• Quick repair

Uesd
equipment
reliable
support

Optimum
procurement

Used
equipment

Customer’s
lifecycle

Parts / Aseet
reliable
support

Maintenance /renewalProcurement
reliable
supportCustomer
operation

Operation
reliable
supportMachineprocurementwith suitablemeans ondemandMachineownershipwith peace ofmind

Productivity
improvement

Safe workplaces
Quality support
Human resource development

Together, to "The Next"
Evolving value chain businessthrough integration of data, tools,
and people

In order to maintain the performance of our customers’
equipment over a longer period of time, we are expanding
the extended warranty program with maintenance contracts upon the purchase of a product. The extended warranty program with maintenance contract that draw on our
quality and reliability of in-house developed and produced
components, enable our customers to ensure stable equipment operation at ideal costs.
We also focus on this service program as the starting
point for our lifecycle support. The frequent interactions
with customers that come from providing this service program leads to our deep understanding of their issues andenable us to offer a variety of service to resolve theirissues effectively.
In addition, we are advancing our “Lifecycle Reliable
Support” solutions through providing new customer experiences, including a machine-condition-based predictive
maintenance utilizing the operating data collected by our
next-generation Komtrax.

Keiko Fujiwara

Senior Executive Officer
President, Construction
Equipment Solution Division

with and without appropriate ICT infrastructure. The digitalization needs themselves also vary from region to region.
For example, service engineers are basically supposed tovisit customers’ job site actually for now, but in regions
where they may not be able to make frequent visit due toinadequate base network, the priority must be given tourgently put in place systems enabling them remote failure
detection and diagnosis.
In terms of people, the growing complexity of ICT systems used at construction job sites is increasing a demandfor “bridge engineer” who is able to balance gaps between
ICT systems and job site operations. Therefore, it is of theutmost importance that we provide service engineers whoare proficient in digital technologies with opportunities togain experience both at job sites and in the ICT project thataims to improve operations of our customers and distributors early in their career. Both of the experiences are essential to foster ideal leaders who can drive innovation atcustomers’ job sites.
Collecting and analyzing the data that helps generatevalue, developing support tools for effectively utilizing thedata, and cultivating service engineers who can transformthe data into value, thereby, sophisticatedly integratingthese three initiatives, we will provide comprehensive“Lifecycle Reliable Support” solutions that allow customers to keep using their equipment with peace of mind.
Going forward, we are striving to evolve our value chain
business with the goal of making Komatsu an indispensable partner to customers.

“Lifecycle Reliable Support”

Enhancement of global service operations
We are enhancing our global service operations through the development of service tools to improve the efficiency of on-site workand training of service engineers around the world including ourdistributors’.
In the area of on-site work efficiency, we are promoting thedigitalization of various service operations to improve the productivity of service engineers. One tool we offer with this regard is“Machine Touch App,” which supports service engineers reportingto customers. Based on the data from machine maintenance, it
allows service engineers to issue reports of machine checkup
results immediately on site. Timely proposals for parts replacement, etc. with data-based reports will help customers use
machines with peace of mind by keeping them in good conditionand preventing breakdowns before they occur. This also contributes to increasing service revenues.
In terms of human resource development for distributors, weoffer a variety of training programs at training centers in major
regions, including lectures on service techniques and machine
operation training for customers. In recent years, the training programs have become more digital and remote, as travel has
restricted by COVID-19. In addition, the development of programs
utilizing the latest technology, such as AR and simulators, hasenabled more efficient and detailed training.
As for in-house service engineers, we established Komatsu
Human Resources & Development Center (currently Komatsu
Philippines Corp.) in the Philippines in 2008, and started training
locally hired engineer as “Global Engineers” armed with both technological insight and field experience. There are currently over
100 Global Engineers working at customer sites and in a various
other function such as quality assurance, digital solutions, andSmart Construction.

Machine Touch App

Safe machine operation training by simulator

Komatsu Report 2023

53

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Sustainability
Contents
56 With people—Human resource initiatives—Business and human rights

60 With business—Social contribution activities

62 With the planet—Disclosure based on TCFD recommendations

3
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Komatsu Report 2023

55

Komatsu's vision

With people

Human resource initiatives

Having witnessed Europe’s cutting-edge technologies at that time, founder Meitaro Takeuchi defined our guiding principles
characterized by global expansion, quality first, technological innovation, and human resource development. The commitment
to the development of human resources, an invaluable asset to Komatsu, lives on in the Company today, unchanged from thetime of our founding.

Together, to "The Next"

Komatsu is always striving to ensurethat it offers a workplace environment
in which diverse people from aroundthe world can contribute to the growthof its business as a united team.
At Komatsu, we believe that people are an importantresource for creating new value. This is why we continue toinvest in our people, not just through the wages we pay them
but also through the allowances, bonuses, and benefits theyreceive as well as the training opportunities we provide.
The Komatsu Way forms the foundation for our humanresource development efforts. The Komatsu Way is the very
DNA of Komatsu, an expression of the strengths of Komatsu,
the beliefs supporting these strengths, the basic attitudes,
and the patterns of behaviors established based on theexperiences of our predecessors as they proceeded totackle the challenges facing them.
In addition, our Sustainability policy stresses the importance of providing a workplace environment in which diverse
people can act as a united team and of training people who
can overcome challenges to resolve various social issues
and create new value together with customers. This is

Mitsuko Yokomoto

Director
Senior Executive Officer
Supervising Human Resources,
Education and Sustainability

imperative to fulfilling our purpose of “Creating value throughmanufacturing and technology innovation to empower asustainable future where people, businesses, and our planet
thrive together.”
Our approach toward these challenges will be advancedin accordance with key initiatives of enriching our humanresource base with diversity, as defined under the growthstrategies set forth in the mid-term management plan.
Specifically, we are promoting diversity and inclusion while
offering employees various opportunities to develop theirskills and working to improve engagement. In addition, we are
fostering human resources with skills pertaining to digitaltechnologies and open innovation.
Through these efforts, we will pursue the ongoing growthand development of Komatsu and its employees whileremaining mindful of whether our management policies
coincide with the changing internal and external environment.

The Komatsu Way is divided into three chapters—Leadership/Top Management, “Monozukuri” for all employees, and Brand
Management—to better present its principles in a manner that reflects the roles of specific employees. Komatsu seeks to develop
its operations on a global scale and to become a stronger company and grow. To accomplish these objectives, it will be crucial for
employees with different cultures and customs around the world to understand and practice by The Komatsu Way. Ongoing efforts
to promote the Komatsu Way are being advanced for this purpose.

Komatsu Report 2023

Sustainability

Corporate governance

Data

Promoting diversity and inclusion
Komatsu continues to promote diversity and inclusion. These efforts are
based on the belief that the development of a workplace environment inwhich diverse employees respect each colleague’s individuality andability that leads the high level of psychological safety and creation of
innovation, and consequently the growth of the entire company. For thispurpose, we are advancing measures related to global human resource
development, promotion of gender diversity, support for members of
LGBTQ community, and employment of people with disabilities, andrehiring after retirement. Moreover, we support diverse workstyles andwork-life balance and provide opportunities for learning, development,
and success premeditatedly since enhancing our internal systems. We
also implement campaigns for promotion of diversity and inclusion to
improve employees' awareness.
Diversity and inclusion promotion video

Global human resource development and promotion

The Komatsu Way

56

Mid-term management plan

Komatsu seeks to develop frameworks that allow its employees to tackle new challenges and create freely with peace of mind.
We are also implementing human resource initiatives based on the Komatsu Way, which is an expression of the strengths ofKomatsu, the beliefs supporting these strengths, the basic attitudes, and the patterns of behaviors established by ourpredecessors.
Furthermore, measures are put in place to prevent or mitigate negative impacts to the human rights of Komatsu group members aswell as suppliers, sales and service distributors, and other business partners. A remedy process has also been i­mplemented to takeappropriate action in the case that the Group is found to have contributed to negative impacts on human rights.

1 Leadership / Top Management
Leaders must be directly involved in the workplaces
and manage businesses with an emphasis on
contributing to the entire Group, including distributors and suppliers. We have also defined guidelines
for leaders related to actively engaging in regularboard meetings, communicating with stakeholders,complying with rules of the business community,
managing risks, and grooming successors for
management positions.

Business overview

2 “Monozukuri” for all employees
Komatsu aims to pass on the Monozukuri philosophy, perspectives, and values that, based on total
quality management, have continued to drive
Komatsu’s competitiveness and support its growth.
We look to transmit these principles through a joint
effort encompassing all internal divisions as well as
our suppliers, distributors, and other partners andto continue promoting involvement by all of theseparties.

3 Brand Management
Komatsu defines “Brand Management” as all thecustomer value creation activities that “makeKomatsu indispensable to our customers.” Thisobjective is accomplished by visiting customer
workplaces to understand their ideal state and tobuild relationships that enable us to work together
with them to help achieve their goals throughconcerted efforts by the Komatsu Group and its
distributors.

Roughly 70% of Komatsu’s employee base comprises a diverse
nationalities, and several senior management positions at major overseas subsidiaries have been filled by locally hired staff following
efforts to localize management. In regard to the training of future
leaders, we have drawn up a succession plan under which approximately 750 major positions in Japan and overseas are classified as“global key positions.” In addition, we have been arranging our Global
Management Seminar for management and managerial candidates,
implementing our Komatsu Way Leadership Development Program for
middle management professionals who are expected to play central
roles with respect to business operations and functions, and enacting
other programs.
Programs for non-leader employees include the All-Komatsu
Technology Olympics, the All-Komatsu QC convention, the Global
brand management meeting and other global events that provide
employees around the world with opportunities to develop their skills.

Japan

32%

Overseas

68%

Number of
employees

64,343(Consolidated)(As of March 31, 2023)

Japan

Overseas

6% (13)94% (199)

Number of
consolidated
companies212(As of March 31, 2023)

Promoting gender diversity

The mid-term management plan’s key performance indicators forgender diversity include the ratio of full-time female employees, forwhich we have set a target of 17.0% or more, and the ratio of female
managers, for which we have set a global target of 13.0% or more. Aspart of our efforts to work toward these targets, we are proactively
recruiting women, providing training programs for women, and creating favorable environments for continuous career development. In
addition to such system- and infrastructure-related initiatives, we arepromoting reforms to our corporate culture to empower women. For
example, we implement diversity and inclusion literacy improvement
activities, hold D&I Talk Events in which executives talk about their own
career and diversity and inclusion-related anecdotes, and conduct
other initiatives for supporting the career ambitions of women. In
recognition of these efforts, Komatsu was selected as a company of
the Nadeshiko Brands for FY2022 by the Ministry of Economy, Tradeand Industry in collaboration with the Tokyo Stock Exchange (onecompany from each industry is selected from approximately 3,700
listed companies from 17 industries).

First D&I Talk Event

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Komatsu's vision

With people

Professional / Expert

Skilled employee

Global Management
Development Program

K-Way Leadership
Development Program

Diversity & Inclusion
Development Seminar

Middle Management
Strategy Program

New Manager Training
Mastermechanic

Study Abroad
New Assistant Manager Training
Training by job function
Woman Career Training

New Employee Training

Komatsu group human rights management system

TQM (QC) training
Skilled employee /Engineer

Human rights due diligence

Admin. / All employees

Formulation ofpolicyTQM Training for Global Assignment

Global Training
Institute

Advanced Technic
ContestTechno Service
SchoolTechnical
Institute
Komatsu
Philippines

Assessment of human rights risks

Integration into internal divisions
and procedures,
and appropriate measures

Establishment ofremediation andgovrernancemechanisms

Follow-up survey(Monitoring)

Information disclosure

TQM Instructor Development Program

Meister Training

3rd and 7th Year Training
Experienced Employee Training

https://komatsu.disclosure.site/en/themes/192

Training for overseas groupcompanies

ForemenTraining
All Komatsu
Technology
Olympics

KOMATSU COLLEGE
OF INDUSTRIALTECHNOLOGY

Assistant
ForemenTraining

Mid-Level
Employee
Training

TQM Training for Managers
QC Circle
Promoter Training

TQM Advanced

QC Circle
Leader Training

Quality Engineering
TQM Intermediate
TQM Basic

All Komatsu QC Convention

Intermediate

Other (training by job function)

QC presentation by job function

Chiefmastermechanic

Data

Human rights policy

Manager Refreshment Training

AI Human Resource
Education

Sectionmanager

Corporate governance

Komatsu established its Human Rights Policy in September 2019, thereby declaring its commitment to conducting its business ina manner that is compliant with internationally accepted standards pertaining to respect for human rights throughout its globalorganization. Based on this policy, processes have been established to prevent or mitigate negative impacts on human rights andto allow for corrective measures to be instituted should it be found that the Company was directly or indirectly involved in activities that had a negative impact on human rights. Reports on such activities are issued to the Sustainability Promotion Committee,
which is chaired by the president and membered by the heads of relevant divisions, to build a deeper understanding of our
response toward human rights issues. The Company is committed to ongoing efforts to continue identifying priority issues, defining clear policies for responding to these issues, and establishing action plans for use in work processes.

human rights

DX Human Resource
Education

SuprememastermechanicNew
employee

Choice-type training

Cross-Industrial
Training

Global Management Seminar

Dept.
GM

Less-experienced

Executive

Training by Job rank

New Executive Officer’s
Program

Executive

AssistantmanagerTraining for selected employees

KMPI activities (administrative departments)

Employee training structure

Executive
officer

Sustainability

Business and human rights

Improving employee engagement is essential for the ongoing growth of a company. Based on this recognition, we conducted a global
engagement survey of employees worldwide in 2021 (approximately 63,000 employees surveyed, response rate of 72%), and we areworking to develop human resource policies that reflect the strengths and challenges of each region and organization. The second global
engagement survey was conducted in 2023. We will continue to monitor and analyze employee engagement and respond to ever-changing challenges to create an environment in which each and every one of our employees can work with more vitality and enthusiasm.
We also provide a variety of skill development opportunities, including training for employees to become professionals intheir fields and support for the acquisition of the knowledge and skills required at each level. Meanwhile, initiatives to support theautonomous and spontaneous growth of employees are being advanced from the perspective of further heightening employee
engagement. Launched in FY2023, one such initiative is the Career Development Program, a one-on-one meeting between an
employee and their supervisor for the purpose of discussing their growth and career. Through this and other initiatives, we aim tostrengthen the connection between human resource measures and support for employees’ career development.
Going forward, we will continue efforts to spur the ongoing growth of Komatsu and its employees through the continuation ofprior measures based on the goals of the companies and organizations as well as through the expansion of measures oriented
toward the goals and ambitions of individual employees.

SkilledMid-term management plan

Offering variety of talent development oppotunities andimprovement of employee engagementJob roles

Business overview* In 2019 Komatsu Human Resources & Development Center became Komatsu Philippines Corporation
as a 100% affiliate of Komatsu Ltd.

Stakeholder engagement

2014With the assistance of external specialist Business for Social Responsibility (BSR), assessments were conducted to evaluate human rights risks pertaining to the construction equipment, mining equipment, and forestry machinery businesses being developed on a global scale.

2017

The aid of BSR was once again enlisted for our second human rights assessment, which was carried out whilereferencing the Universal Declaration of Human Rights and the United Nations Guiding Principles on Businessand Human Rights.

2020

With support from external specialist CSR Europe, a systematic human rights risk assessment of our global
operations was conducted covering downstream areas of our construction equipment, mining equipment, andforestry machinery businesses (equipment and replacement parts sales). Given the characteristics ofKomatsu’s businesses, relevant issues pertaining to discrimination based on ethnicity, race, or national origin;compulsory labor; freedom of association; and fair work conditions were assessed, and potential risks andpriorities were identified by business and by region.

2021

The Sustainability Promotion Committee approved plans to prioritize the human rights issues facing Komatsu,
administer questionnaires to Komatsu Group companies and suppliers, and perform on-site impact assessments of downstream operations.

2022

The support of external consultations was enlisted to conduct online human rights surveys of Komatsu Group
companies and major suppliers. In addition, aid was received from CSR Europe to perform on-site impact
assessments of downstream businesses in South Africa.

Development of digital and open innovation-driven human resourcesAs to the cultivation of personnel with digital knowledge and technologies, welaunched the program for developing AI engineers in FY2019 and initiated DX personnel education program in Japan in FY2022. This program promotes the cultivation ofhuman resources with curriculums for attaining knowledge at every stage, from entry
level for basic knowledge to practical education that covers problem solving in thecontext of real-life business operations and projects. In regard to fostering humanresources with open innovation skills, we are conducting and utilizing both internal andexternal programs in order to accelerate collaboration with government and academic institutions. In FY2023, we are planning
Inovator's Program on a global scale aimed at cultivating human resources able to learn and utilize Design Thinking p­ rocesses thatare potent for creating innovation and businesses. Such programs for fostering the human resources needed to supply customers
with DANTOTSU Products, DANTOTSU Services, and DANTOTSU Solutions will be conducted continuously.

For more information on our business and human rights activities, please refer to our corporate website:
https://komatsu.disclosure.site/en/themes/193

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Komatsu's vision

With businessSocial contribution activities in FY2022
The following chart shows the expenditure for social contribution activities by the Komatsu Group, aggregated based on six general categories.

20 %FY2022SocialContribution
Expenditure

Culture & Sports 22 %Disaster Relief

(Consolidated)¥ 2,038
million13 %Human Resource
Development

20 %Local Community
Support

22 %Environment

3%

Break down of social contribution expenditure
Cash contributions¥767 million

Employeedispatchment andtime contributions¥340 million

Expense related toproviding own facilities for public use¥209 million

Expense related toevents for thecommunity¥722 million

Total¥2,038 million

Clearing landmines and making the land safe
In the areas afflicted by anti-personnel landmines, Komatsu has engagedin activities to support community development throughout the processfrom demining to reconstruction. Utilizing Komatsu’s demining machinesand construction equipment, developed by combining its technical expertise and knowledge in manufacturing, Komatsu started its project inCambodia in 2008 partnering with the authorized NPO “Japan Mine Action
Service” (JMAS) and another project in Laos in 2016.
As part of its community reconstruction efforts, Komatsu also has
been supporting initiatives to develop farmlands on former landmine fieldsites and build roads, bridges, elementary schools., and other facilities. In
2022, we expanded these efforts to our 10th school in Cambodia.
Approximately 800 students are now learning at these 10 schools.

“I used to be very afraid of mines. Thanks
to demining and development, I can live
free from that worry.”
Mr. PhoResident of Roung Village

Corporate governance

Data

Relief aid to earthquake damages in Turkey and Syria
Komatsu has provided relief aid to the areas affected by the earthquake that struck
Turkey and Syria in February 2023. In cooperation with its local distributor MarubeniDağıtım ve Servis A.Ş. (MDS), a wholly owned subsidiary of Marubeni Corporation,
Komatsu lent construction equipment needed for relief efforts to the affected areas
free of charge and dispatched operators and service mechanics to assist in the relief
efforts. In terms of expenses, these efforts equate to ¥20 million worth of support. In
addition, Komatsu donated ¥10 million through the Japanese Red Cross Society,making for a total relief aid package of ¥30 million.
Since establishing an office in Turkey in 1975, Komatsu has been developing a
locally anchored business in Turkey, a major market in the Middle East region.
Komatsu will continue to provide material assistance to help the affected areas
recover as quickly as possible while monitoring the conditions with MDS.

One World One Komatsu employee-driven social contribution project
The Komatsu Group launched the One World One Komatsu employee-driven social
contribution project as a new initiative in 2021 in conjunction with its 100th anniversary.
Based on themes pertaining to the environment and sustainability, which areshared global issues that are highly related to our business, the One World One
Komatsu project encourages employees to take close-at-home action in their daily
lives, such as cutting back on water use and turning off lights in unoccupied rooms.
As part of this project, the One World One Komatsu Contest was held in 2021.
Applications were received by more than 200 employees from around the world, andwinners were chosen from each of the 10 award categories. Five of the winners wereinvited to receive trophies from President Hiroyuki Ogawa at an award ceremony
held in Tokyo in November 2022.
Furthermore, employees are encouraged to engage in environmentally themed
volunteer activities in conjunction with Earth Day on April 22 each year. Videos areprepared showing the volunteer activities performed by Komatsu employees aroundthe world and broadcast through global watch parties, virtual gatherings arranged through a dedicated website.
https://youtube.com/playlist?list=PLl09JNAS3JlHjiRio50EDhJ-s7eAJJ1K0

Together, to "The Next"

Sustainable society built by small efforts of all
Demining machine“Demining, infrastructure, agriculturalwork, if all these are pursued as one setof measures, the people who grow therice enjoy the benefits.”“I am very happy to have a new school.
My dream is to become a doctor. When
my parents or villagers get sick, I want
to be able to heal them.”

Mr. Nobuyoshi Shimozono
JMAS Technical Advisor

Maria
Student at KOMATSU
SAFETY Primary Schoolhttps://youtu.be/8zlmCv6PTaE?feature=shared
Komatsu Report 2023

Sustainability

To view videos from the June 2023 global watch party, please refer to the following website.

For more information on the Demining and Reconstruction Project, please refer to the following video.

60

Mid-term management plan

Undertaking social contribution activities in the communities where we operate is one of our important corporate responsibilities. We recognize and position social contribution activities as activities that are in alignment with the Sustainability Policy
and do not directly generate earnings. Leveraging our strengths as a business, we seek to give back to the community andsociety in general.

Academic and Industry–
Academia Collaborations

Business overview

I bought a 200-liter barrel to store rainwater and water frommy washing machine] and built a plumbing system that channels water directly into this barrel. I then used accumulated
rainwater that is used to wash the floors in my house.
Reducing the number of times one does laundry from twice aweek to once a week can save around 3,100 liters of water ayear. Also, for at least two out of every three times I bathe, I try
to take only a quick shower. This saves more than 1,800 litersof water a year. And not leaving the water running while I
brush my teeth saves another 730 liters a year.
Working toward sustainability does not mean you have tofundamentally change your life. If everyone tries to cut backon what they use, it is sure to leave a better future for ourchildren and our children’s children. There is so much we cando for nature and the environment if we have the desire andthe commitment.

Wesley dos Santos Gomes, Komatsu do Brasil Ltda.
One World One Komatsu contest award winner(Award Category: Water Wise)

For a list of all One World One Komatsu contest
award winners, please refer to the following
website.
https://komatsu.disclosure.site/en/themes/197

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Komatsu's vision

With the planet

Komatsu Earth and Environment Policy

https://komatsu.disclosure.site/en/themes/199

Disclosure based on TCFD recommendations

Komatsu established the Komatsu Earth Environment Charter (currently known as the Komatsu Earth and Environment Policy) in
1992, launching proactive initiatives for addressing climate change and other environmental issues a step ahead of its peers. In
April 2019, Komatsu announced its endorsement of the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). We advance climate change response measures through climate change risk and opportunity assessments
and scenario analyses based on these recommendations as well as through a healthy dialogue with stakeholders.
At the 26th United Nations Climate Change Conference held in the United Kingdom (COP26) in November 2021, an agreement was reached to work toward limiting the average rise in global temperatures to 1.5ºC above pre-industrial levels.
Furthermore, at the G7 Ministers’ Meeting on Climate, Energy and Environment held in Sapporo, Japan, in April 2023, a call was
made for the G7 to commit to playing a leadership role in working toward the goal of limiting the average rise in global temperatures to 1.5ºC above pre-industrial levels and in strengthening society’s resilience to the impacts of climate change and for allcompanies and organizations to collaborate toward transforming our economy over the next decade.
Komatsu has previously conducted scenario analyses based on scenarios projecting average rises of 2ºC or 4ºC. However, inlight of these global trends and following discussions by the Sustainability Promotion Committee and the Strategy Review
Committee, with reports to the Board of Directors, it was decided that the Company would also perform analyses of a scenario
projecting rises of 1.5ºC beginning in FY2022. The results of these analyses have been disclosed.

1 Governance
The Komatsu Group views climate change as an important management issue, and targets for combating climate change havebeen incorporated into its business strategies.
A framework for appropriate oversight of our climate change response has been implemented whereby the Sustainability
Promotion Committee and the Risk Management Committee discuss climate change-related matters and make suggestions to
the Strategy Review Committee and issue reports to the Board of Directors. Meanwhile, the Executive Officer Meeting fulfills thefunction of managing progress toward targets.

Climate change-related reporting and deliberation system
Board of Directors

ReportStrategy Review Committee
Executive Officer Meeting

SuggestMajor discussion items related to climate change

62

Chairperson

Board of Directors

Chairman of the Board

Strategy Review Committee

President

The Executive Officer Meeting

President

Body

Chairperson

Sustainability Promotion
Committee

President

Risk Management Committee

Executive officer
supervising generalaffairs

Komatsu Report 2023

Mid-term management plan

Sustainability

Corporate governance

Data



We, at the Komatsu Group clearly defines the basic policies of environmental conservation, which will be the guidelines ofbusiness activities, when engaging in business activities while working to realize a sustainable society, and promotes environmental conservation activities.

Body

Business overview• Sustainability Promotion Committee• Risk Management Committee

Major discussion items related to climate changeD iscussions regarding goal of achieving carbon
neutrality by 2050
E
 stablishment of Sustainability Policy
Formulation of new mid-term management planR
 eports from the Sustainability Promotion
CommitteeL ow-carbon product development strategiesM ining business growth strategiesF orestry machinery business growth strategiesS mart Construction growth strategiesR eports from research, development, andproduct planning divisions and the Chief
Technology OfficerR eports from production and procurement
divisionsM id-term management plan progress reportG rowth strategies for major production basesR eports from the Sustainability Promotion
CommitteeR eports from the Risk Management CommitteeP rogress in product development (including climate change-related KPIs)

Major discussion items related to climate changeInitiatives for addressing ESG issues
C SR activity reports
Revision of environmental policiesD eliberations and reports regarding importantenvironmental matters and key performanceindicators (KPIs)

2 Strategies
Risk and opportunity identification
In identifying climate change-related risks and opportunities pertaining to the Komatsu Group’s business, we referenced the risk
and opportunity examples described in Final Report: Recommendations of the Task Force on Climate-related Financial
Disclosures to determine 16 risks and opportunities with the potential to impact the construction and mining equipment
business. We next assessed the internal factors and external factors predicted by the chosen scenarios that may impact earnings
to group the identified risks and opportunities into the four major themes of “changes in resource demand,” “transition to lowcarbon products,” “manufacturing costs,” and “natural disasters.”

Risks and opportunities and groupings

16 risks and opportunities

Four major themes oal demand fluctuations
CChanges in reputation among customers andinvestors

Changes inresource
demandReduced coal demandIncreased resource demand related
to electric equipment

 nvironmental regulations
ETrend toward electric equipment
Subsidiaries for renewable energy and energy conservation projects
Substitute fuel technologies
Next-generation technical services (new market)

Transition to
low-carbon
products

 ore stringent fuel regulations
MProgress in electrification and nextgeneration technologies

 arbon prices
CPopularization of renewable energy technologies
Raw material prices
Energy prices
Recycling

Manufacturingcosts

 ore frequent abnormal weather events
MIncreased precipitation amounts and weather
patterns
Higher average temperatures
Rising sea levels

Naturaldisasters ising manufacturing costs due toRhigher carbon prices** CO2 taxation measures for reducing emissions

Increased precipitation amounts andflood risks due to abnormal weather
Higher demand in conjunction withnational resilience plans

To gauge the potential impacts of climate change-related risks and opportunities on the Komatsu Group’s business, we performed scenario analyses of the aforementioned four major risk and opportunity themes. For these scenario analyses, weselected a 1.5°C scenario, a 2°C scenario, and a 4°C scenario based on the Fifth Assessment Report (Representative
Concentration Pathways 2.6 and 8.5) and the Sixth Assessment Report (Shared Socioeconomic Pathways 5-8.5) of theIntergovernmental Panel on Climate Change, and the Sustainable Development Scenario, the Stated Policies Scenario, and the
Net Zero by 2050 scenario of the International Energy Agency (IEA).
The risks and opportunities associated with changes in resource demand, the transition to low-carbon products, and manufacturing costs were the greatest in the 1.5°C and 2°C scenarios whereas the risks and opportunities associated with natural
disasters were the greatest in the 4°C scenario. Information on the risks and opportunities related to each of the four major
themes, as well as Komatsu’s response to these risks and opportunities, is displayed on the following page.

R eports on responses to natural disaster risks

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63

Komatsu's vision

With the planet

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data



2 Strategies
Changes in resource demand

Transition to low-carbon products
Opportunities

Risks

Opportunities

 apid transition from fossil fuel-powered equipment to electric equipment
R
Higher demand for copper and other resources necessary for electric equipment (motors, batteries, fuel cells, etc.)
Increased sales to copper and other relevant mining-related customers by
Komatsu in conjunction with trend toward electric equipment
Increased investment for improving the efficiency of mining operations

H
 igher development and capital investment costs
due to emissions restrictions
R educed sales due to inability to cater to customer
electrification demands
S ubstantial changes in technology development andcompetitive climate including market entry by newcompetitors
L ong-term diminishment of technological edge ascustomers begin leading the drive in component
development and manufacturing projects

R ising demand for electrified equipment, fuel-efficient equipment, and biomass
fuel-powered equipment; ability to respond swiftly to impending changes in strategic markets fostered through adaptation in traditional markets
G rowth of equipment restoration (Reman) operations driven by transition to circular
economyIncreased demand for solutions businesses with emissions-reducing benefits
Increased product reliability due to securing stable supply sources for high-quality
components for storage batteries and others

Risks
Regulation of power generation using fossil fuels
Massive reductions in coal production volumes
Reduced sales to coal-related customers by Komatsu
Reduced appetite for investment in coal mines

Strategies

By advancing initiatives based on the three pillars of growth strategies of the mid-term management plan—
accelerate growth by means of innovation, maximize earnings power, and enhance corporate resilience—
Komatsu will capitalize on opportunities created by changes in resource demand to achieve sustainable growth.

Priority initiatives​ Strategies

 xpand underground hard rock mining businessEDevelop automated and remotely controllable mining equipment to quickly respond to shifts in demandImprove productivity through open technology platforms

Priority initiatives​  evelop electrified equipment using batteries, hydrogen fuel cells, and other power sourcesD
Develop power sources compatible with carbon-neutral fuels and hydrogenDeploy Smart Construction and other solutions on a global scale
Contribute to cyclical businesses through forestry machinery and Reman businesses

Revision of mining equipment business portfolio in response to shifts in resource demand

Under the IEA’s Net Zero by 2050 scenario (1.5ºC scenario), demand for coal, a soft rock mineral, is expected to decline to an evengreater degree as a result of the decarbonization trend than projected by 2ºC scenarios. Conversely, demand is expected to growfor the critical minerals that are imperative to clean energy technologies. Accordingly, the global transition to electrified equipment is anticipated to drive a strong shift in demand toward hard rock minerals like iron, copper, and gold.
It is possible that changes in global trends could result in temporary shifts in demand, but the overall trends in demand are
expected to advance in this direction. In response to this shift in demand, the Komatsu Group is revising its mining equipment
business portfolio by reorganizing its underground soft rock mining equipment production and support systems and expanding its
lineup of underground hard rock mining equipment through M&A activities. As a result of these activities, the portion of net sales
associated with thermal coal has gradually decreased and the portion related to copper has increased over the last few years.

Resource demand projections of IEA’s 1.5ºC scenario(Monetary value basis)*

Ratio of sales of Komatsu mining equipment businessby target mineral(Billions of U.S. dollars)(FY2018 vs. FY2022)

500

Other

FY2018300

200

Copper

19%

100

2020

2030

2040

2050

■ Coal ■ Copper ■ Lithium ■ Nickel ■ Graphite ■ Cobalt■ Manganese ■ Other* Source: Based on IEA data from the IEA (2021) ‘Net Zero by 2050 A Roadmap for
the Global Energy Sector’, https://www.iea.org/data-and-statistics. All rights
reserved.​

64

35%

36%

400

0

Thermal coal

Komatsu Report 2023

Thermal coal

Other

28%

37%

FY2022
Cokingcoal

10%

 omatsu is advancing initiatives aimed at achieving carbon neutrality while facilitating the transition to theK
low-carbon products the world demands.

Copper25%

Cokingcoal

10%Development of models using next-generation power sources

To ensure sufficient output and operating times, medium-sized and large construction equipment requires a power source with higher energy density than that ofsmall construction equipment, which has led the move to electrification with batteries. This fact has led us to begin research and development of models that use
next-generation power sources like hydrogen fuel cells and hydrogen engines.
In May 2023, we have developed a concept machine for a medium-sized
hydraulic excavator that combines a hydrogen fuel cell and in-house developed
Key Components. By advancing the PoC (Proof of Concept) tests, we will accelerate our efforts to embark on the commercial production of medium-sized and large
construction equipment powered by hydrogen fuel cells in the near future.

Middle-sized hydraulic excavator equipped with ahydrogen fuel cell (concept machine)

Utilization of carbon-neutral fuels

Reduction of the CO2 emitted by existing construction equipment using diesel
engines is an important task to advance alongside the development and introduction of electrified equipment. We are therefore promoting the use of carbonneutral fuels, which offset the CO2 emissions in use and in production. Examples
of carbon-neutral fuel include hydrotreated vegetable oil (HVO), e-fuel, and otherhydrogen-based fuels as well as biodiesel fuels like fatty acid methyl ester.
In April 2023, as one facet of these efforts, Komatsu Germany GmbH
Construction Division (KGC) switched to HVO as factory-fill fuel for its equipment
and other Europe plants have followed.
HVO is produced from renewable raw material such as cooking oil and animalfats wastes. It is a simple drop-in replacement for fossil diesel, but with highcetane, no oxygen and no aromatics. It can lower the amount of greenhouse gas
emitted by our equipment by up to 90%, if the machine is fuelled with Neste MY
Renewable Diesel (=HVO100) from Neste, one of our main suppliers of HVO.
The combustion engines in our machines*1 can be operated with HVO*2, withno modifications required. The switch to this renewable, paraffinic fuel as a sustainable alternative to traditional diesel fuel is a major step we are taking towards
reducing our environmental impact.

Filling a Komatsu machine with HVO as factory-fill fuel at
the KGC plant in Hannover, Germany*1 Including the construction, forklift, mining and forestry machines*2 Only HVOs that conform to the standards can be used for
Komatsu machines equipped with Komatsu engines.
Note: The GHG emission reduction varies depending on theregion-specific legislation that provides the methodology
for the calculations (e.g. EU RED Ⅱ 2018/2001/EU forEurope and US California LCFS for the US), and the raw
material mix used to manufacture the product for eachmarket.

Komatsu Report 2023

65

Komatsu's vision

With the planet

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data



2 Strategies
Manufacturing costs
Risks

Opportunities

Taxation of fossil fuels and CO2 emissions
Transfer of higher product purchase prices to Komatsu
Rising power fees and energy costs following investment in
power generation facilities with low CO2 emissions

Increased competitiveness through production technologies that reduce CO2
emissions

Strategies

Komatsu will work to mitigate cost increases by achieving its CO2 reduction and renewable energy targets
while developing production bases with low environmental impacts.

Priority initiatives​  reate plants with zero environmental impacts
CEncourage environmental investments through internal carbon pricing (ICP)** Framework for increasing the priority of environmental investments through assessments of capital investment returns that position CO2 reduction benefits as a value
similar to cost reduction benefits

Together, to "The Next"
Komatsu’s production andprocurement divisions are united in
our pursuit of carbon neutrality.
The world is undergoing a massive transformation inpursuit of carbon neutrality among the rising awarenessregarding climate change. At Komatsu, our production
and procurement divisions are working to curb cost
increases through the accomplishment of our CO2 emissions reduction targets and to develop plants that have
low environmental impact. These efforts are aimed ataccomplishing our goals of halving Scope 1 and Scope 2CO2 emissions intensity from the level in 2010 by 2030
and then achieving carbon neutrality by 2050.
Our priorities in CO2 emissions reduction activities
are as follows: 1) conserve energy through production
reforms; 2) generate energy in-house through solar
power and other such systems; and 3) buy renewableenergy. Based on these priorities, we are implementing
improvement activities with a focus on high-energyconsumption processes like casting, forging, and heat
treating. We have also introduced an internal carbon
pricing system, which we are using to encourage theadoption of production equipment that reforms manufacturing processes and the transition to high-efficiency

Reduction of CO2 emissions from casting processes(Seal ring factory in the Himi Plant)

Located in Himi City, Toyama Prefecture, the Himi Plant manufactures the cast parts
that are used in construction and mining equipment. A new seal ring factory wasconstructed at this facility in November 2021, and steps are being taken to reduce
the CO2 emissions of this factory by half. As the casting process, including for sealrings, particularly consumes a large amount of energy, high-efficiency casting, byimproving its process, will lead to an outstanding reduction of energy consumption.
In addition, we are also working to improve the environmental performance of the
new factory, including the reduction of CO2 emissions, by installing energy-saving
equipment and improving the airtightness of the factory building.

New Komatsu Mining Corp. headquarters

In June 2022, Komatsu Mining Corp. that conducts the manufacture and sale ofsurface and underground mining equipment and provides related service, finishedthe relocation of its headquarters, previously located in Milwaukee in the U.S. state of
Wisconsin, to its South Harbor campus, which is in the same city. The new headquarters uses solar panels, a remotely operated closed-loop heat treatment system, andother energy-saving technologies to achieve substantial reductions in energy andwater use and in CO2 emissions.

Korekiyo Yanagisawa
Senior Executive Officer
President, Production Divisionutilities. In 2022, these efforts had already resulted in a
reduction in CO2 emissions of 43% from the level in
2010.
These efforts will be continued with an eye to halving
emissions by 2030 and then achieving carbon neutrality
in 2050. At the same time, we will be promoting digitaltransformation to further cut energy use while renovating aged plant and office buildings to achieve zero
emissions.
Komatsu will also assist its suppliers in reducing their
CO2 emissions by actively sharing and deploying its
successful improvement activities in order to contributeto reduction of CO2 emissions for the production anddistribution of parts and raw materials (Scope 3
emissions).
Accomplishing our CO2 emissions reduction targets and developing plants that have low environmental impacts are important goals for Komatsu’s
production and procurement divisions. By achieving
our goals, we hope to make manufacturing at Komatsu
even more competitive.

Komatsu Report 2023

New headquarters of Komatsu Mining Corp.
(South Harbor campus)

Scenario analysis: Impacts of carbon taxes under 1.5ºC scenario
The 1.5ºC scenario projects carbon tax rates that are higher than those predicted by the 2ºC scenarios, describing high tax rates
in both developed and developing countries in 2030 and ongoing increases thereafter. Higher carbon prices as a result of carbon
taxes and other government policies present the risk of future increases to manufacturing costs. Conversely, if Komatsu takes
action to achieve its CO2 emissions reduction targets, these efforts will help lower the costs associated with carbon taxes.
Moreover, carbon taxes also influence the prices of the fuel used by equipment. Accordingly, Komatsu’s initiatives for developing low-carbon products and otherwise reducing CO2 emissions from product use will also contribute to a lower cost burden
for customers.

Carbon tax payments should Komatsu accomplish
its CO2 emissions reduction target for 2030

Projected carbon taxes ($/t-CO2)($/ton-CO2)

100

250
200

$67 million
per year

150

Reduction in costs of$34 million per year
50
$33 million
per year

100
50
0

2030

Developed countries (1.5ºC scenario)
Developing countries (1.5ºC scenario)

2040

2050

(FY)

Developed countries (2ºC scenario)
Developing countries (2ºC scenario)

Sources:
2ºC scenario: Announced Pledges Scenario, International Energy Agency
1.5ºC scenario: World Energy Outlook 2022, International Energy Agency

66

Seal ring factory at Himi Plant

CO2 emissions in 2010

CO2 emissions
Carbon tax payments

If 2030 CO2 emissions reduction
target is accomplished

Note: Figures are based on a trial calculation assuming that CO2 emissions in 2030
are half the level of 2010.
Carbon tax payments are calculated by applying the carbon tax predictionsfor 2030 of the IEA’s Announced Pledges Scenario (1.5ºC scenario) to therespective CO2 emissions volumes.

Komatsu Report 2023

67

Komatsu's vision

With the planet

Business overview

Sustainability

Corporate governance

Data



2 Strategies

4 Indicators and targets

Natural disasters
Risks
Increased frequency of heavy rain and floods due to abnormal weather
Risks of disaster damages to Komatsu plants at high risk offlooding
Component supply delays following damages to suppliers
from disasters

Targets for climate change-related indicators include the target of reducing CO2 emissions from product use and production to
50% of the level in 2010 by 2030 and increasing the rate of renewable energy use to total energy use to 50% by 2030.
In addition, the mid-term management plan launched in FY2022 introduced the challenging goal of achieving carbon neutrality by 2050.

Opportunities
Increased demand for flood-control works

Medium- to long-term targets
Index• Renewable energy use

Komatsu will implement countermeasures against heavy rains and flooding across the value chain(response to physical risks).

Target• CO2 emissions	Decrease by 50% by 2030 from 2010

Reduction of environmental
impactStrategies

Mid-term management plan

Become carbon neutral by 2050 (challenging goal)
Increase to 50% of total energy use by 2030

Product development roadmap for carbon neutrality

Priority initiatives​ 

Reductions from product improvements: Reduce CO2 emissions by increasing machine efficiency and improving low carbon
levels (shift to cleaner power sources).
Reductions from process improvements: Reduce CO2 emissions by optimizing and improving the efficiency of all jobs, construc- uild production and procurement systems that are resilient to changes in the operating environmentB(expand the multi-sourcing ratio)tion, and operations at customers’ workplaces.

Cross-sourcing and multi-sourcing

To hedge against risks of damages to the factories of Komatsu and its suppliers from heavy rains, floods, and other natural disasters, the Komatsu Group is developing a production and procurement system that enables it to maintain business continuity evenunder extreme circumstances. Specifically, we practice cross-sourcing, which allows us to flexibly alter manufacturing plants andproduct destinations based on changes in the operating environment, and multi-sourcing, through which we purchase the same
parts from multiple suppliers.
In addition, Asia procurement centers were established at overseas subsidiaries in India, Indonesia, and Thailand in May 2023
to increase the multi-sourcing ratio with the goal of further strengthening our supply chain.

Cross-sourcing operation for production

Hydrogen engines/Fuel cells
Electric (battery/plug-in)
Carbon-neutral fuels
Hybrid/Diesel-electric
Diesel internal combustion

Underground mining

Protection ofunderground miners’ health

Surface mining

On-site generation andhydrogen fuelExtent of reduction from 2010

Zero

Reductions fromproduct improvements
in 2050

Halved CO2 emissions in 2030

Multi-company procurement system(50% reduction in CO2 emissions from 2010)-50%

Use of urban electricity
infrastructure

Komatsu

Forestry

Urban civil engineering
General civil engineering

Electrified equipment for reducing environmental impacts-100%

Reductions fromprocess improvements
in 2050

Carbon neutrality in 2050

(100% reduction in CO2 emissions from 2010)

Main units
Parts

Company B Company A Factory b(Alternative)(Alternative)
Factory a(Current)

Factory c(Alternative)

2010

2020

2025

2030

2035

2040

2045

2050

For information on the results of environmental investments and other activities in FY2022, please refer to the following website.
https://www.komatsu.jp/en/sustainability/data

3 Risk management
Major climate change-related risks are incorporated into the Risk Management Rules and other aspects of the Groupwide risk
management process and managed as an element of corporate risks. Risk management page 84.

68

Komatsu Report 2023

Komatsu Report 2023

69

Komatsu's vision

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

Corporate
governanceContents

72 Discussion with Outside Board Members
76 Corporate governance
84 Risk management

88 Stakeholder engagement

90 Directors and Audit & Supervisory Board Members

470

Komatsu Report 2023

Komatsu Report 2023

71

Komatsu's vision

Discussion with Outside Board Members

Michitaka Sawada
Outside Director

Kotaro Ohno

Outside Audit & Supervisory Board Member

improvements to the effectiveness of the Board of Directors are being prioritized accordingly.

The following is a discussion with Outside Director Michitaka Sawada and Outside Audit & Supervisory
Board Member Kotaro Ohno in which they offer their opinions about corporate governance at Komatsu
and the challenges it will need to overcome in order to heighten corporate value going forward.

Q

Ohno: I have served as an Outside Audit & Supervisory Board
Member since June 2017. Komatsu strikes me as earnest,
study and strong company. With my 40-year history as apublic prosecutor, I place a lot of emphasis on compliance. It
is difficult for any company to avoid all of the potential issues
that could occur during the course of business. Komatsu,
fortunately, is swift to report any serious issue that may arise
to the Board of Directors. It also makes steadfast efforts toprevent issues through the institution of internal reporting
72

Komatsu Report 2023

Mid-term management plan

Sustainability

Corporate governance

Data



At Komatsu, the Board of Directors is a central component of corporate governance systems, andWhat are your thoughts with regard to theatmosphere and corporate culture at Komatsu?

Business overview

After becoming an Outside Director at Komatsu last year, I
have had the opportunity to visit some of the Company’s
factories and research and development organizations.
There, I was able to witness the bold and aggressive
approach employees take toward developing new technologies and operational systems in pursuit of lofty targets
related to product development and productivity improvement. At the same time, I noticed steadfast improvement
efforts aimed at ensuring safety and improving quality. In thismanner, Komatsu takes a meticulous and determined
approach toward improving corporate value through manufacturing and technology innovation and the commitment toquality and reliability described in Komatsu’s management
principle. I hope that people at Komatsu will continue thisapproach going forward.

and sometimes even include videos, which is really helpful toour understanding of the issues at hand. Outside Board
Members still in their first year are given the opportunity toreceive pre-meeting briefings on the backgrounds andassumptions in relation to specific agenda items. On the dayof a meeting, we receive a simple explanation of agenda
items through an executive summary of the meeting materials and then we jump into discussions. Even if there are a lotof agenda items, we are able to work through them efficiently
thanks to being able to really focus on discussions.

Q

Sawada: If we liken the Board of Directors to a parent and theexecutive management team to its children, that would meanan effective Board of Directors is one that properly does thejob of a parent. As the parent, the Board should provide
advice to the executive management team, push them in theright direction, or tell them to stop when needed. If one’s
children grow to become capable adults, that means they
properly did their job as a parent. Similarly, if the executive
management team takes the right course, it means that theBoard of Directors is effective. Executive officers overseeing
major business areas attend meetings of the Board of
Directors, which enables such members of the executive
management team adopt the suggestions raised at Board
meetings and put them into action. Such coordination
between the Board of Directors and the executive management team is emblematic of a healthy parent–child relationship, to continue the prior metaphor.

How would you evaluate the effectiveness of
the Board of Directors at Komatsu?

Ohno: At Komatsu, meetings of the Board of Directors startwith a report from the President & CEO in which he reports onimportant management matters. These matters include
previews of the agenda items to be discussed at the meeting,newly emerging causes for concern, and information oninteractions with investors, customers, distributors, suppliers,and other stakeholders. If there are matters that are cause forconcern, these are explained upfront based on a stance of
putting the bad news first. These reports from the President& CEO are a venue through which the executive management
team provides important information to the members of theBoard in a timely manner. This openness ensures that there
are no surprises for us Outside Board Members and thereby
helps greatly improve the effectiveness of corporate
governance.
Sawada: Putting bad news first means that Board members
are able to offer advice or point out issues at an earlier stageof the situation. The President’s ability to take this stance ofquickly communicating undesirable realities is due to his trustin the members of the Board.

system, the regular compliance surveys, and the issuanceof compliance newsletters. Moreover, SLQDC (Safety, Law,
Quality, Delivery, and Cost) policies have been establisheddefining priorities for employee actions. These policies havecultivated a consistent stance toward tackling new issues
that has granted Komatsu an even greater sense of integrity.
This stance is a large contributor toward the soundness of
the Company’s management.

Ohno: Discussions at meetings of the Board of Directors arequite extensive and fulfilling. The Directors and Audit &Supervisory Board Members voice opinions based on theinsight and experience gained through their respective backgrounds, and I often find myself learning a lot from these
discussions. Komatsu’s Board has a policy of not limiting
discussion time, which means we can delve as deep into
matters as we need to ensure that everyone is convinced.

Sawada: If I were to try to describe Komatsu in the fewest
possible words, I would say that it is bold yet meticulous. I
was involved in research at Kao Corporation for 32 years. As
a result, research and development is a core part of who I am.

Sawada: Our ability to immerse ourselves in discussions isdue in part to the hard work of the Secretariat of the Board of
Directors and the people who give us briefings. Materials
pertaining to Board meetings are distributed well in advance

Ohno: Evaluations of the effectiveness of the Board of
Directors deliver high assessments every time. Regardless,
Komatsu never becomes complacent with these results andis always searching for ways to better facilitate discussions. I
am quite impressed with this diligence.

Ohno: I totally agree. If we Outside Board Members come tocompletely share the perspective of the executive management team and employees, we will be unable to fulfill our role.
This is why we need to maintain a separate perspective
based on the standpoint of external stakeholders. I hope thatthe executive management team will seek to make evengreater use of Outside Board Members as the questions andinput of such Members can bring new discoveries and cast
light on previously unidentified issues.

Q

What are your opinions of Komatsu’s
sustainability initiatives and the challenges it
faces in this regard?

Ohno: Komatsu’s business is truly matched to the current
era, which is characterized by a focus on sustainability. The
Company does not just supply construction equipment, italso provides software and solutions that utilize data in its
efforts to realize the safe, highly productive, smart and clean
workplaces of the future. Workplaces around the world are
Komatsu Report 2023

73

Komatsu's vision

Discussion with Outside Board Members

Michitaka Sawada

Kotaro Ohno

Career History

Career History

4/1981	Joined Kao Soap Co., Ltd.
(currently Kao Corporation)
6/2006	Took office as Executive Officer of
Kao Corporation
6/2008	Took office as Director, Executive
Officer of Kao Corporation
6/2012	Took office as Representative
Director, President and Chief
Executive Officer of Kao
Corporation
1/2021	Took office as Director, Chair of
Kao Corporation (current)
6/2022	Took office as Director of theCompany (current)

Anticipating Komatsu to continue to enhance its intelligence and integrity
while making workplace operations smarter.

Sawada: Komatsu takes a humble and earnest approach
toward sustainability, incorporating it into its management.
Looking at its efforts through the framing of ESG, theCompany conducts environmental initiatives to contribute todecarbonization by providing customers with options they
can choose based on their specific environmental needs. As
for social initiatives, Komatsu strives to achieve excellence
when it comes to respecting human rights issues, raising
employee engagement, and empowering female employees.
Ohno: The United Nations Sustainable Development Goals
are gaining increasing attention, which is also making all themore clear the significance of the steps Komatsu has taken
thus far. In terms of production and sales, Komatsu is proactively pursuing carbon neutrality by reducing its own CO2emissions while helping lower emissions from customer
workplaces. In addition, its forestry machinery business
contributes to the mechanization of sustainable forestry
processes, which in turn revitalizes forests and allows themto absorb greater quantities of CO2.
Moreover, as Komatsu is developing its business on a
global scale, it must pay particular attention to human rights
issues across its supply chain. The Company has begun
conducting human rights due diligence activities overseas.
Going forward, it will be important for Komatsu to remain

74

Komatsu Report 2023

Mid-term management plan

Sustainability

Corporate governance

Data



Outside Director

facing issues related to safety, eco-friendliness, and labor
shortages. If Komatsu is able to continue fulfilling its role insupporting society as a piece of infrastructure for use bysuch workplaces, it should contribute to the sustainablegrowth of the Company.

Business overview

highly receptive toward issues of global interest and to takean earnest stance toward responding to such issues.
Sawada: There are two important points to consider in practicing effective sustainability management. The first point is
to position sustainability at the center of management.
Sustainability is not just about contributing to society; it alsoentails linking a company’s business to sustainability andmaking it a core element of its business. The second point is
to make sure that all employees understand sustainability
and exercise this understanding at their respective workplaces. I hope that Komatsu will remain mindful of these twopoints as it works to generate a positive cycle for resolving
ESG issues and improving earnings to achieve sustainablegrowth by creating value for customers, which is the basic
concept of its growth strategies.

Q

What challenges will Komatsu need to tackle
over the medium to long term in order toimprove corporate value?

Sawada: I see three challenges that will need to be tackled to
improve corporate value. The first challenge is strengthening
businesses that will contribute to the resolution of global
environmental and social issues. Clear examples of suchbusinesses are the forestry machinery business and theunderground hard rock mining equipment business. There
are also opportunities for construction equipment to be used
to respond to natural disasters, such as forest fires andfloods, by helping with restoration and recovery. The second

Outside Audit &Supervisory Board Member
4/1976	Appointed as Prosecutor
7/2009	Took office as Vice-Minister ofJustice
7/2012	Took office as Superintending
Prosecutor of Tokyo High Public
Prosecutors Office7/2014	Took office as Prosecutor-General ofSupreme Public Prosecutors Office9/2016	Retired from the position ofProsecutor-General of Supreme
Public Prosecutors Office
11/2016	Attorney at law, Special Counsel ofMori Hamada & Matsumoto (current)
6/2017	Took office as Audit & Supervisory
Board Member of the Company(current)
1/2023	Took office as advisor of Atsumi &Sakai (current)

Expecting Komatsu to communicate its roles for the resolutionof social issues more proactively
challenge will be enhancing visualization of its corporate
activities. It is important for a wide range of stakeholders tounderstand Komatsu’s activities. Accordingly, the Company
should devote efforts to further improve corporate communications to foster such an understanding. The third challenge
will be recruiting talented individuals and promoting diversity
and inclusion. Komatsu still has a lot of room for improvementin this regard. I expect Komatsu to further pursue a company
of intelligence and integrity by tackling these challenges.
Ohno: Komatsu has superior technological capabilities and a
global business that contributes to the resolution of social
issues. Unfortunately, though, Komatsu does not appear so
prominently in rankings of popular companies to work at,which seems to indicate that these qualities are not particularly well known. Companies have to compete to recruit talented human resources, and succeeding in this competition
requires that a company inspire a wide range of people totake interest in it. I therefore think it is important for Komatsu
to improve its ability to convey such a message and raise its
profile, in order to communicate its role in society to a wider
range of stakeholders.
Sawada: Rather than taking a reserved approach toward
presenting its activities to external stakeholders, I feel that
Komatsu should be more proactive in this regard. If Komatsu
is more aggressive in broadcasting the role it fulfills in society, it will help improve its reputation among external stakeholders while also contributing to higher levels of motivationand engagement for employees.

Q

Lastly, what are your expectations for
Komatsu going forward?

Ohno: It is mainstream for Komatsu to continue its efforts tocontribute to the resolution of social issues through its business activities. The social role played by Komatsu is growing
increasingly more important, particularly with regard toaddressing labor shortages at construction and mining workplaces, improving workplace safety and productivity, andpromoting decarbonization. Also, given that two-thirds ofKomatsu Group employees work in countries other thanJapan, I think the Company should provide more opportunities to non-Japanese employees when it comes to theircareer development in order to become a truly global
company.
Sawada: As a business-to-business company, Komatsu
provides the behind-the-scenes support that is crucial to amyriad of industries. The workplaces Komatsu serves allpresent difficult conditions. Fortunately, Komatsu has ahistory of making workplace operations smarter through theuse of technologies like Komtrax and its autonomous haulage system. I want Komatsu to continue to evolve as anintelligent company with integrity to ensure that it is always
trusted by its stakeholders. Moreover, I hope that this process will make it so that all Komatsu Group employees canfeel pride in their company.

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75

Komatsu's visionCorporate governanceCorporate governance frameworkAt the Company, the Board of Directors is positioned as thecore of corporate governance, and to improve the effectiveness of discussions at meetings of the Board of Directors,
the Company has worked to put in place a system to ensure
thorough discussions of important management matters andprompt decision-making, and reform their operational aspect.
Having introduced the Executive Officer (Shikko Yakuin)

System in 1999, the Company has separated management
decision-making and supervisory functions from executivefunctions to the extent permitted by laws and regulations,and while appointing both Outside Directors and Outside
Audit & Supervisory Board Members, limits the Board of
Directors to a small number of members.

Elect / Discharge
Audit

Advise /SuggesBoard of Directors(Standing 5 /Outside 4)

Elect / Discharge /SuperviseInternal audit

Report /Submission

Elect / Discharge
Audit reports

Accounting Auditors(Audit corporation)

Recommend

Nomination Advisory
Committee

Recommend

2003:

8 members(0 Outside Directors)

8 members(1 Outside Director)(2 Outside Directors)

2005:

10 members(3 Outside Directors)

2017:
8 members(3 Outside Directors)

1994:

President and CEO
Strategy Review
Committee

Komatsu Group’s Global Operations

Executive Officers and Global Officers 56• Japan 33• Global 23 (including 16 foreign nationals)

Recommend

Audit reports

4 members

2021:

9 members(4 Outside Directors)(2 Outside Audit & Supervisory Board Members)

2006:

5 members(3 Outside Audit & Supervisory Board Members)Composition of Directors
5 Internal Directors

FemaleExecutive Officer

Non-Executive
Officer

4 Outside Directors

Composition of Audit & Supervisory Board Members
2 Standing Audit &Supervisory Board
Members

Major Committees

Product Safety Committee
Compliance Committee

Risk Management Committee
Export Control Committee
Sustainability Promotion
Committee

The Komatsu Way Committee
Disclosure Committee

3 Outside Audit &Supervisory Board
Members

Non- Female
Japanese
FemaleRatio of Outside Directors

Ratio of Outside Directors

44%

60%

Ratio of women

Ratio of women

20%

22%

Decide on the details of the items including election and discharge / Confirm suitability or independency of the Accounting Auditors

Komatsu Report 2023

1999:

28 members

Compensation Advisory
Committee

Collaboration

76

Supervisory Board to appropriately audit Directors’ executionof duties. In addition, the Company established theInternational Advisory Board (IAB) in 1995. Through the IAB,
the Company aims to secure objective advice and suggestions
from experts from Japan and abroad about how to function asa global company by exchanging opinions and holding discussions. Going forward, the Company will pursue increases to theeffectiveness of the Board of Directors while appointing
Outside Directors to ensure transparency and soundness andpromoting openness and accountability in management.

Composition of Directors and Audit & Supervisory Board Members (As of June 30, 2023)

Executive Functions
Internal Auditing
Dept.

Data

Board of Directors(1 Outside Audit& Supervisory
Board Member)Elect / Discharge

International
Advisory Board

The Company has proceeded to implement reforms to its
corporate governance system in order to ensure effective andadequate performance of matters related to management
decision-making and oversight. Specific reforms haveincluded separation of corporate management from businessexecution, enhancement of corporate management decisionmaking by the Board of Directors, strict management andsupervision of business execution, measures undertaken by
Outside Directors to improve transparency and objectivity ofmanagement, and measures undertaken by the Audit &3 members

General Meeting of Shareholders

Audit

Corporate governance

Audit & Supervisory Board

Corporate governance of the company (As of June 30, 2023)

Collaboration

Sustainability

Corporate governance reforms

We believe that corporate value represents the total sum of trust the greater society and our stakeholders place in Komatsu.
To become a company that enjoys more trust from shareholders and all other stakeholders, Komatsu is working to strengthen
corporate governance, improve management efficiency, advocate corporate ethics, and ensure sound management on agroup-wide basis. To further improve the transparency of management for its shareholders and investors, the Company discloses information in a fair and timely manner and actively engages in investor relations activities by holding meetings withshareholders and investors.

Office ofCorporate
Auditors’ Staff

Mid-term management planBasic views on corporate governance

Audit &
Supervisory Board(Standing 2 / Outside 3)

Business overview

Other organizations and systems
Organization /SystemEstablishment

Overview

2015

The Nomination Advisory Committee discusses matters related to the nomination of candidates for positions as
Directors and Audit & Supervisory Board Members and the appointment and dismissal of the President and otherexecutive officers and reports the results of these discussions to the Board of Directors.
Current members: Four Outside Directors, including the chairperson; one Outside Audit & Supervisory Board Member;and Chairman of the Board

Compensation
Advisory
Committee

1999

The Compensation Advisory Committee is responsible for discussing policies and levels for compensation of Directors
and Audit & Supervisory Board Members and reporting the results of these discussions to the Board of Directors andthe Audit & Supervisory Board.
Current members: Four Outside Directors, including the chairperson; three Outside Audit & Supervisory Board
Members; one external expert; and one internal member

International
Advisory Board

1995

The International Advisory Board was established with the purpose of incorporating the objective advice and suggestions of external experts on the management and corporate activities expected of a global company into the discussions of the Board of Directors.

Executive Officer
System1999

An Executive Officer (Shikko Yakuin) System was introduced in 1999 to separate supervisory functions from executivefunctions. This system has enabled the Company to limit the Board of Directors to a small number of members.

Global Officers

2016

Global officers are appointed to senior management positions at major overseas subsidiaries to facilitate the consolidated management of the Komatsu Group.

Nomination
Advisory
Committee

Komatsu Report 2023

77

Komatsu's visionCorporate governance

The Company holds Board of Directors’ meetings periodically, at least once every month. The Board of Directors deliberates and makes resolutions on important matters,
determines management policies of Komatsu, and rigorously
controls and supervises the execution of duties by all members of the executive management team including
Representative Directors. Of the nine (9) Directors on the
Board, four (4) are Outside Directors to ensure transparent
and objective management.
The names of the members of the Board of Directors are
as listed in “Activities of the Board of Directors” below, andthe Chairman of the Board chairs meetings of the Board of
Directors.
The Board of Directors make decisions on importantmanagement matters based on the Standards for Matters to

be Referred to a Meeting of the Board of Directors, andreports on business execution. While the business execution
reports cover virtually 100% of businesses on a consolidated
basis, that of very small operations is also reported, focusing
on their safety, compliance, and risk matters, in Board meetings. To ensure thorough discussions by the Board of
Directors, the Company secures ample time for thoroughdiscussions and has adopted a process in which the Board of
Directors meets twice to separately discuss and resolve
important agenda items.
In monthly Board meetings, the President directly reportson the latest conditions and topics of important matters,
including safety, compliance, and risk management, and the
CFO also reports on conditions related to sales, profit, orders
received, and borrowings.

Activities of the Board of Directors

Number of agenda items, etc., for Board of
Directors meetings in FY2022

During FY2022, the Company held 15 meetings of the Boardof Directors, and the attendance of individual directors isshown as follows.
Name
Tetsuji Ohashi

15

100%

Representative
Director

Hiroyuki Ogawa

15

100%

Masayuki Moriyama

15

100%

Representative
Director

Kiyoshi Mizuhara

15

100%

Director

Outside Director

Takeshi Horikoshi

100%

Outside Director

Makoto Kigawa

15

Takeshi Kunibe

13

86%

Naoko Saiki

15

Outside Director

Outside Director
Outside Director

Standing Audit &Supervisory Board
MemberStanding Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberArthur M. Mitchell
Michitaka Sawada

4

100%

15

100%

11

100%

100%

Terumi Sasaki

15

100%

Yasuhiro Inagaki

14

93%

Hirohide Yamaguchi

4

100%

Eiko Shinotsuka

14

93%

Kotaro Ohno

15

100%

Tatsuro Kosaka

11

100%

Note: Outside Director Makoto Kigawa and Outside Audit & Supervisory Board
Member Hirohide Yamaguchi retired at the 153rd Ordinary General Meetingof Shareholders held in June 2022, and Outside Director Michitaka Sawada
and Outside Audit & Supervisory Board Member Tatsuro Kosaka wereappointed at the same Ordinary General Meeting of Shareholders.
Therefore, the number of meetings of the Board of Directors to be attended
by these outside officers differs from that of other Directors and Audit &Supervisory Board Members.

78

Komatsu Report 2023

Agenda item numbers

Frequency Attendance
rate

Chairman of the
Board

President and CEO

Mid-term management plan

Sustainability

Corporate governance

Data



The Board of Directors

Position

Business overview

Free discussion

The support systems for Outside Directors and Outside Audit & Supervisory Board Members include the following.
Distribution ofmaterials andpre-meeting
briefings

As a general rule, the Company provides materials for Board of Directors meetings to Outside Directors and Outside Audit &Supervisory Board Members in advance of the meetings so that they have sufficient time to review the matters that are to be discussed. For newly appointed Outside Directors and Outside Audit & Supervisory Board Members, the concerned departments conduct explanatory meetings on the agenda items to be discussed at meetings of the Board of Directors, as needed. Such meetings areattended by the Secretariat of the Board of Directors and held prior to Board of Directors meetings.

Discussion
process

With respect to matters that may be of particular importance, the Board of Directors discusses them at the Board of Directors meeting
prior to the Board of Directors meeting where such matters are scheduled for resolution. In this manner, the Company ensures that the
Directors have sufficient time to review the matters before decisions are made and that they will have an opportunity to consider the
points noted in earlier discussions before deciding upon such matters.

Business site
tours

The Company also provides opportunities for Outside Directors and Outside Audit & Supervisory Board Members to visit businesssites other than the head office, where meetings of the Board of Directors and the Audit & Supervisory Board are mainly held, andlearn about the workplaces involved in the Company’s business.

Material
database

The Company has built a database that houses materials, minutes, and other information on past Board of Directors and other majorcommittee meetings. This database can be accessed by all members of the Board of Directors and the Audit & Supervisory Board
Members, including outside members. The Company has also built a database that houses materials and minutes of past meetings of
the Audit & Supervisory Board. This database can be accessed by all Audit & Supervisory Board Members, including outside members.

Evaluation of the effectiveness of the Board of Directors

Resolutions

39

Deliberations

9

Reports

39



Supporting system for Outside Directors and Audit &Supervisory Board Members

2 times

In addition to meetings, members of the Board of Directors
took part in the following activities
1. Free discussions were arranged centered on the topic of
medium- to long-term management issues.
2. Outside Directors and Outside Audit & Supervisory Board
Members held meetings at which these Outside Board
Members shared opinions regarding management issues
from their objective and independent standpoints.
Discussions with the President were also arranged tofoster sharing recognition.

The results of the evaluation of the effectiveness of theBoard of Directors conducted in FY2022 were as follows.

1. Process of analysis and evaluation

With regard to the process of analysis and evaluation, theCompany has confirmed the evaluation method for FY2022
based on the effectiveness evaluation method and results of
the Board of Directors’ evaluation from the previous fiscal year.

Outline of evaluation of the effectiveness of theBoard of Directors
Subjects

All nine Directors and all five Audit & Supervisory Board
Members

Conduction/
Evaluation(1) Questionnaire filled out by the subjects(2) Interviews with internal Directors and Outside Audit &Supervisory Board Members(3) Discussion by Outside Directors and Outside Audit &Supervisory Board Members(4) Analysis and evaluation based on (1) through (3) above
followed by planning and drafting of a proposal forholding a Board of Directors meeting(5) Report and discussion at the Board of Directors
meeting

Principal
topics(1) Size and composition of the Board of Directors(2) Proceedings of Board meetings (agenda setting)(3) Proceedings of Board meetings (reporting and explanation, provision of information, follow-up)(4) Discussion at Board meetings(5) Roles and functions of the Board of Directors(6) Self-evaluation

The above evaluation process is managed by the Secretariatof the Board of Directors and is part of a PDCA cycle. For

FY2023, the Company has incorporated advice from external
specialists (law firm) and increased the number of topics

when reassessing the topics. In the future, the Company willconsider introducing a third-party evaluation to further
Business site tour by Outside Directors and Outside Audit & Supervisory Board
Members (Ibaraki Plant)

enhance the objectivity of the evaluation.

2. Outline of the evaluation results

After reviewing the discussion by the Board of Directors,
based on the analysis of the questionnaires, interviews, anddiscussions arranged as part of the evaluations of effectiveness, the Company has confirmed that the effectiveness of
its Board of Directors remains ensured with a generally highlevel in regard to each of the evaluation items.
The main points that were highly rated were as follows:(1) Diversity of Board members (background, internationality,
gender, etc.)(2) Timely provision of information and explanation of management issues in the President’s report made at the beginningof Board meetings(3) Provision of explanatory videos in advance of Board meetings to simplify explanations on the day of the meeting andto ensure sufficient time for discussion(4) Frank and multifaceted discussions by members withdiverse backgrounds and knowledge(5) Promotion of dialogue with stakeholders, visits to businesssites by Outside Directors and Outside Audit & Supervisory
Board Members, and provision of opportunities for dialogue
with employees, etc.

Conversely, the issues to be further examined in the future
are as follows:(1) Continuation and enhancement of discussions on mediumand long-term issues (business portfolio, sustainability,
human capital, etc.) to enhance corporate value(2) Continuation of clarification of discussion themes, concise
reports focusing on the day’s key discussion points, efficient explanation of risks and opportunities, etc.
(3) More frequent meetings for Outside Directors and Outside
Audit & Supervisory Board Members, etc., and promotion of
exchanges between Outside Directors and Outside Audit &Supervisory Board Members and executive officers, etc.
In FY2023, the Company will work on these points toachieve an even more effective Board of Directors.

Komatsu Report 2023

79

Komatsu's visionCorporate governance

The activities of the Audit & Supervisory Board Members andthe Audit & Supervisory Board were as follows.

Terumi Sasaki

15

100%

Yasuhiro Inagaki

14

93%

offered appropriate opinions and discussed said mattersf) Received a report from the Compliance Department on thestatus of its activities and offered appropriate opinions anddiscussed said mattersg) Investigated the status of implementation of the basic
policy on internal controls and confirmed no issuesh) Discussed and passed resolutions regarding the revision of
the Company’s Audit & Supervisory Board regulations andaudit standards for Audit & Supervisory Board Members inlight of revisions of laws and regulations
Furthermore, the Audit & Supervisory Board also discussed and implemented improvements for efficient andeffective operation of the Audit & Supervisory Board andaudit duties.

Hirohide Yamaguchi

4

100%

3. Activities of Audit & Supervisory Board Members

Eiko Shinotsuka

14

93%

Kotaro Ohno

15

100%

Tatsuro Kosaka

11

100%

1. Frequency of and attendance at meetings of the
Audit & Supervisory BoardIn FY2022, 15 meetings of the Audit & Supervisory Board
were held, and the attendance of individual Audit &Supervisory Board Members is as follows.

Standing Audit &Supervisory Board
MemberStanding Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberName

Frequency Attendance
rate

Note: Attendance for Outside Audit & Supervisory Board Member Hirohide
Yamaguchi reflects attendance at meetings held before his resignation on
June 21, 2022. Attendance for Outside Audit & Supervisory Board Member
Tatsuro Kosaka reflects attendance at meetings held after he assumed his
position on June 21, 2022.

2. Details of discussions at meetings of the Audit &Supervisory Board

Details of discussions at meetings of the Audit & Supervisory
Board in FY2022 are as follows:a) M ade resolutions after deliberation on the audit policy,
audit method, audit plan, key matters, allocation of duties,
and audit reportb) Conferred with the independent auditor to identify key
audit matters (KAMs) in the audit and confirmed that thesewere disclosed properlyc) Discussed and confirmed the method of the independent
auditor’s audit, the appropriateness of the results, and its
independence of the independent auditord) Discussed the appointment or dismissal of the independent auditor and passed a resolution for reappointmente) Received reports on internal audit results of the Company andits subsidiaries from the Internal Auditing Department andIn accordance with the audit policies, assignment of duties, andother matters determined by the Audit & Supervisory Board, theAudit & Supervisory Board Members attended important meetings of the Board of Directors, the Strategy Review Committee,
the Compliance Committee, the Risk Management Committee,
and other bodies, and inspected and confirmed business operations and assets through review of important resolution documents and associated information as well as on-site inspectionof the Company and its subsidiaries.
Moreover, the Audit & Supervisory Board Members
endeavored to communicate and exchange information withRepresentative Directors, other Directors and Audit &Supervisory Board Members, and the management of theCompany and its subsidiaries, and received explanations andreports on execution of their duties and the status of businesses and also periodically received explanations and reportson the establishment, improvement, and operation of internal
control systems and expressed opinions as needed. In addition, the Audit & Supervisory Board Members worked to
improve the environment for auditing through liaison meetingsand individual interviews with the Internal Auditing Department
and subsidiaries’ standing Audit & Supervisory Board Members
while maintaining close contact to enhance effectiveness.
Furthermore, Audit & Supervisory Board Members also
monitored and verified whether the independent auditor
maintained its independent position and implemented appropriate audits, received reports on the execution of duties
from the firm, and requested an explanation as needed.

The following new Outside Audit & Supervisory Board Member was appointed at the Ordinary General Meeting of Shareholders
held in June 2023.

80

Komatsu Report 2023

Sustainability

Corporate governance

Data

Activities of advisory committees
Committee name
Chairman

Nomination advisory committee

Ms. Mariko Matsumura is an attorney at Shinwa Sohgoh Law Offices and has gained considerable knowledge and abundant experiencein the legal and compliance fields through positions including President of the Dai-Ichi Tokyo Bar Association.
Utilizing this knowledge and experience, the Company expects her to execute her duties as Outside Audit & Supervisory Board
Member from the standpoint of a specialist. Therefore, the Company nominated her as a candidate for Outside Audit & Supervisory
Board Member.
Although Ms. Matsumura has no experience being directly involved in corporate management, the Company has judged that she
will be capable of appropriately performing the duties of an Outside Audit & Supervisory Board Member based on the reasons above.

Compensation advisory committee

Outside Director (Takeshi Kunibe)

Members(As of June 30, 2023)

PurposeMeetings in FY2022

Agenda items in
FY2022

Outside Director (Takeshi Kunibe)

4 Outside Directors(Takeshi Kunibe, Arthur M. Mitchell, Naoko Saiki,
Michitaka Sawada)
Chairman of the Board
President

4 Outside Directors (Takeshi Kunibe, Arthur M. Mitchell,
Naoko Saiki, Michitaka Sawada)
1 Outside Director (Kotaro Ohno)
Chairman of the Board

3

4

Deliberation, resolution, and reporting to the Board of
Directors on selection of the next President and humanresource development methods, succession plans, andappointment and dismissal of Directors

Deliberation, resolution, and reporting to the Board of
Directors and Audit & Supervisory Board on remuneration
systems for Directors, Audit & Supervisory Board Members,
and Executive Officers to ensure objectivity and transparency•S election and cultivation of candidates for the next
President•N omination of Director and Audit & Supervisory Board
Member candidates•D irector and Audit & Supervisory Board Member skill
matrix•S
 election of Executive Officer candidates•M embership of Nomination Advisory Committee andCompensation Advisory Committee in FY2023, etc.

•E valuation of the mid-term management plan for
FY2019–2021•E valuation method for the mid-term management plan for
FY2022–2024•P erformance-based remuneration for Directors for FY2022•M onthly compensation levels for Directors and Audit &Supervisory Board Members for FY2023•E valuation indicators for performance-based remuneration
for Directors in FY2023, etc.

Succession plansOne of the items contained in the Code of Conduct for
Leadership/Top Management that has been clearly delineated in The Komatsu Way is “continue to think about yoursuccession plan.” In order to ensure that Komatsu’s management values are transmitted to the next generation, the basic
requirements for candidates for the position of President are
discussed and clearly defined by the Nomination Advisory
Committee. In addition, successors for important domestic

and overseas positions up to and including that of the
President are decided through the annual implementation of
succession plans (see chart below).
Selected candidates are assigned to challenging tasks
and granted even larger roles in the organization to systematically develop them in an environment that encourages the
pursuit of mutual growth.

Overview of succession plans
Results Feedback
Succession Plans

Evaluation and Selection of
Successors

Human Resource Relocations andCultivation

Oversight of Implementation Process
Board of Directors

Introduction of new Outside Audit & Supervisory Board MemberMariko Matsumura

Mid-term management planAudit & Supervisory Board Members and Audit & Supervisory BoardPosition

Business overview

Nomination Advisory Committee
Key Points for Cultivating
Leadership/Top
Management Successors

1. Foster willpower necessary to overcome challenges by having candidates experienceextremely difficult situations
2. Nurture organizational operation capabilities needed to unite parties with differing interests
3. Cultivate compliance awareness to prevent misconduct

Komatsu Report 2023

81

Komatsu's visionCorporate governanceperformance for a single fiscal year (bonus in cash and theStock-Based Remuneration A) as well as the performancebased remuneration (Stock-Based Remuneration B) that willreflect the degree of achievement of the targets raised in the
mid-term management plan, so that it will further contributeto the enhancement of the medium- and long-term corporate
value of the Company, by linking the remuneration.
The remuneration for Outside Directors only consists of basic
remuneration (fixed remuneration) designed to support their role
to make recommendations with respect to the overall management of the Company as a member of the Board of Directors.
Furthermore, the remuneration for Audit & Supervisory
Board Members only consists of basic remuneration (fixed
remuneration) designed to support their independent position with authority to audit the execution of duties byDirectors without getting fettered by the movements of corporate performance of the Company. The retirement allowance system for Directors and Audit & Supervisory Board
Members was terminated as of June 2007.

Composition of remuneration of Directors and Audit & Supervisory Board Members
Basic Remuneration(Fixed Remuneration)

Performance-Based Remuneration for a Single Year(Monthly remuneration 0–24 months)

Monthly remuneration x
12 months

Bonus in Cash
(2/3, in principle)*

Basic Remuneration(Fixed Remuneration)

Stock-Based Remuneration A(1/3, in principle)
Restricted Stock

Performance-Based Remuneration
Linked to Performance of Mid-term
management plan(Monthly remuneration 0–3 months)

Not influenced byCompany performance

Monthly remuneration x
12 months

Performance-based remuneration linked to performance of Mid-term management plan

The Company will pay Internal Directors the equivalent of a three-month portion of monthly remuneration every fiscal year as
remuneration linked to the period of the Company’s mid-term management plan by granting restricted stock as stock-based
remuneration (Stock-Based Remuneration B). In deciding Stock-Based Remuneration B, after the expiry of the period of themidterm management plan, the number of shares on which to lift transfer restrictions (within a range of 0%–100%) will bedecided based on the achievement of the management targets of the mid-term management plan presented in the abovetable and as general rule; the restriction of transfer on the shares will be lifted after three years from delivery.

Malus and clawback system

The Company resolved on Malus (reduction / confiscation) and Clawback (return) system at the meeting of the Board of
Directors held in April 2022. In the event of a significant revision of financial statements or an event that has a significant
impact on the reputation of the Company due to the execution of business by Directors, the performance-based remuneration paid to the Internal Directors could be required to be reduced, confiscated, or refunded. In principle, the content of the refund request, etc. be decided by the Board of Directors after deliberation by the Compensation Advisory
Committee according to each event.
The Company adopted all principles of Japan’s Corporate Governance Code after its June 2021 revision.

https://www.komatsu.jp/en/-/media/home/ir/corporate-governance/cgr_en.pdf?rev=30c1c9376d714556bf1e8499edc483eb&
hash=74B4E3CB68D8D237C24B4F16B5914A07

Komatsu Report 2023

Corporate governance

Data

Komatsu established the International Advisory Board (IAB) back in 1995 for the Board of Directors to incorporate, from external
experts, objective advice and suggestions concerning management and operations of Komatsu as a global company. The IAB has
met a total of 38 times through meetings of traditional bodies and new organizations combined. In April 2020, Komatsu commenced the 8th session of the IAB with the following advisors. In FY2022, the advisors took part in discussions with Directors andAudit & Supervisory Board Members and provided advice and suggestions with regard to risk management in global management.
Komatsu will continue to improve management and strengthen its corporate governance in order to enhance its corporate value.

Advisors of the 8th session (current)
Name

R. David Hoover

Risto Siilasmaa

Current position and brief background
2018–Present
2015–February 2021
2009–2018
2000–2015
1996–2013

Chairman of the Board, Elanco Animal Health
Board of Directors, Edgewell Personal Care Company
Board of Directors, Eli Lilly and Company
Board of Directors, Energizer Holdings, Inc.
Board of Directors, Ball Corporation (Chairman, 2002–2013)

2022–Present
2022–Present
2006–2022
2012–2020

Chairman of the Board of Directors, WithSecure Corporation
Director, F-Secure Corporation
Chairman of the Board of Directors, F-Secure Corporation (He is the founder of
F-Secure Corporation.)
Chairman of the Board of Directors, Nokia Corporation

2018–Present
2014–2020
2008–2010

Specially Appointed Professor, Osaka University
Outside Director, Komatsu Ltd.
Vice Minister, Ministry of Foreign Affairs

Mitoji Yabunaka

Stock-Based Remuneration B
Restricted Stock* The upper limit for Bonus in Cash is set at 12 months’ worth of monthly remuneration; the remainder of bonuses is to be paid as Stock-Based Remuneration A.

82

Sustainability

International Advisory BoardIn an effort to maintain an objective and transparent remuneration system, the policy and levels of remuneration for
Directors and Audit & Supervisory Board Members of theCompany are deliberated by the Compensation Advisory
Committee. Taking its reports and recommendations into
consideration, the remuneration for Directors is determinedby the Board of Directors, and the remuneration for Audit &Supervisory Board Members is determined by discussions by
the Audit & Supervisory Board Members, respectively, within
the range previously determined by resolution of the General
Meeting of Shareholders. With regard to the level of monthly
remuneration paid as basic remuneration, comparison byposition at other key, globally active manufacturers in Japanis made by the Compensation Advisory Committee and isreflected in its reports and recommendations.
The remuneration for Directors excluding the Outside
Directors (hereinafter “Internal Directors”) comprises basic
remuneration (fixed remuneration) and performance-based
remuneration linked to the Company’s consolidated

OutsideDirectors andAudit &
Supervisory
Board Members

Mid-term management planRemuneration systems

Internal
Directors

Business overview

Major executive committees
PurposeMeeting
frequency*2

Product Safety Committee

Discussions on and decisions regarding policies and systems related to product safety
activities and technologies, assessment of product safety activities of business divisions
and deliberation on issues regarding said activities, and reporting of important matters atmonthly Board of Directors’ meetings

Twice a year

Compliance Committee*1

Discussion on and decision and execution of policies and important measures pertaining
to group-wide compliance

Twice a year

Risk Management Committee*1

Discussion and approval of group-wide risk management tasks and risk countermeasures

Once a year

Export Control Committee

Discussion on and decision of policies and important matters regarding group-wide
security and export control measures and systems

Once a year

Sustainability Promotion
Committee*2

Discussion on and decision and execution of policies and important measures regarding
the environmental and social activities implemented as part of the Group’s ESG activities

Twice a year

The Komatsu Way Committee*1

Discussion on and decision and execution of policies and important measures regarding
human resources, labor affairs, education and human resource development, employee
benefits, and occupational health and safety management for the Company and the Group

Twice a year

Disclosure Committee

Discussion and assessment to facilitate accurate information disclosure as required by the
Financial Instruments and Exchange Act and submission of recommendations to internal
information control representatives regarding judgments on material developments

4 times a year

Committee name

*1 Chaired by the President*2 Meeting numbers are in principle, special meetings arranged when necessary

Komatsu Report 2023

83

Komatsu's vision

Risk management

Mid-term management plan

Basic principles and structure for risk managementResponse to climate changeIn addition to the basic policy for risk management to ensurebusiness continuity and stable development, Komatsu has
established Risk Management Rules to correctly recognize
and manage risks.
Furthermore, we have developed the Basic Manual for
Risk Management, which defines the response systems andrules to be utilized should a risk materialize along with specific risk items and the divisions responsible for said risk
items. This manual is periodically revised to ensure that risk
management systems are adapted to the constant changes
in the operating environment and in risks.
Komatsu has established the Risk Management
Committee to devise relevant policies for the entire Group,
review the risk management system, and evaluate andimprove upon the response measures in place for each risk
as well as to take control of risks when they arise. In FY2022,

Approximately 90% of the CO2 emissions from the lifecyclesof Komatsu construction equipment are attributable toproduct operation. Accordingly, we have the potential tohelp mitigate climate change by providing low-carbon products and solutions like Smart Construction, which helps
reduce CO2 emissions by optimizing work processes.
Conversely, if we do not conform to the regulatory requirements of the relevant countries or with the demands ofmarkets or if we are impacted by rapid changes in resource
demand, market entry by new competitors, or higher manufacturing costs due to the introduction of carbon taxes, wewill risk suffering future impacts to our earnings.
To address such risks, we are working to reduce the fuelconsumption and improve the efficiency of products whiledeveloping eco-friendly products. Efforts to develop suchproducts include refining existing hybrid and diesel-electric
technologies and utilizing new technologies, such as thoserelated to fuel cells and hydrogen engines. In addition tothese product-based improvements, we are also pursuingsolutions-based improvements through the development of
Smart Construction and forest management solution andthe meeting was held regularly in February and in June andOctober as needed. The committee regularly reports on its
deliberations and activities to the Board of Directors. In
FY2022, risk management was discussed by the International
Advisory Board and advice and suggestions were received
from advisors in order to gain objective input from outside
experts.
Komatsu will establish an emergency headquarters whenserious risks, such as the COVID-19 pandemic and the situation in Ukraine, occur and implement appropriate measures tominimize damage. Other important matters to be consideredfrom the perspective of risk management include corporate
governance; compliance; response measures for climatechange, pandemics, and other natural disaster risks; andframeworks for preventing transactions with antisocial forces.
We continue management efforts related to these matters.
Risk management system

Report asneededHazard risk

Inherent risks associated withcorporate activities such as theviolation of laws and scandals

Strategy risk
Risks related to significant changes
in social situations and businessuncertainties

Financial risk
Risks related to finance including
fluctuations in interest rates andstock prices

Komatsu Report 2023

Risk Management Rules

Operational risk

Review
regularly

Basic Manual for Risk Management

Risks of natural disasters and otherdisasters caused by external
factors

Sustainability

Corporate governance

Data



Risks facing the company

84

Business overview

Board of Directors
President

Reportregularly

Risk Management Committee(Chairperson: President)(When serious risks are exposed: Emergency Headquarters)

Reportregularly /Report asneededRisk Management Committee
Executive Office(General Affairs Department)

Primary division responsible for each risk

• Identify and review risk recognition• Perform activities to prevent risks and minimize
their effects• Take action when a risk is exposed​

Each division and each Group company​
Expert committees• Product Safety Committee• Compliance Committee• Export Control Committee• Sustainability Promotion Committee

Reportregularly

other solution. Furthermore, we are promoting investments
in environmental preservation through such means as the
adoption of an internal carbon pricing system to combat
rising production costs. We thereby look to conserve
energy during production processes as well as create clean
energy. Through these efforts, the Company aims to halve
CO2 emissions from the level in 2010 by 2030 and achievecarbon neutrality by 2050.
At the same time, we project that demand may rise forcopper and other resources necessary for items used toelectrified equipment, such as motors, batteries, and fuelcells. Seeking to seize this opportunity, we are expanding
our hard rock mining business (response to transition andopportunity risks). Meanwhile, the rise in natural disasters
associated with climate change is creating risks of damages
to the Company and its supply chain. We are therefore
taking steps to identify the water-related risks threatening
the Company and its supply chain while instituting business
continuity plan (BCP) drills and other measures such as the
expansion of cross sourcing to mitigate these risks(response to physical risks).

Response to geopolitical risksAs globalization processes, the outlook for the operating
environment is becoming increasingly opaque amid risingsocial, political, and military pressures.
As a global conglomerate, the Komatsu Group takes
steps to minimize the impacts of resource price fluctuations, trade restrictions, and supply chain complications
that result from diversifying geopolitical risks by confirming, analyzing, and addressing the political, economic, andregulatory trends of relevant countries.
In response to the situation in Ukraine, an emergency

headquarters led by the president was established inaccordance with the Company’s risk management policies,
steps were taken to protect the safety of employees andtheir families in areas affected by the conflict, and theexport restrictions implemented by countries around theworld were addressed.
We will continue to monitor such trends going forward in order to implement appropriate measures toensure the safety of customer’s operation site andaddress other issues.

Economic security measures
It is possible that further political division around the world
could result in various countries implementing more rigorous regulations. To respond to trends related to Japan’s
Act on the Promotion of Ensuring National Security
through Integrated Implementation of Economic Measuresand to economic security regulations and legislation, theKomatsu Group has appointed an individual responsible for
economic security who is tasked with collecting and analyzing relevant information.

Komatsu Report 2023

85

Komatsu's vision

Risk management

Komatsu has established business continuity plans (BCPs)
to ensure the continuity of core operations and to facilitatequick resumption of operations should they be interrupted.
As part of these plans, we hold regular initial response andproduction resumption drills based on major earthquake
and water damage scenarios. At production bases, we
implement measures to reinforce the seismic resistance ofstructures and production equipment while implementing
countermeasures to safeguard against water and winddamage from concentrated heavy rains and other weather
events in order to minimize the impacts of increasingly more
severe natural disasters. Moreover, the disaster responsereporting chains and standards for frontline sites have beenclarified to facilitate swift decisions by senior management
should a disaster strike.

In FY2022, a Groupwide BCP drill was held based on
the shared scenario of an eruption of Mt. Fuji. This drill was
designed to enhance inter-base coordination and to bolster responsiveness through training in anticipation of avariety of disasters.
We are focused on not only strengthening the BCPs of
Komatsu Group bases but also on strengthening the supply
chain system through BCP development and implementation
support for our business partners.
Komatsu will continue to ramp up its BCP initiatives inorder to build a flexible and sustainable supply chain that can
respond to an increasingly diverse range of risks.

1995

2007

2011

2018

2019

2020

Great Hanshin
Awaji Earthquake

Niigata prefecture
Chuetsu Offshore
Earthquake

Great East Japan
Earthquake

Heavy rainsin WesternJapan

TyphoonHagibis2020 Kyushu
floods● Initial responsemanual development for
ensuring safety● Business
continuity
manualdevelopment● Group-wide
deployment ofresponse
measures● Reconfirmation of natural disaster risks and countermeasuredevelopment● Improvement of BCP implementation procedures at the KomatsuGroup and business partners•P reparation of BCPs
for specific bases•E stablishment of
headquarters BCP
drill regulations

Mid-term management plan

Sustainability

Corporate governance

Data



BCP measures for addressing frequent natural disasters• Preparation ofdisaster responsemanuals• Formulation ofrisk-related
regulations

Business overview• Installation ofequipment andcommunications
infrastructure•E stablishment ofbase-specific BCP
drill regulations

2021• Installation of equipment and communications infrastructure• Establishment of base-specific BCP drill regulations• Revision of disaster response procedures to accommodate lower numbers of
employees at the office• BCP seminar for partner companies

2022● Groupwide BCP drill
based on shared
scenario• Enhancement ofinter-base coordination
and bolstering of
responsiveness• Measures at Group companies

Reinforcement of information security
As information security threats grow increasingly moresophisticated and complex, Komatsu is engaging in activities
for improving information security on a Groupwide level. For
example, we have assembled computer security incident
response teams (CSIRTs) to address security risks given thepotentially serious damages that could result fromcyberattacks.
(1) Management system CSIRTs have been put in place on
the regional and country level to accommodate Komatsu’s
entire global base network in order to implement an organization-wide information security system that is capable ofcombating cyberattacks. Under normal conditions, CSIRTs
are tasked with collecting information, instituting systembased countermeasures, and training employees to prevent
information security incidents. Should an incident occur, the
CSIRTs will play a central role in working to minimize damages
and quickly restore systems.

Reports on the activities of CSIRTs are regularly submitted to the Risk Management Committee, which is responsible
for Groupwide risk management. This sharing of information
on risk management challenges with the members of thiscommittee, which include the president and directors, facilitates more appropriate response measures.
(2) Personal information protection Protecting personal
information is a social responsibility. Recognizing this responsibility, Komatsu has formulated and disclosed its Personal
Information Protection Policy. Steps are taken to guaranteethat personal information is properly handled. These steps
include e-learning programs and internal audits. Overseas,
we comply with the European Union’s General Data
Protection Regulation and other laws, regulations, and social
expectations in countries and regions of operation in ourefforts to protect personal information.

(3) System measures Komatsu has instituted a multilevel
defense system combined with various system measures toprevent unauthorized access from outside of the Company,
computer virus infections, and other threats as well as information leakages resulting from these threats. For example, aspart of the process of implementing teleworking systems, weinstalled a rigorous verification system that employs ascheme in which multiple processes are required to accesssystems from outside of the Company.
(4) Education and training All employees engaged in thehandling of information assets are required to undergo regular e-learning programs. In addition, targeted attack email
drills are held several times a year to entrench procedures foraddressing suspicious emails. These drills target companies
in Japan as well as certain overseas subsidiaries in order toboost the level of information security on a global scale.
(5) Information security audits Information security auditsof Group companies are performed to improve the level of
information security across the entire Komatsu Group. In
principle, every company is required to undergo an audit atleast once every three years as part of an effort to confirm
information security-related conditions on an ongoing basis.

(6) Initiatives for improving information security across the
supply chain Our information security initiatives are notlimited to Komatsu and Group companies; we also requestthat affiliates across the supply chain with which confidential
information is shared during the course of business activities
practice information security management in accordancewith the Company’s policies. Effective, ongoing support isprovided for this purpose.
The appropriateness of IT equipment and other systembased countermeasures and of information management atsales agents and affiliates is regularly confirmed throughchecklists. In addition, we arrange meetings with such partners on information security subjects and recommend theuse of the information security education materials designated by the Company. We thereby aim to promote understanding of the importance of appropriate information
management among all parties responsible for handlingconfidential information or ensuring business continuity inorder to reduce risks.

Compliance
Komatsu established the Compliance Committee to oversee
compliance, and the committee regularly reports its discussions and activities to the Board of Directors. Komatsu alsoestablishes a system to ensure all Directors and employees
thoroughly comply with business rules as well as laws andregulations through a variety of measures, including theprovision of Komatsu’s Worldwide Code of BusinessConduct, appointment of the Executive Officer in charge ofcompliance, and establishment of the ComplianceDepartment. Through all of these measures we work tosupervise, educate, and train Directors, Audit & Supervisory
Board Members, and employees. In addition, Komatsu establishes an internal reporting system under which those whoare discreetly reporting questionable actions in light of laws
and regulations and business rules will not be given any
disadvantageous treatment.

Process for compliance activities
1. Declaration of Stanceby Senior Management
Formulate the Code

2. Implement the Code

3. Determine the Current
Status

4. Reacting toContingencies

Komatsu’s Worldwide Code ofBusiness Conduct

Training

Compliance and risk audits

Accidents, incidents

Five Principles of Compliance

Monthly Newsletter

Internal reporting systems

Statement of Compliance

Compliance Portal

Visualization survey(Interviews, online surveys)

Recurrence prevention
measures

For more information on our compliance-related initiatives including Komatsu's Worldwide Code of Business Conduct, pleaserefer to our corporate website:
https://komatsu.disclosure.site/en/themes/96#909

86

Komatsu Report 2023

Komatsu Report 2023

87

Komatsu's vision

Stakeholder engagement

Share information on the Komatsu Group’s

Distributors

Suppliers

Employees

Provide as many opportunities forSociety(employees, suppliers, distributors)

engagement as possible and practiceproper information disclosure to facilitate

understanding of Komatsu Group

Customers

Individual
shareholders

Institutional
investors andtheir analysts

Mass media

Localcommunity

Employees

Communication details

Explanations on business results, policies, and strategies fromthe President
Explanations on business results, policies, and strategies fromthe President
Safety patrols and support for suppliers' activities such as
obtaining certification

Explanations on business results, policies and strategies fromthe President
Global sharing of dialogues between employees and the President
via the intranet

Individual
shareholders
Institutional
investors andtheir analysts
Mass media
Local community

Activity examples

Frequency

Regular meetings with distributors ineach region

Five times a year

Regular meetings with Komatsu
Midori-kai

As needed

Dialogue with customers that makes Komatsu an indispensable
partner for them

Brand Management activities

Daily

Explanations on business results, policies, and strategies fromthe President and the CFO

Regular meetings with individual
shareholders

Daily

Explanations on business results, policies, and strategies fromthe President and the CFO

Sixteen times ayear in JapanIR meetings

As needed

Explanations on business results, policies, and strategies fromthe President and the CFO

SRI surveys

Daily

Media interviews

Daily

Mutual communication with local
communities

As needed

Volunteer activities

Daily

Explanation of initiatives related to operations, the environment,
and safety
Voluntary activities to resolve issues in local communities by
employees

For more information on engagement with stakeholders, please refer to the ESG databook.
https://komatsu.disclosure.site/en/themes/121

88

Komatsu Report 2023

Two times a year
in Japan

Plant tours for individual shareholders

Response to questionnaires, surveys, etc.

CONEXPO 2023 Komatsu IR Meetinghttps://www.youtube.com/watch?v=6EaKP8L03_Q

We hold plant tours in Japan for institutional investors, their analysts, and individual shareholders
in order to deepen understanding of our business activities. In FY2022, these tours were resumed
after a three-year hiatus in response to the COVID-19 pandemic. A total of 18 tours were held,
drawing more than 600 participants. After tours of facilities such as construction equipment
assembly lines, Q&A sessions were held, during which various questions were received on ourbusinesses. Institutional investors and their analysts made inquiries regarding trends and outlooks
on production and productivity improvement initiatives such as factory automation. Meanwhile,
individual shareholders asked about electrification and automation development of construction
and mining equipment and human resource development at Komatsu. These questions wereanswered by plant managers and other members of plant management, making these Q&A sessions a forum for interactive communication.

As needed

Labor-management councils

Explanations of business activities through tours of company
facilities

Over the five-day period spanning from March 14 to 18, 2023, we held an IR event in conjunction with
our exhibition at CONEXPO-CON/AGG 2023, an international construction equipment trade show heldin Las Vegas. Our event included five booth tours and one IR meeting, which saw numerous participation from Japanese and overseas institutional investors and their analysts. At the IR meeting, a lively
exchange of opinions was held between participants and management members including the CEOof Komatsu America Corp. on topics such as ASP strategies, demand in the North American market,
the latest trends in the mining business, and supply chain conditions.

Two times a year

Two times a year
As needed

Collaborative activities with customers to resove issues in local
communities where we operate

I R event in Las Vegas(for institutional investors and their analysts)

 esumption of Japan plant tours after three-year hiatus
R(for institutional investors, their analysts, and individual shareholders)Town-hall Meeting with the President
Virtual office of President

Dialogue with the labor union and employee representatives toimprove the workplace environment

Customers

Data

In FY2022, we resumed certain in-person IR activites such as the events of IR meetings and plant tours that had been suspended
in response to the COVID-19 pandemic. We will continue to conduct both online and in-person IR activities to provide opportunities for interactive communication with institutonal investors, their analysts, and individual shareholders going forward.

https://www.youtube.com/watch?v=H2G09pEgeuQ

Based on our “Management Principle” of maximizing the total sum of trust given to us by society and all stakeholders, we areproviding appropriate communication opportunities for each stakeholder and engaging in interactive communication.

Suppliers

Corporate governanceIR topics in FY2022


CONEXPO
2023 Komatsu Booth TourInteractive communication with various stakeholdersDistributors

Sustainability

Videos of our IR event at CONEXPO-CON/AGG 2023 can be found on our official YouTube channel.

Direct communication
by top management

Stakeholders

Mid-term management planIn order to become a company which enjoys more trust from all of our stakeholders, we are engaging in fair and timely disclosure of information and emphasizing the importance of direct communication by top management.

vision and the issues it faces

Business overview

Notice of online meeting for individual shareholders (Japanese only)
We will hold an online meeting for individual shareholders to explain matters such as
the status of the Komatsu Group, our future outlook, and the progress of the mid-term
management plan as detailed below.
At this meeting, members of top management will provide our business overview
and we would like to hear the shareholder's opinions.

Details of FY2023 online meeting with individual shareholders (tentative)

Time and date	7 p.m.–8 p.m. (JST), December 19, 2023 (Tuesday)
Method	The viewing website and viewing methods will be described in the interim business reports scheduled for distribution in early December 2023 (in Japanese only) and the “Shareholder events” section of our corporate website(in Japanese only). The briefing will be viewable from computers, smartphones, and tablets.
Attendance requirements	Open to shareholders of the Company as of September 30, 2023
Agenda
1. Explanation of mid-term management plan progress, interim financial results, and full-year financial outlook		
2. Question and answer session

For more IR-realated materials and information on events for individual shareholders and investors, please refer to the“Investor relations” section of our corporate website.
https://www.komatsu.jp/en/ir

Komatsu Report 2023

89

Komatsu's vision

Directors and Audit & Supervisory Board Members
Directors (As of June 30, 2023) 

Chairman of the Board

Outside Director

Tetsuji Ohashi

Takeshi Kunibe
5 years
108 thousand sharesNone

4/1985 Joined the Company
4/2019	Took office as President and Representative Director (current) CEO (current)

President and CEO
Representative Director

Hiroyuki Ogawa

CEO

Three pillars of growthstrategies of the mid-term
management plan

4/1976	Joined The Sumitomo Bank, Ltd.
(currently Sumitomo Mitsui Banking Corporation, hereinafter “SMBC”)
6/2003 Took office as Executive Officer of SMBC
10/2006 Took office as Managing Executive Officer of SMBC
4/2007	Took office as Managing Executive Officer of Sumitomo Mitsui Financial Group,
Inc. (hereinafter “SMFG”)
6/2007 Took office as Director of SMFG
4/2009	Took office as Director and Senior Managing Executive Officer of SMBC
4/2011	Took office as Representative Director, President and Chief Executive Officer
of SMBC
4/2017	Took office as Representative Director and President of SMFG Retired from
Director of SMBC
6/2017	Took office as Director President and Representative Executive Officer of
SMFG
4/2019 Took office as Chairman of the Board of SMFG (current)
6/2020 Took office as Director of the Company (current)
10/2021 Took office as Chairman of the Board of SMBC
4/2023 Retired from Director of SMBC

Arthur M. MitchellPresident of Mining Business Division

Number of Year (s) in Office
Number of Shares of the Company Held
Important Concurrent Positions Held in Other Organizations
4/1985
4/2023

2 years
37 thousand shares
None

Joined the Company
Took office as Director and Senior Executive Officer (current)

Outside Director

Naoko Saiki
Director andSenior Executive Officer

Takeshi Horikoshi
NEW

CFO

Number of Shares of the Company Held
Important Concurrent Positions Held in Other Organizations
4/1985
6/2023

Number of Year (s) in Office
1 yearNumber of Shares of the Company Held
None
Important Concurrent Positions Held in Other Organizations

Director, Chair of Kao Corporation
Outside Director of Panasonic Holdings Corporation
Outside Director of Nitto Denko Corporation

20 thousand shares
None

Joined the Company
Took office as Director and Senior Executive Officer (current)

Outside Director

Michitaka Sawada

Human Resources, Education and Sustainability

Number of Year (s) in Office
2 years
Number of Shares of the Company Held
None
Important Concurrent Positions Held in Other Organizations
Outside Director of Sojitz Corporation
Outside Audit & Supervisory Board Member of Development Bank of Japan Inc.

Outside Director of Sankyu Inc.
4/1982 Joined the Ministry of Foreign Affairs (hereinafter “MOFA”)
7/2014	Took office as Director-General, Economic Affairs Bureau and Councillor,
Cabinet Secretariat
10/2015	Took office as Director-General, International Legal Affairs Bureau
7/2017	Took office as Director-General, Foreign Service Training Institute, MOFA
1/2019 Retired from MOFA
4/2020	Took office as Visiting Professor, Graduate School of Public Policy, The
University of Tokyo
6/2021 Took office as Director of the Company (current)
4/2023 Special Assistant to the Minister for Foreign Affairs (current)Standing Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Yasuhiro Inagaki

Kotaro Ohno
Number of Year (s) in Office
Number of Shares of the Company Held
Important Concurrent Positions Held in Other Organizations
4/19836/2020Joined the Company
Took office as Standing Audit & Supervisory Board Member (current)

Terumi Sasaki

For more information on Directors and Audit &Supervisory Board Members, please refer to theAnnual Securities Report.

Outside Audit &Supervisory Board Member

Tatsuro Kosaka

NEWhttps://www.komatsu.jp/en/ir/library/annual-security-report

90

Komatsu Report 2023

Outside Audit &Supervisory Board Member

Mariko Matsumura

4/1976 Joined Chugai Pharmaceutical Co., Ltd.
10/2002	Took office as Vice President, General Manager of Corporate Planning Dept. of
Chugai Pharmaceutical Co., Ltd.
10/2004	Took office as Senior Vice President, General Manager of Corporate Planning
Dept. of Chugai Pharmaceutical Co., Ltd.
3/2005	Took office as Senior Vice President, Deputy Managing Director of Sales &Marketing Group of Chugai Pharmaceutical Co., Ltd.
7/2005	Took office as Senior Vice President, Head of Strategic Marketing Unit of
Chugai Pharmaceutical Co., Ltd.
3/2008	Took office as Senior Vice President, Head of Lifecycle Management &Marketing Unit of Chugai Pharmaceutical Co., Ltd.
3/2010	Took office as Director, Executive Vice President of Chugai Pharmaceutical Co., Ltd.
3/2012	Took office as Representative Director, President & COO of Chugai
Pharmaceutical Co., Ltd.
3/2018	Took office as Representative Director, President & CEO of Chugai
Pharmaceutical Co., Ltd.
3/2020	Took office as Representative Director, Chairman & CEO of Chugai
Pharmaceutical Co., Ltd.
3/2022	Took office as Senior Advisor (current)
6/2022	Took office as Audit & Supervisory Board Member of the Company (current)

Number of Shares of the Company Held
None
Important Concurrent Positions Held in Other OrganizationsPartner, Shinwa Sogo Law OfficesOutside Statutory Auditor of Fund Creation Group Co., Ltd.

Outside Member of the Board of Meiji Holdings Co., Ltd.

Outside Director of SODA NIKKA CO., LTD.
4/1988	Admitted to the bar in Japan as attorney at law (current)
Joined Braun Moriya Hoashi & Kubota
2/1994	Joined Ryudo Sogo Law Offices
1/2006	Joined Shinwa Sohgoh Law Offices as a Partner (current)
4/2022	Took office as President of Dai-Ichi Tokyo Bar Association
6/2023	Took office as Audit & Supervisory Board Member of the Company (current)

Corporate
Management

Sales &
MarketingCorporate
Management

Legal Affairs& Compliance

Innovative
Technologies/
DX
Environments

GlobalFinance/
Economics

GlobalHuman Rights/
Human Resources &Human Resource
Development

GlobalThe ability to identify and oversee “earnings power” in new and existing areas of business areas from a financial perspective

Innovative
Technologies/DX
Environments

The ability to oversee a positive cycle of improving profitability through innovation from technology (production development) and DX and through solving
ESG issues, including environmental issues

Sales & Marketing

The ability to identify risks/opportunities in the external environment of our global, multi-site business
The ability to oversee the protection of human rights as it relates to all our business activities and the ability to identify measures to enhance the diversity of
our human resource base
The ability to oversee legal and compliance matters to support the sustainable growth of new and existing businesses
The ability to anticipate and oversee risks/opportunities in global business development from a variety of perspectives (supply chain, geopolitics, etc.)

Innovative
Corporate
Finance/ Technologies/
Sales &
Management Economics
DX
Marketing
Environments

Name

Tetsuji Ohashi●

Hiroyuki Ogawa●●

Independent

●

●

●

●

●

●

●

Independent

Outside●Independent

Michitaka Sawada

Independent

●

●

●

Mariko Matsumura
OutsideOutsideIndependent●

Independent

Independent

Independent●●• As President and CEO, he focuses on, and supervises, all aspects ofachieving the Company’s growth strategies●• Expertise in development, marketing, and product support• Served as President of the U.S. subsidiary, supervising the mining business●• Has held key positions in the accounting and finance related
departments• Hands-on experience in Europe●• Experience in the fields of human resources and general affairs, compliance and sustainability

●

●

●

• Knowledge and experience in the field of international legal affairs as
an attorney●●• Knowledge and experience in the fields of international affairs, international law and economics• Experience in the business world, including global group corporate
management and ESG management practices●

Kotaro Ohno

Outside• Has held various important positions in the production departments, and has
served as President of the U.S. subsidiary and President of the Company.
• He oversees overall governance as Chairman●

Terumi Sasaki

Tatsuro Kosaka●●

Yasuhiro Inagaki

Outside●• Knowledge and experience in the business world, including the field offinance and group company management

Naoko Saiki
OutsideReason for selection●

Arthur M. Mitchell
OutsideGlobal●●Mitsuko Yokomoto
Outside●●Takeshi Horikoshi

Takeshi Kunibe

Human Rights/
Human
Legal Affairs
Resources &&HumanCompliance
Resource
Development●

Masayuki Moriyama

Number of Year (s) in Office
1 yearNumber of Shares of the Company Held
None
Important Concurrent Positions Held in Other Organizations

Senior Advisor of Chugai Pharmaceutical Co., Ltd.

Outside Director of Mitsubishi Electric Corporation
Outside Director of Olympus Corporation

3 years
22 thousand shares
NoneStanding Audit &Supervisory Board Member

4/1976 Appointed as Prosecutor
7/2009 Took office as Vice-Minister of Justice7/2012	Took office as Superintending Prosecutor of Tokyo High Public Prosecutors
Office7/2014 Took office as Prosecutor-General of Supreme Public Prosecutors Office9/2016	Retired from the position of Prosecutor-General of Supreme Public
Prosecutors Office
11/2016 Attorney at law, Special Counsel of Mori Hamada & Matsumoto
6/2017	Took office as Audit & Supervisory Board Member of the Company (current)
1/2023 Attorney at law, Special Counsel of Atsumi & Sakai (current)

Sales &
MarketingThis skill matrix presents categories of skills that the Board of Directors has deemed particularly worthy of focus and oversight by the respective
Directors and Audit & Supervisory Board Members with respect to management of the Company, upon having taken into account the primary abilities and expertise of each individual.

Directors

Joined the Company
Took office as Standing Audit & Supervisory Board Member (current)

Corporate
Management

Skill matrix for Directors and Audit & Supervisory Board Members of the Company

4/1981 Joined Kao Soap Co., Ltd. (currently Kao Corporation)
6/2006 Took office as Executive Officer of Kao Corporation
6/2008 Took office as Director, Executive Officer of Kao Corporation
6/2012	Took office as Representative Director, President and Chief Executive Officerof Kao Corporation
1/2021 Took office as Director, Chair of Kao Corporation (current)
6/2022 Took office as Director of the Company (current)

Number of Year (s) in Office
6 years
Number of Shares of the Company Held
None
Important Concurrent Positions Held in Other Organizations

Attorney at law, Special Counsel of Atsumi & Sakai

Outside Director of Mizuho Financial Group, Inc.

3. Enhance corporate resilience

Finance/Economics

GlobalAudit & Supervisory
Board Members

4/19846/2021

2 years
47 thousand shares
None

Management foundation

2. Maximize earnings power

Reasons for selection and content

Legal Affairs & Compliance

Mitsuko Yokomoto

Number of Year (s) in Office
Number of Shares of the Company Held
Important Concurrent Positions Held in Other Organizations

Core business

1. Accelerate growth by means of innovation

The ability to oversee resource allocation across the Company’s business segments holistically, and to identify investments in growth areas

Human Rights/Human Resources& Human Resource Development

Director andSenior Executive Officer

Audit & Supervisory Board Members (As of June 30, 2023) 

Growth Strategies Creating DANTOTSU Value

Topic

Corporate Management

Outside Director

Masayuki Moriyama

Data

Value creation

Topics on which
Directors and Audit &Supervisory Board
Members are to focus
particular attention andsupervision

7/1976 Registered as attorney at law in New York State, U.S. (current)
1/2003 Took office as General Counsel of Asian Development Bank
9/2007 Joined White & Case LLP
1/2008	Registered as registered foreign lawyer in Japan (current)
Registered foreign lawyer of White & Case LLP (current)
6/2020 Took office as Director of the Company (current)

4 years
78 thousand sharesNone

4/1982 Joined the Company
4/2022	Took office as Representative Director and Senior Executive Officer (current)

Representative Director andSenior Executive Officer

Corporate governanceIn order to achieve the growth strategies set out in the mid-term management plan, the following seven topics are defined as areas for focus andsupervision by the Directors and Audit & Supervisory Board Members with respect to management of the Company.

Number of Year(s) in Office
3 years
Number of Shares of the Company Held
None
Important Concurrent Positions Held in Other Organizations
Foreign lawyer of White & Case LLP

Number of Year (s) in Office
Number of Shares of the Company Held
Important Concurrent Positions Held in Other Organizations

Sustainability

Number of Year (s) in Office
3 years
Number of Shares of the Company Held
None
Important Concurrent Positions Held in Other Organizations:
Chairman of the Board of Sumitomo Mitsui Financial Group, Inc.

Outside Member of the Board of TAISHO PHARMACEUTICAL HOLDINGS CO., LTD
Outside Director/Audit & Supervisory Committee Member ofNankai Electric Railway Co., Ltd.

Joined the Company
Took office as Chairman of the Board (current)

Number of Year (s) in Office
Number of Shares of the Company Held
Important Concurrent Positions Held in Other Organizations

Mid-term management plan

Seven topics of focus and supervision by the Company’s Directors and Audit & Supervisory Board Members of the Company

Number of Year (s) in Office
14 years
Number of Shares of the Company Held
204 thousand shares
Important Concurrent Positions Held in Other Organizations
Outside Director of Yamaha Motor Co., Ltd
Outside Member of the Board of Nomura Research Institute, Ltd.

Outside Director of Asahi Group Holdings, Ltd.
4/19774/2022Business overview

●

●

●

●

• Knowledge and experience in legal affairs, business development
relations, and corporate planning●• Knowledge in the field of accounting and finance• Hands-on experience in Europe and the U.S.
• Served as the Prosecutor-General of the Supreme Public Prosecutors
Office, with knowledge and experience in the legal profession• Knowledge and experience in the business world as a top executive●●• Knowledge and experience in the legal and compliance fields as an
attorney

Outside Director, Outside Audit & Supervisory Board MemberDirector or Audit & Supervisory Board Member who meets the Company’s independence standards and for whom the Company has submitted or plans to submit an
Independent Director or Audit & Supervisory Board Member Notification to the Tokyo Stock Exchange (the Japanese stock exchange on which the Company’s shares are listed).

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Directors and Audit & Supervisory Board Members

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data



Executive Officers (Japan) (As of June 30, 2023) 

Executive Officers (Global) (As of June 30, 2023) *Executive officers overseas concurrently serve as Global Officers.

Senior Executive Officer (Jomu)

Executive Officer

President, Production Division

President, Smart Construction Promotion Division

Korekiyo Yanagisawa
Supervising Legal, General Affairs & Compliance,
Safety & Health Care and Brand Strategy

Koichi Honda

President, Construction Equipment Marketing Division

Yasuji Nishiura

President, Construction Equipment Solution Division
GM, Business Reform Department,
Construction Equipment Solution Division

Keiko Fujiwara

Chikashi Shike

Awazu Plant Manager, Production Division
GM, Business Reform Department, Awazu Plant,
Production Division

Takashi Yasukawa

President, Information Strategy Division

Shinji Maeda

Vice President, Production Division(Responsible for casting)

Norikatsu Nishiyama

President, Quality Assurance Division
Executive Officer

Supervising Industrial Machinery Business
Chairman of the Board, Komatsu NTC Ltd.

Chief Technology Officer (CTO)
President, Development Division

President, Service Division,
Construction Equipment Solution Division

Masami Naruse

Taisuke Kusaba

Hidefumi Obikane
Toru Sunada

Responsible for Economic Security

Toshiro Okada

President, Procurement Division, Production Division

Goro Senda

President, Parts & Reman Promotion Division,
Production Division

Naoyuki Sakurai

President, Defense Systems Division

Chairman & CEO, Komatsu America Corp.

Rodney Schrader

Executive Vice President,
North America Chief Technology Officer (CTO), andPresident, North America Engineering & Development,
Komatsu America Corp.
Technical Director, Komatsu Mining Corp.

Osamu Kitajima

Oyama Plant Manager, Production Division
Representative Director, President,
Komatsu Cummins Engine Co., Ltd.

Shinichi Araie

Osaka Plant Manager, Production Division

Norihiko Tanigawa

GM, Human Resources Department
GM, Global HR Unit, Human Resources Department

Kenichi Sato

Executive Officer

Vice President, Development Division

Atsushi Awai

GM, Manufacturing Engineering Development Center,
Production Division
Supervising Simultaneous Engineering Planning

President, Aftermarket Business Division,
Construction Equipment Marketing Division

Senior Executive Officer (Jomu)

Executive Officer

President, Sustainability Promotion Division

Takayuki Furukoshi

EuropeVice President, Japanese Domestic Marketing,Construction Equipment Marketing Division
Representative Director, President,
Komatsu Customer Support Japan Ltd.

President, Forest and Agriculture Business Division

Hiroyuki Umeda

North America

Yoshie Ideura

Masafumi Murakami

Ibaraki Plant Manager, Production Division

Seiichiro Harada

President and COO, Komatsu America Corp.

Kozo Okuda

Kosei Okamoto

Executive Vice President and CFO, Komatsu America Corp.

Gary Kasbeer

Vice President, Mining Business Division
President & CEO, Komatsu Mining Corp.

Peter Salditt

Executive Vice President & COO, Komatsu Mining Corp.

Nozomu Okamoto

Vice President, Mining Business Division
Technical Director, Mining Technology Solutions

President and CEO, Komatsu Europe International N.V.

Tadashi Maeda

AfricaExecutive Officer
President & MD, Komatsu South Africa (Pty) Ltd.

Michael Blom

Chief Operating Officer, Komatsu Europe International N.V.

Göksel Güner

Asia/Oceania
Executive Officer
President Director,
PT Komatsu Marketing and Support Indonesia

Koji Yanagi

President & MD, Komatsu Australia Pty. Ltd.

Sean Taylor
China

Senior Executive Officer (Jomu)
Representative of All China Operations
Chairman, Komatsu (China) Ltd.

Takuya Imayoshi

Jun Taniguchi

GM, Business Coordination Department

Kiyoshi Hishinuma

Global Officers (As of June 30, 2023)

Hiroaki Ohno

President, Japanese Domestic Marketing,Construction Equipment Marketing Division
Chairman of the Board,
Komatsu Customer Support Japan Ltd.

Hideki Yoshizawa

President, Product Marketing Division

Terumasa Imajo

Vice President, Development Division
GM, Engine Technical Center, Development Division
Representative Director, President,
Industrial Power Alliance Ltd.

Masaki Shinohara

GM, Komatsu Economic Strategy Research Center

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Komatsu Report 2023

North America

EuropeAsia/Oceania

President, Surface Mining, Komatsu Mining Corp.

President & MD, Komatsu UK Ltd.

President, Bangkok Komatsu Co., Ltd.

President & CEO, Hensley Industries, Inc.

President and MD, Komatsu Germany GmbH

President and CEO, PT Komatsu Indonesia

John Koetz

John Fiedler

South America
CEO, Komatsu Cummins Chile Ltda.
CEO, Komatsu Holding South America Ltda. (KHSA)

Darko LouitPaul Blanchard
Ansgar Thole

Executive Vice President and President,
Construction Division, Komatsu Germany GmbH

Ingo Büscher

President & MD, Komatsu Italia Manufacturing S.p.A.

David Bazzi

Charoen Ruengwilai
Jamalludin
China

President and CEO, Komatsu (China) Ltd.

Chunjiang Fei

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DATA

Business overview

Mid-term management plan

Sustainability

Corporate governanceData

11-years summary
Millions of yen

FY2012
Net sales

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

1,884,991

1,953,657

1,978,676

1,854,964

1,802,989

2,501,107

2,725,243

2,444,870

2,189,512

2,802,323

3,543,475

211,602240,495

242,062

208,577

174,097

268,503397,806

250,707167,328

317,015490,685

Income before income taxes and equity in earnings ofaffiliated companies

11.2

12.3

12.2

11.2

9.7

10.7

14.6

10.3

7.6

11.3

13.8

204,603

242,056

236,074

204,881

166,469

291,807377,471

223,114

162,775

324,568

476,434

Net income attributable to Komatsu Ltd.

126,321

159,518

154,009

137,426

113,381

196,410

256,491

153,844

106,237

224,927

326,398

Capital investment*1

136,962

179,070

192,724

160,051

142,006

145,668

179,210

166,552

163,174

147,762

161,563

Depreciation and amortization*1

88,00585,837

100,666

111,174

103,219

132,442

129,860

129,525

130,432

133,256

146,478

Research and development expenses

60,78864,47970,71570,73670,50773,62573,44774,76173,84077,47890,628

Total assets

2,517,857

2,651,556

2,798,407

2,614,654

2,656,482

3,372,538

3,638,219

3,653,686

3,784,841

4,347,522

4,875,847

Shareholders’ equity

1,193,194

1,376,391

1,528,966

1,517,414

1,576,674

1,664,540

1,815,582

1,771,606

1,912,297

2,232,511

2,539,641

47.4

51.9

54.6

58.0

59.4

49.4

49.9

48.5

50.5

51.4

52.1

585,926

513,918

481,817

349,081286,512663,740

779,890762,705

666,856

630,710763,787

0.49

0.37

0.32

0.23

0.18

0.40

0.43

0.43

0.35

0.28

0.30

Net cash provided by operating activities

214,045

319,424

343,654319,634

256,126

148,394

202,548

295,181354,129

300,970

206,474

Net cash used in investing activities(131,397)(167,439)(181,793)(148,642)(133,299)(377,745)(187,204)(190,930)(163,057)(143,569)(169,518)

Net cash provided by (used in) financing activities(71,814)(155,349)(143,983)(173,079)(107,718)

243,949(3,660)(3,457)(199,667)(93,868)(66,613)

Cash and cash equivalents, end of year

93,62090,872

105,905

106,259

119,901

144,397

148,479

247,616

241,803

315,360

289,975

983,130

983,130

971,967

971,967

971,967

971,967

972,252

972,581

972,887

973,145

973,450132.64167.36162.07145.80120.26208.25271.81

162.93112.43237.97345.22

Cash dividends per share (yen)

48.0

58.0

58.0

58.0

58.0

84.0

110.0

94.0

55.0

96.0

139.0

Consolidated payout ratio (%)

36.2

34.7

35.8

39.8

48.2

40.3

40.5

57.7

48.9

40.3

40.3

ROA (%)

8.5

9.4

8.7

7.6

6.3

9.7

10.8

6.1

4.4

8.0

10.3

ROE (%)

11.5

12.4

10.6

9.0

7.3

12.1

14.7

8.6

5.8

10.9

13.7

Exchange rate for the U.S. dollar (yen)*3

83

100

110

121

109

111

111

109

106

112

135

Exchange rate for the euro (yen)*3

107

133

140

132

119

130

129

121

123

130

140

–

–

–

–

–

–

–

–

–

83

93

46,73047,20847,41747,017

47,204

59,632

61,90862,82361,56462,77464,343

Overseas employee ratio (%)

64.3

61.8

61.0

60.7

62.7

66.7

68.4

68.4

67.5

67.7

68.4

CO2 emissions (Kt)*4

468

458

412

342

384

459

519

404

382

461

464

Waste generated (Kt)*4

112.1

101.4

83.2

62.4

83.5

113.1

117.8

95.6

74.2

92.7

104.0

Volume of water used (thousand m3)*4

5,836

5,086

4,319

3,761

3,469

4,059

3,963

3,570

3,238

3,140

3,081

Operating profit
Operating profit ratio (%)

Shareholders’ equity ratio (%)
Net interest-bearing debt*2
Net debt-to-equity ratio (times)

Number of common shares issued(thousands of shares)
Net income attributable to Komatsu Ltd. per share(yen)

Exchange rate for the Australian dollar (yen)*3

Number of employees (persons)*1 Capital investment is for property, plant and equipment only. Depreciation is the total of depreciation on property, plant and equipment and on intangible assets.
*2 Net interest-bearing debt = Interest-bearing debt – Cash and cash equivalents – Time deposits*3 Average exchange rates for the fiscal year
*4 Certain data has been revised and restated

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DATA

Financial highlights
Income before income taxes and equity inearnings of affiliated companies/ROA(Billions of yen)
5,000

(%)

3,000

11.3%

10.3%
2,725.2

2,444.9

2,000

7.6%

397.8
2018

Net sales

Operating profit

400
300

2,189.5

2,50.7
2019

6

490.7

317.0

167.3
2020

2021

Sustainability

Corporate governanceData2022 (FY)

10.8%

377.5

10.3%

3

0

Operating profit ratio

476.4

2019

10

80

4
162.8

2018

100

6

324.6

2020

2

2021

2022

(FY)

(%)

12

8

223.1

100

0

8.0%

6.1%

4.4%

200

CO2 emission index for product use
(%)

500

9

2,802.3(Billions of yen)
600

12

3,543.5

1,000

0

15

13.8%

4,000

Mid-term management planNon-financial highlights

Net sales/Operating profit/
Operating profit ratio
14.6%

Business overview

0

We have set the management target of reducing the CO2
emissions from product use (such as construction, mining
and forestry equipment) by 50% in FY2030 from FY2010.
To evaluate progress toward this target, we estimatedcurrent year’s CO2 emissions on the assumption that thecurrent product performance such as fuel consumption andoperation efficiency was the same as in the reference year
(FY2010). As a result of a comparison of the estimated emissions and the actual emissions, we have achieved a 21%
reduction (compared with FY2010) in FY2022.

100
88

86

86

79

81

57
Target
50

60

40

20

0

2010

2018

2019

2020

2021

2022

2030

(FY)

Income before income taxes and equity in earnings of affiliated companies
ROA

Net income attributable to Komatsu Ltd./ROE

Net interest-bearing debt/Net debt- to-equity ratio

Changes in Reman sales

Incidence rate of occupational accidents(Frequency rate of lost work time)(Billions of yen)

(Billions of yen)

(%)(Frequency rate)

400

(%)

13.7%

300

10.9%
256.5

8.6%

200

0

326.4

2019

763.8
666.9

0.43

630.7

0.28

2.5
294

300
0.6

0.43
0.35

350

0.4

0.30

0.2

250
200
150
100

100

120

125

152

135

201

175

226

217

207

2021

2022

(FY)

0

0

ROE

2018

2019

Net interest-bearing debt*

2020

2021

2022

(FY)

0

0

1.83

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (FY)* Net interest-bearing debt = Interest-bearing debt – Cash and cash equivalents – Time deposits

1.79

1.29
0.88

0.73

0.65

0.56

0.20

0.31

0.16
2019

2018

0.80
0.59

0.57

0.37

0.28

0.44

0

2.06

1.54

1.44

0.5

2.09

1.95

1.80

1.0

Note: Base FY2010 = 100

Net debt-to-equity ratio

2.0
1.5

177

157

50

2020

Net income attributable to Komatsu Ltd.

0.8
762.7

200

4

106.2

2018

400

8

153.8

779.9

600

12

224.9

5.8%

100

800

16

14.7%

(times)

2020

0.29

0.55

0.11
2021

2022 (FY)

All industries (Japan)
Construction and mining equipment manufacturing industry (Japan)
Komatsu Group (Global)
Komatsu Group (Japan)
Komatsu (Non-consolidated)

Notes: 1. The data for all industries (Japan) and construction and mining equipment manufacturing industry(Japan) are provided by the Ministry of Health, Labour and Welfare.

2. The scope of the Komatsu Group (Japan) includes Komatsu Ltd. and group companies in Japan.
3. The scope of the Komatsu Group (Global) includes “Komatsu Group (Japan)” and overseas

Shareholders’ equity/
Shareholders’ equity ratio(Billions of yen)

(%)

3,000
2,500

49.9%

48.5%

51.4%

60

52.1%

50

2,539.6
2,232.5

2,000
1,500

50.5%

1,815.6

1,771.6

30

1,000

20

500

10

0

2018

Shareholders’ equity

2019

2020

2021

Shareholders’ equity ratio

Global Officers

Female employees(Billions of yen)

(People)(People)(%)

200

2022

(FY)

0

4.7
184.6

150

40

1,912.3

production plants.

Capital investment, Depreciation andamortization

129.9

30
5.1
173.5

129.5

5.1
174.6

130.4

100

5.4
155.7
133.3

8.1
174.0

28

26

146.5

27

18

18

19

19

800

16

2018

2019

2020

2021

2022

Construction, Mining and Utility Equipment & Retail FinanceIndustrial Machinery and Others
Depreciation and amortization

(FY)

0

Total

400

2018

2019

2020

2021

Non-Japanese Global Officers among total

Note: Data as of March 31 of each fiscal year

2022

(FY)

0

15

23

12.3%

12.3%

12.4%

12.3%

11.4%

11.2%

10.8%

11.0%
16

10

341

5

8.9%

10

20

1,507

1,451

1,443

1,438

1,200

23

20

50

0

1,600
29

292

168

2019

9.3%

300

172

2020

Number of female employees
Number of female managers
Number of female junior managers

9.2%

312

9.5%

192

177

2021

2022

(FY)

0

Ratio of female employeesR atio of female managers
Ratio of female junior managers

Notes: 1. Komatsu's non-consolidated data as of March 31 of each fiscal year

2. Number (ratio) of female managers include executive officers and junior managers

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Komatsu's vision

DATA

Business overview

Mid-term management plan

Sustainability

Corporate governance

Data

External recognition

Corporate information

We have been selected for inclusion in the following SRI indexes and IR awards.

Company name

Number of issued shares

Transfer agent

Komatsu Ltd.

973,450,930
(including treasury stock)

Mitsubishi UFJ Trust and Banking
Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, Japan

Head office

Number of shareholders

2-3-6 Akasaka, Minato-ku, Tokyo, Japan216,078

EstablishedOne unit of shares

May 13, 1921
CDP Climate Change A List
CDP Water Security A List

Dow Jones Sustainability
Indices (DJSI) WorldMSCI ESG Leaders Indexes*1

100

Common stock
Consolidated:(As of March 31, 2023)

Securities code

¥69,660 million

6301(according to U.S. GAAP)

Stock listings

Number of employees

Depositaries (ADRs)
The Bank of New York Mellon
101 Barclay Street, New York, NY
10286, U.S.A.
Tel: +1-(201)-680-6825 for international calls and 888-269-2377(888-BNY-ADRS) for calls within U.S.A.
URL: https://www.adrbnymellon.com/
Ticker Symbol: KMTUYTokyo Stock Exchange Prime Market

Consolidated:64,343
Non-consolidated:12,208
Average age*:
40.9
Average length of service*:
16.4* non-consolidated

ISS-Oekom Prime

MSCI Japan
Empowering Women Index*1

MSCI JapanESG Select Leaders Index*1

FTSE Blossom Japan Index*2

S&P/JPX Carbon Efficient Index

EcoVadis Silver

Major shareholders
Number of shares held(Thousands of shares)

Shareholding
ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

162,789

17.20

Custody Bank of Japan, Ltd. (Trust Account)

69,758

7.37

JP Morgan Securities Japan Co., Ltd.

25,902

2.73

STATE STREET BANK WEST CLIENT - TREATY 505234(standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division)

25,455

2.69

Taiyo Life Insurance Company

24,7002.61

Nippon Life Insurance Company (standing proxy: The Master Trust Bank of Japan, Ltd.)

21,301

2.25

THE BANK OF NEW YORK MELLON AS DEPOSITARY BANK FOR DEPOSITARY RECEIPT HOLDERS(standing proxy: Sumitomo Mitsui Banking Corporation)

20,185

2.13

STATE STREET BANK AND TRUST COMPANY 505223(standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division)

16,447

1.73

JP MORGAN CHASE BANK 385632(standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division)

14,145

1.49

Komatsu Employees Shareholding Association

12,2461.29

Notes: 1. Shareholding ratio is calculated by subtracting treasury stock.
2. Although the Company holds 27,445 thousand shares of treasury stock, it is excluded from the major shareholders listed above.

Stock information (including treasury stock)

DX Platinum Companies
2023–2025

SBT

Tokyo Stock Exchange (TSE)the Corporate Value Improvement AwardGrand Prix

*1 The inclusion of Komatsu ltd in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names HEREIN, do not constitute a sponsorship, endorsement or promotion of
Komatsu ltd by MSCI or any of its affiliates. The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.
*2 FTSE Russell confirms that Komatsu has been independently assessed according to the index criteria, and has satisfied the requirements to become a constituent of the FTSE Blossom
Japan Index. Created by the global index and data provider FTSE Russell, the FTSE Blossom Japan Index is designed to measure the performance of companies demonstrating strong
Environmental, Social and Governance (ESG) practices. The FTSE Blossom Japan Index is used by a wide variety of market participants to create and assess responsible investment funds
and other products.

For more information on our external recognition, please refer to our corporate website:
https://komatsu.disclosure.site/en/themes/133

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Komatsu Report 2023

● Financial.............................................. 33.9%

Breakdown of
Shareholders(%)● Foreign................................................ 40.4%● Individual and other........................ 17.8%● Corporate.............................................. 2.0%
● Securities.............................................. 5.6%

330,679,211 shares

183 shareholders

393,849,560 shares

1,184 shareholders

173,635,235 shares

213,040 shareholders

19,926,581 shares

1,589 shareholders

55,360,343 shares

82 shareholders

For more information on the our stock and rating information, please refer to our corporate website:
https://www.komatsu.jp/en/ir/shares

Komatsu Report 2023

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