Financial Results
for the Six Months Ended
September 30, 2021
November 11, 2021

KATO WORKS CO., LTD.

Table of Contents
Progress To The Next Stage

Ⅰ． Summary of Consolidated Financial Results for the
Six Months Ended September 30, 2021

P.2

1.

Summary of consolidated financial results

2.

Changes in consolidated financial results

3.

Consolidated statement of income

P.5

4.

Analysis of changes in operating loss

P.6

5.

Consolidated balance sheet

P.7

6.

Consolidated statement of cash flows

P.8

7.

Changes in consolidated net sales by principal item

P.9-P.12

8.

Changes in consolidated net sales by destination

P.13

P.3-P.4

Ⅱ． Full-year Consolidated Financial Results Forecast
for Fiscal Year Ending March 31, 2022
1.

Full-year consolidated financial results forecast for fiscal
year ending March 31, 2022

Ⅲ. KATO Reborn Project
Ⅳ．TOPICS

P.14

P.15
P.16-P.18
1

Summary of consolidated financial results
Progress To The Next Stage Net sales for the six months ended September 30, 2021 increased by 16.1% year-on-year

to 30,959 million yen.
 While the review of cost structure and the improvement of working capital have beenongoing through “KATO Reborn Project”, it will take time for their effects to emerge.
Therefore, profits are still on the way to recovery.
(Unit: millions of yen)
Results forResults for
YOY comparison
the six months ended
the six months ended
The numbers in parentheses
are percent changes.
September 30, 2020
September 30, 2021

Net
sales

26,67430,959Operatingprofit(loss)(1,522)(1,033)489

Ordinary
profit(loss)(1,126)

(932)

193

Profit (loss)
attributableto ownersof parent(1,310)

(988)

322

4,285

[16.1%]

[－]

[－]

[－]

2

Changes in consolidated financial results
Progress To The Next Stage(Unit: millions of yen)

Operating profit (loss)/
Operating profit (loss) margin

Net sales
50,00045,000

2,000

2.0 %

1.6%

41,8891,500

40,0000.0 %35,00030,00030,95926,67425,000

1,000

686

500

(2.0)%(3.3)%

0

20,000(4.0)%(500)
15,000(1,000)10,000(5.7)%(1,033)(1,500)5,000(6.0)%(1,522)0
For 6 months ended For 6 months ended For 6 months ended
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2021

(2,000)(8.0)%For 6 months
ended Sep. 30,
2019

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

3

Changes in consolidated financial results
Progress To The Next Stage(Unit: millions of yen)

Profit (loss) attributableto owners of parent

Ordinary profit (loss)

2,000

2,000

1,500

1,500

1,000

500

1,000

432
500

0

0

(51)
(500)

(500)

(1,000)(1,126)(932)(1,500)(1,000)(988)(1,310)(1,500)(2,000)For 6 months
ended Sep. 30,
2019

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021(2,000)For 6 months
ended Sep. 30,
2019

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

4

Consolidated statement of income
Progress To The Next Stage(Unit: millions of yen)

For the 6 months ended
Sep. 30, 2020
AmountPercentage

For the 6months ended
Sep. 30, 2021
AmountPercentage

Year-on-year
AmountchangePercentchangeNet sales

26,674100.0%

30,959100.0%

4,285

16.1%

Cost of sales

24,03590.1%

27,235

88.0%

3,199

13.3%

Gross profit

2,638

9.9%

3,724

12.0%

1,085

41.1%

Selling, general andadministrative expenses

4,161

15.6%

4,757

15.4%

596

14.3%

Operating profit (loss)(1,522)(5.7)%(1,033)(3.3)%

489

-

396

1.5%

100

0.3%

(295)

(74.6)%(1,126)(4.2)%(932)(3.0)%

193-

Extraordinary income (losses)

108

0.4%

15

0.0%

(93)

(86.1)%

Profit (loss) before income
taxes(1,018)(3.8)%(917)(3.0)%

100-

Income taxes

316

1.2%

46

0.1%

(270)

(85.5)%

Profit (loss) attributable to noncontrolling interests(24)(0.1)%

24

0.1%

49

-

(1,310)(4.9)%(988)(3.2)%

322-

Non-operating income (expenses)
Ordinary profit (loss)

Profit (loss) attributable toowners of parent

 Increase in gross profit (up 41.1%
year-on-year)
2,638 million yen → 3,724 million yen[1,085 million yen]
→ Consecutive year-on-year increase from thefirst quarter Improvement of cost of sales ratio

90.1％ → 88.0％[(2.1)%]→ End of the production adjustment until theprevious year under the COVID-19 pandemic

5Analysis of changes in operating profit (loss)
Progress To The Next Stage(Unit: millions of yen)

(1,033)Operating profit(loss) for six
months ended
Sep. 30, 2020

VolumeSelling price/
Cost/Productline-upExchange

SGA

Operating profit(loss) for six
months ended
Sep. 30, 2021

 Factors of changes in operating profit (loss)* Increase in sales volume

380 million yen* Changes in selling prices/costs/product line-up

638 million yen* Fluctuations in exchange* Increase in selling, general and administrative expenses

66 million yen

489 million yen(595) million yen
6Consolidated balance sheet
Progress To The Next Stage(Unit: millions of yen)
As of March 31, 2021

AmountNon-current assets

Liabilities
andNet assets
Net assets

AmountPercentage

Amountchange14,782

12.8% 1

9,319

16.9%

4,536

Trade receivables

32,813

28.3% 3

1,085

27.1%

(1,727)40,814

35.2% 3

7,844

33.0%

(2,969)Other(2,715)(2.3)%(3,418)(3.0)%(703)

Total current
assets85,69474.0%

84,830

74.0%

(864)

Property, plant andequipment

25,23521.8%

24,735

21.6%

(499)

Intangible assets

422

0.4%

398

0.3%

(24)

4,469

3.9%

4,638

4.0%

169

30,12726.0%

29,772

26.0%

(355)

Total assets

115,822100.0%

114,603100.0%(1,219)Trade payables

12,253

10.6%

14,259

12.4%

2,005

Interest-bearing debt

46,51240.2%

43,23437.7%(3,278)

Other

5,561

4.8%

6,090

5.3%

529

Total liabilities

64,327

55.5%

63,584

55.5%

(743)

Retained earnings

38,18833.0%

37,06532.3%(1,122)

Valuation and translation
adjustments

2,312

2.0%

2,853

2.5%

540

Investments and otherassetsTotal non-current
assetsLiabilities

Percentage

Year-on-year

Cash and deposits

Current assets Inventories

Assets

As of September 30, 2021

Other

10,993

9.5%

11,1009.7%

106

Total net assets

51,49444.5%

51,018

44.5%

(475)

115,822100.0%

114,603100.0%(1,219)Total liabilities andnet assets

 Decrease in trade receivables
32,813 million yen → 31,085 million yen[(1,727) million yen]
→ Trade receivables turnover period improved.
(As of Mar. 31, 2021 : 204.7 days
As of Sep. 30, 2021

: 183.2 days)

 Decrease in Inventories
40,814 million yen → 37,844 million yen[(2,969) million yen]
→ Inventory turnover period improved.
(As of Mar. 31, 2021 : 254.6 days
As of Sep. 30, 2021

: 223.1 days)

 Decrease in interest-bearing debt
46,512 million yen → 43,234 million yen[(3,278) million yen]
→ Decrease due to repayment of long-termborrowings

7

Consolidated statement of cash flows
Progress To The Next Stage(Unit: millions of yen)

Cash flows from operating
activities

Cash flows from investing
activities

Cash flows from financing
activities
Increase (decrease)

For the 6 months ended
Sep. 30, 2020

For the 6 months ended
Sep. 30, 2021

AmountAmountProfit (loss) before income taxes(1,018)(917)

Depreciation

1,024

959

Decrease (increase) in tradereceivables

9,235

2,277

Decrease (increase) in inventories(1,513)

3,088

Increase (decrease) in trade
payables(6,856)

1,884

Other, net

(670)

207

 Increase in CF from

Net cash provided by (used in)operating activities

200

7,499

operating activities(1,787)

(907)

(138)

180

Net cash provided by (used in)investing activities(1,925)(727)

Increase (decrease) in interest-bearing
debt

1,602

(3,379)

 Decrease in CF from

Other, net

(113)

(221)

financing activities

Net cash provided by (used in)financing activities

1,489(3,601)

29

148

(206)

4,704

11,101

14,614Purchase of property, plant andequipment
Other, net

Effect of exchange rate change
Net increase (decrease)
Cash and cash equivalents at beginning of
periodIncrease in cash and cash equivalents
resulting from inclusion of subsidiaries in
consolidation

Cash and cash equivalents at end of
period10,895→ Mainly from decrease in tradereceivables and decrease ininventories→ Mainly from repayment oflong-term borrowings

19,3198

Changes in consolidated net sales by principal item
Progress To The Next Stage(Unit: millions of yen)For 6 months ended
For 6 months ended
For 6 months ended
Year-on-year
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2021
Composition
Composition
Composition Amount
Percent
AmountAmountAmount
ratio
ratio
ratio
changechangeMobile cranes
Domestic sales
Overseas sales
Subtotal

23,971
2,804
26,776

57.2% 14,192
6.7%
1,776
63.9% 15,969

53.2%
6.7%
59.9%

14,074
3,212
17,286

45.5%
10.4%
55.8%

(118)
1,435
1,316

(0.8)%
80.8%
8.2%

6,451
8,243
14,695

15.4%
5,024
19.7%
5,273
35.1% 10,298

18.8%
19.8%
38.6%

6,241
6,955
13,196

20.2%
22.5%
42.6%

1,216
1,681
2,898

24.2%
31.9%
28.1%

Domestic sales
418
1.0%
406
1.5%
Overseas sales
0
0.0%
0
0.0%
Subtotal
418
1.0%
406
1.5%
Total
Domestic sales
30,841
73.6% 19,623
73.6%
Overseas sales
11,048
26.4%
7,050
26.4%
Total
41,889100.0% 26,674 100.0%
Changes in net sales by principal item

474
0
475

1.5%
0.0%
1.5%

68
0
69

16.9%
17.2%

20,790

67.2%

1,166

5.9%

10,16830,95932.8%
100.0%

3,118
4,285

44.2%
16.1%

 Mobile cranes
Domestic: Demand was on a recovery
track but not in full swing yet,and thus leveled off.
Overseas: Sales recovered mainly in
products for Asia and Oceania.

Construction equipment

Domestic sales
Overseas sales
Subtotal
Industrial equipment

 Construction equipment
Domestic: Demand remained steadydue to recovery in public
sector and private sector
constructions.
Overseas: Sales increased in North
America and Europe.

Changes in domestic and overseas net sales(Unit: millions of yen)

(Unit: millions of yen)

50,00045,00040,00035,00030,00025,00020,00015,00010,0005,000
041,88926,67430,959418
14,695475
406
10,29826,776

For 6 months
ended Sep. 30,
201913,196

Industrial
equipment
Construction
equipment

15,96917,286

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

Mobile cranes

50,00045,00040,00035,00030,00025,00020,00015,00010,0005,000
041,88926,67430,9597,050

10,168

19,623

20,790For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

11,04830,841

For 6 months
ended Sep. 30,
2019

Overseas

Domestic

9

Changes in consolidated net sales by principal item
(Mobile cranes）[Explanation of main products]
Rough terrain cranes(Unit: millions of yen)

Changes in net sales• Operations for traveling and a crane are available at one
operator’s cab.
• Excellent in abilities for traveling rough terrain andturning in a small radius• For domestic (4.9t - 80t, 7 models)• For overseas (13t - 70t, 8 models)

Progress To The Next Stage

30,00025,00026,776

15,96917,286

1,776

3,212

Overseas

14,192

14,074

Domestic

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

2,804

20,000All terrain cranes• Operator’s cabs are independent respectively for traveling andfor crane operations.

15,000• Cranes with abilities for both high-speed traveling and travelingrough terrain

10,000• For domestic (110t - 400t, 5 models)

23,971

5,000• For overseas (130t - 300t, 2 models)0

Crawler cranes• The lattice boom can be used at various sites, depending on
its combination.
• The telescopic boom can be set up quickly with anextendable boom.
• For domestic (50t - 200t, 6 models)• For overseas (55t - 300t, 7 models)For 6 months
ended Sep. 30,
2019 Domestic sales→ While sales of middle-size rough terrain cranes increased,sales of all terrain cranes were stagnant. Therefore,
domestic sales were 99.2% on a year-on-year comparison.

 Overseas sales→ Sales increased mainly in Asia and Oceania, up 80.8%
year-on-year.

10Changes in consolidated net sales by principal item
(Construction equipment）

Progress To The Next Stage[Explanation of main products](Unit: millions of yen)

Hydraulic excavators

Changes in net sales• Excavating machinery with crawler traveling section• Capable of self-propelling at unspecified places

20,00014,695

10,29813,196• Durable and easy to operate• For domestic (8t - 50t, 7 models)

16,000• For overseas (8t - 38t, 12 models)
12,000Overseas8,243

Mini excavators• Small hydraulic excavators• Usable at various sites with ability to turn a small
radius• For domestic (0.9t - 8t, 15 models)• For overseas (0.9t - 13t, 22 models)

Crawler carriers• Transporting machine capable of self-propelling at unspecified
places• Usable at various sites with excellent work efficiency• For domestic (3.7t - 11t, 6 models)

6,955

8,000
4,000

5,273

5,024

6,241

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

6,451

Domestic0
For 6 months
ended Sep. 30,
2019 Domestic sales→ Sales steadily grew due to the increased demand, up
24.4% year-on-year.

 Overseas sales→ Sales increased mainly in North America and Europe,up 31.9% year-on-year.

• For overseas (3.7t - 11t, 4 models)11Changes in consolidated net sales by principal item
(Industrial equipment）[Explanation of main products]

Progress To The Next Stage(Unit: millions of yen)

Changes in net sales

Street sweepers• Having both high ability to clean up and a compact size

418

• Human-friendly, low-noise, and highly
efficient sweeper

700• For domestic（2 models）

600• For overseas (custom-made)

500

Vacuum trucks• Sucking various objects from sludge to powder and granularmaterials• Diverse lineup of products including various models from small
to large-sized ones
• For domestic（9 models）• For overseas (custom-made)Snow sweepers• Adopting a powerful brush and blowing method

406

475

400

Overseas

300
200

418

406

475
Domestic

100

0
For 6 months
ended Sep. 30,
2019

For 6 months
ended Sep. 30,
2020

For 6 months
ended Sep. 30,
2021

 Increase in net sales→ Net sales increased 17.2% on a year-on-yearcomparison.

• Realizing speedy and efficient snow removal• For domestic（5 models）• For overseas (custom-made)12

Changes in consolidated net sales by destination(excluding Japan）

Progress To The Next Stage(Unit: millions of yen)

7,060

11,04815,000 Asia (Up 20.5% year-on-year)North

10,168Africa4,747 million yen → 5,719 million yen[972 million yen]
→ Sales of mobile cranes increased

Oceania North America (Up 87.3% year-onyear）

America/Central
and South America

12,50010,000

7,500

141
199

1,620

59

1,760
52
13

5,000
2,500

480 1,354

7,266

723
1,499

14

103

723 million yen → 1,354 million yen[631 million yen]
→ Sales of Hydraulic excavators increasedin North America.

96

2,413

EuropeMiddle and Near

5,719

4,747

East

1,499 million yen → 2,413 million yen[914 million yen]
→ Increased due to the impact of capital
investment related to infrastructures by
NextGenerationEU.

Asia

0

For 6 months ended
Sep. 30, 2019

For 6 months ended
Sep. 30, 2020

 Europe (Up 61.0% year-on-year)

For 6 months ended
Sep. 30, 2021

(Unit: millions of yen)For 6 months ended Sep. 30, 2019
AmountAsia

Composition ratio

For 6 months ended Sep. 30, 2020
AmountComposition ratio

For 6 months ended Sep. 30, 2021
AmountComposition ratio

Year on year
Amount change

Composition ratioof total net sales

Percent change

7,266

65.8%

4,747

67.3%

5,719

56.2%

972

20.5%

18.5%

199

1.8%

13

0.2%

103

1.0%

90

667.2%

0.3%

Europe

1,760

15.9%

1,499

21.3%

2,413

23.7%

914

61.0%

7.8%

Oceania

141

1.3%

52

0.7%

480

4.7%

427

813.1%

1.6%

Africa

59

0.5%

14

0.2%

96

0.9%

81

557.0%

0.3%

North America/Central andSouth America

1,620

14.7%

723

10.3%

1,354

13.3%

631

87.3%

4.4%

Total overseas
net sales

11,048100.0%

7,050

100.0%

10,168100.0%

3,118

44.2%

32.8%

Middle and Near East

13

Full-year consolidated financial results forecast for
fiscal year ending March 31, 2022
FY ending Mar. 31, 2022
(Forecast)

FY ended Mar. 31, 2021

AmountRatio

Amount58,519(2,810)(1,921)100.0%(4.8)%(3.3)%

65,700(2,600)(2,900)12.3%
ーーProfit (loss) attributable toowners of parent(5,738)(9.8)%(3,100)ーInterim
Dividend per
Year-end
share
AnnualFY ending Mar. 31, 2022
(Forecast)

0.00 yen
10.00 yen
10.00 yen

0.00 yen
10.00 yen
10.00 yen

80,00070,00060,000 While severe businessresults have continued,
we will establish a stable
management base andimprove earning powerby steadily implementing
respective measures inaccordance with “KATO
Reborn Project.”

Operating profit (loss)

Net sales
90,000(Unit: millions of yen)

ChangeNet sales
Operating profit (loss)
Ordinary profit (loss)

FY ended Mar. 31, 2021

Progress To The Next Stage

077,89465,70058,51950,000

(500)

(282)

(1,000)(1,500)40,000(2,000)30,00020,000(2,500)10,000(3,000)0
FY ended Mar. 31, FY ended Mar. 31, FY ending Mar. 31,
2020
2021
2022 (Forecast)(2,810)(2,600)FY ended Mar. 31,FY ended Mar. 31, FY ending Mar.
2020
2021
31, 2022(Forecast)14

Progress of KATO Reborn Project
Progress To The Next Stage We steadily implemented the measures announced as of August 2021.
Policies

Improvementofprofitability

Improvementof efficiency inuse of funds

Priority themes

Status of initiatives

Maximizing profits by reviewing productportfolios

Orders increased by putting emphasis on
domestic priority customers and products.

Accelerating product development byconcentrating development resources therein

Started initiatives for reducing thedevelopment period, determining models
which should be preferentially developed
and concentrating the resources in it.

Reviewing the global strategy andrestructuring the supply chain

Improved productivity of two plants,
moving the production base of small-sizedrough terrain cranes.

Reviewing the fundamental cost structure

Reviewed the cost structure of priority
models and reduced production costs with
the improved productivity.

Further focusing on aftermarket

Started the review of operations in orderto enhance services.

Improving working capital by strictly managing
inventories and trade receivables

Reduced the amount of inventories byexchanging information and enhancing
cooperation between sales and production
divisions.

Improving CF with structural reform

Sold underutilized real estates.
15

TOPICS
Progress To The Next StageLaunch of new hydraulic excavator HD-2050-7
As a new series of REGZAM, a large-sized hydraulic excavator was
launched, equipped with an exhaust-gas aftertreatment unit and
KATO’s unique fuel efficient feature.
~From July 2021~
 Equipped with an engine in conformity with a standard
equivalent to 2014 standards for the exceptional case forsmaller number of non-road special motor vehicles.
 Designated as low-noise construction machinery in thedesignation system for low-noise construction machinery by
Ministry of Land, Infrastructure, Transport and Tourism.
 Improved operation performance by updating each hydraulicsystem, and making front hydraulic piping larger.
 Improved durability even at sites under heavy load,
strengthening respective front parts and underbody ofvehicles.

 The new control lever with a shape of grip changed reduced
operational loads by 20%, which enabled an operator to work
comfortably for a long time.

16

TOPICS
Progress To The Next StageLaunch of new rough terrain crane SL-750Rf II
The new-type 75t lifting rough terrain crane was launched, aiming at thehighest safeness in the industry and environmental consciousness.
~From June 2021~

 Highly rigid super boom with six sections
High efficiency and high performance thanks to HYBRIDZOOM, an extendable system
fusing lock pin and full power Equipped with the environment-friendly engine in conformity with 2014 emission control
regulations for diesel-engine special motor vehicles.
Also designated as low-noise construction machinery.
 Equipped with a clearance sonar system asstandard.
Improved safeness during traveling with an
obstacle detection feature with an ultrasonicsensor.
 Tire air pressure monitoring system is set as an
option.
By issuing warning on air pressure of tires andtheir abnormal temperature to keep air pressure
appropriate, fuel efficiency improves and service
life of tires becomes longer.
17

TOPICS
Progress To The Next StageLaunch of new rough terrain crane MR-130Rf II
The first 13t rough terrain crane adopting a jib which can be
drawn out in air (EJIB TYPE S)~From August 2021~
 Realized space-saving for operations for attaching and storing a jib by adopting the jib
which can be drawn out in air (EJIB TYPE S).
Also, as attaching and storing the jib became easier, loads on an operator decreased.
 Equipped with the environment-friendly engine in conformity with 2014 emission control
regulations for diesel-engine special motor vehicles.
Also designated as low-noise construction machinery.
 An outrigger can be selected from two
types, H type and X type, depending on
various site situations.
 KATO safety view system is set as an
option.
Safeness during both traveling andworking improved with our uniquesurrounding view system and humandetection assisting camera.

18

Notes/Contact
Progress To The Next Stage

Contents on the present plans and the forecasts included inthis material are based on information presently obtained andcertain premises deemed reasonable by the Company. Actual
business results, etc. may be significantly different from them
due to various factors. Therefore, this material does notpromise or guarantee their realization.

Contact

KATO WORKS CO., LTD.

IR team, General Affairs Department
1-9-37 Higashioi,
Shinagawa-ku, Tokyo, 140-0011
E-Mail:ir-kato@kato-works.co.jp

19