Investors Meeting for First Half of Fiscal 2007
(for the year ending March 31, 2008)

Nov 2, 2007

Kawasaki Heavy Industries, Ltd.

Contents
・ Summary of 1H/FY2007 Results (Consolidated)
・ Breakdown of Increases/Decreases
in Profit for 1H/FY2007 Compared to 1H/FY2006
・ Interest-Bearing Debt and Cash Flows・ Business Results and Outlook by Segment
Shipbuilding
Rolling Stock
Aerospace
Gas Turbines & Machinery
Plant & Infrastructure Engineering
Consumer Products & Machinery
・ R&D/Capital Expenditures/Number of Employees
・ Outlook for FY2007
・ Outlook for FY2007 by Segment
・ Outlook of Orders Received for FY2007
・ Business Portfolio (FY2007 Projection)

1234567891011121314Summary of 1H/FY2007 Results (Consolidated)
Profits

Orders Received & Net Sales(Billion \)(Billion \)

800

763.8

724.8 699.5

645.8

39.0

40

600

30400

2025.5
19.8
11.4

200

1000
1H/FY2006

1H/FY2007

Orders Received

1H/FY2006
Operating Income

Net Sales

1H/FY2007
Net Income（Billion￥）

Actual Exchange Rates

１Ｈ/ＦＹ２００６(a)１Ｈ/ＦＹ２００７(b)(b)-(a)１Ｈ／ＦＹ２００６

１Ｈ／ＦＹ２００７

ＵＳＤ／￥

１１５

１１９

Operating Income

２５．５３９．０＋１３．４

ＥＵＲ／￥

１４６１６１Net Income

１１．４

１９．８＋８．４

1

Breakdown of Increases/Decreases in Profit
for 1H/FY2007 Compared to 1H/FY2006
 Operating income(＋１３．４billion yen)

Effects of the fluctuation of foreign exchange rate
Effects of increase in sales
Increase in selling, general and administrative expenses *Adverse impact of a rise in material price
Adverse impact of Tax Law Revision regarding Depreciation Methodology
Effects of cost reduction including fixed cost, etc＋７．０＋７．０－５．９－４．９－１．７＋１１．９*Change in accounting method for development cost
Development cost for new models in the Consumer Product and Machinery business has been included inselling and general administrative(SG&A) expenses since the beginning of 2H/FY2006, but until then its cost
had been included in cost of sales.
On this page, we made a year-on-year comparison with the SG&A expenses for 1H/FY2006 adjusted by thecurrent accounting method just for your convenience to grasp the substantial difference between 1H/FY2006
and 1H/FY2007. (The amount of the influence from this adjustment is 7.9 billion yen.) Non-operating income(－１．８billion yen)

Increase in net interest expenses
Gain on sales of marketable securities
Increase in equity in income of non-consolidated subsidiaries and affiliates(1H/FY2006 ￥0.8 billion → 1H/FY2007 ￥2.3 billion)
Loss of foreign exchange (1H/FY2006 ￥3.7 billion → 1H/FY2007 ￥6.7 billion)
Others－０．３＋０．２＋１．４－３．０－０．１2

Interest-Bearing Debt and Cash Flows
B／S

Cash Flows(Billion \)1,500

1,357.9

1,319.0

1,322.7

150%

100%

1,000

(Billion \)

30

24.0

15500

349.725.0304.2
39.3

50%
291.2

3.8

1H/FY2006

023.10%01H/FY2006

FY2006

Cash on hand and in banks
Total assets-151H/FY2007
Interest-bearing debt
Net D/E Ratio(right scale)(Billion ¥)1H/FY2006
Net debt
Shareholders' equity
Net D/E Ratio

324.7
239.0
135%

FY2006
264.8
290.4
91%

1H/FY2007
268. 0311. 8
85%

-10.7
-20.1

-30
-45

-26.7

1H/FY2007-37.5
C/F from operating activities
C/F from investing activities
Free Cashflows3

Shipbuilding
Net Sales

Orders Received

Operating Income(Billion \)(Billion \)250

140.0150(Billion \)

210.0
200

77.4
85.6

69.5

50-2

42.1-4500

3.0

2.3

2 1H/FY2006 FY2006
0100135.6

1501004108.8

1H/FY2007-2.0

FY2007-2.201H/FY2006

FY2006

1H/FY2007

1H/FY2006

FY2007

1H/FY2006

1H/FY2007

ＬＮＧ carrier

１

ＬＰＧ carriers

２

Bulk carriers

７⇒FY2006

1H/FY2006

ＬＰＧ carriers

２

Bulk carriers

１１1H/FY2007

FY2007

1H/FY2007

ＬＮＧ carriers
ＶＬＣＣ

４(２)
１

ＬＮＧ carriers

５(５)⇒ ＬＰＧ carriers

Bulk carriers
Submarines

３１(１)

ＶＬＣＣ
Bulk carriers２(１)１２Submarines

２(２)【Business Results for 1H/FY2007(year-on-year comparison）】＊Large orders received of 13 vessels such as
LPG carriers and Bulk carriers＊Return to profitability due to sales increase of
LNG carriers and LPG carriers and improvementof profitability effected by a rise in shipbuilding priceNote: ( ) = Sales units by percentage-of -completion method

4Rolling Stock
Orders Received

269.1

250.0

250
200

(Billion \)(Billion \）(Billion \）300

Operating IncomeNet Sales

184.2

200

170.0

15

13.1

160

156.1

150

121.6

100

80504001H/FY2006

FY2006

1H/FY2007

10120

FY2007

86.9

8.0
6.1

70.2

51.1001H/FY2006

FY2006

1H/FY2007

FY2007

1H/FY2006

FY2006

1H/FY2007

FY2007【Business Results for 1H/FY2007（year-on-year comparison）】《Orders Received》＊ Large-scale orders received for North America－Additional order of R160 for N.Y. subway (260 cars/ US$450 mil)《Net Sales》＊Increase in sales for JR and other domestic businesses＊Decrease in sales of large-scale projects for overseas such as high-speed trainsfor China

For reference only
Large-scale orders received for 1H/FY2006－Passenger cars for New York Metropolitan Transportation Authority’s
Metro-North Railroad (300 cars/ US$700mil)《Operating Income》＊Decrease in profit of large-scale projects for overseas such as high-speed trainsfor China

5

Aerospace
Net Sales

Orders Received(Billion \)(Billion \)

255.6
250
200.0

200

(Billion \)

269.1

270

250.0

15

73.7

13.0

10118.2

114.4

70.1

13.4
10.6

180

150
100

Operating Income

90

500

5.0

50
01H/FY2006

FY2006

1H/FY2007

FY2007

1H/FY2006

FY2006＜Sales units of component parts for commercial aircraft＞
Sales units

B777
B767
Embraer170/175
Embraer190/195

1H/FY2006
3371335

FY200673133779

FY2007
1H/FY2007 Projection
4282
61232643993

1H/FY2007

FY2007

1H/FY2006

FY2006

1H/FY2007

FY2007【Business Results for 1H/FY2007（year-on-year comparison)】＊Increase in orders received for BOEING business＊Increase in sales and profit of commercial aircraft businesses such as
B777 for BOEING

6

Gas Turbines & Machinery
Net Sales

Orders Received

Operating Income(Billion \)

230.0

250
204.8

(Billion \)200(Billion \)

190.0

183.3

200150

150
99.3

93.5

100

1005050001H/FY2006

FY2006

1H/FY2007

884.2

80.5

55.6

4.8

301H/FY2006

FY200710.09.8

10FY2006

1H/FY2007

FY2007

1H/FY2006

FY2006

1H/FY2007

FY2007【Business Results for 1H/FY2007（year-on-year comparison)】《Orders Received》＊Increase in orders received of commercial aircraft
jet engines＊Decrease in orders received of marine steam turbine
engines for LNG carriers《Net Sales》＊ Increase in sales of commercial aircraft
jet engines《Operating Income》＊ Increase in profit due to sales increase of commercial aircraft
jet engines

7Plant & Infrastructure Engineering
Orders Received(Billion \)(Billion \)150.0

1502001004110.0

95.0

52.1

2 1H/FY2006 FY2006
049.65041.5-40FY2006

1H/FY2007

1H/FY2006

FY2007

FY2006

1H/FY2007

1.4
1H/FY2007-201H/FY2006

7.0

6150.250(Billion \)8122.0150100Operating Income

Net Sales

FY2007-2.4-3.7

FY2007【Business Results for 1H/FY2007（year-on-year comparison）】《Orders Received》＊Large decrease in orders received of large-scale
projects for overseas

For reference only
Large-scale orders received for 1H/FY2006
・Ferronickel plant/ Korea
・Urea production facility/ Pakistan
・Cement plant/ Vietnam《Net Sales》《Operating Income》＊Decrease in sales of municipal refuse incineration ＊Return to profitability due toplants
・・・rationalization effect by the merger of plantengineering business unit and environmental［Remaining large-scale projects of environmental
engineering business unit
plant business］
・・・sales decrease of unprofitable projects
・Refuse incineration plant/ Tokyo city・Refuse incineration plant/ Hirakata city8Consumer Products & Machinery
Net Sales

Operating Income(Billion \)(Billion \)

500
400

27.53022.0

300
200

450.0

403.7

20212.5

189.9

12.3

10.91010000
1H/FY2006

FY2006

1H/FY2007

FY2007

1H/FY2006

FY2006

1H/FY2007

FY2007<Sales by Region for Consumer Products>(Thousands of Unit / Billion ￥)Region

1H/FY2006
QTY
AmountJapan
NorthAmerica
EuropeOthersTotal13123(61)
5258
246

9.1
85.2
42.7
15.2
152.2

FY2006
1H/FY2007
FY2007(Projection)
QTY
AmountQTY
AmountQTY
Amount 【Business Results for 1H/FY2007(year-on-year comparison) 】
2115.92215.7139.5254(140)183.7 106(53)190.7
78.8 263(135)＊Sales of Motorcycles and ATVs：
9780.9
116
103.0
66
62.6
Increase in Europe market, while Decrease in U.S. market
13032.6
156
38.9 ＊Increase in profit due to entire sales increase
6918.7
502
313.1
557
348.3
254
169.6

Note
1. Sales units consist of Motorcycle, All-Terrain Vehicles (ATV), Utility Vehicles (MULE),
Personal Water Craft (Jet Ski) and parts for these products.
2. Domestic sales include OEM supply.
3. ( ) represents Motorcycle sales unit.

9R&D/Capital Expenditures/Number of Employees(Billion ￥/ Persons )1H/FY2006
ActualFY2006
Actual1H/FY2007
Actual

FY2007
Projection

R&D

14.3

33.8

16.0

38.0

CapitalExpenditures

17.4

39.2

21.4

56.0

Depreciation andAmortization

14.8

30.2

17.6

39.0

Domestic

23,09022,872

23,55023,400Overseas

6,371

6,339

6,832

7,000

29,461

29,211

30,38230,400

Number ofEmployees

10Outlook for FY2007
Orders Received & Net Sales

Profits(Billion \)(Billion \)1,620.0

1,592.6
1,500

1,438.680

1,520.0

72.0

69.1

60

1,000

40500

33.0

29.7

200
FY2006
Orders Received

FY2007（Ｐrojection)

0Net Sales

FY2006

FY2007（Ｐrojection)

Operating Income

Net Income

Exchange Rates（Billion ¥）FY2007 Assumption

FY2006
ActualAs of April

As of November

ＵＳＤ/￥

１１７１１０１１０ＥＵＲ/￥

１５２１５０１５０

FY2006
Actual

FY2007 Projection
As of April

As of November

Operating Income

６９．１

６２．０

７２．０

Net Income

２９．７

３３．０

３３．０

11

Outlook for FY2007 by Segment（Billion ￥）FY２００６ Actual

FY２００７ Projection
As of April

As of November

Net Sales

OperatingIncome

Net Sales

Operating
IncomeNet Sales

OperatingIncome

Shipbuilding

108.8-2.2140.0

3.0

140.0

3.0

Rolling Stock

184.2

13.1

170.0

8.0

170.08.0Aerospace

269.1

13.4

250.0

10.0

250.0

13.0

Gas Turbines & Machinery

183.3

9.8

180.0

8.0

190.0

10.0

Plant & Infrastructure Engineering

122.0

-2.4

130.0

4.0

150.0

7.0

Consumer Products & Machinery

403.7

27.5

440.0

20.0

450.0

22.0

Others

167.3

9.8

170.0

9.0

170.0

9.0

Total

1,438.6

69.1

1,480.0

62.0

1,520.0

72.0

ＵＳＤ/￥

１１７

１１０

１１０

ＥＵＲ/￥

１５２

１５０

１５０
12

Outlook of Orders Received for FY2007（Billion ￥）FY２００６Actual

FY２００７ Projection
As of April

As of November

Shipbuilding135.6

140.0

210.0

Rolling Stock

269.1

180.0

250.0

Aerospace

255.6

190.0

200.0

Gas Turbines & Machinery

204.8

210.0

230.0

Plant & Infrastructure Engineering

150.2

110.0

110.0

Consumer Products & Machinery

403.7

440.0

450.0

Others

173.5

170.0

170.0

Total

1,592.6

1,440.0

1,620.013

Business Portfolio (FY2007 Projection)

Orders Received

Others11%

Consumer
Products &Machinery
28%

Net Sales

Others11%

Shipbuilding
13%￥1,620.0billion

Rolling
Stock
15%

Shipbuilding
9%
Rolling
Stock
11%

Consumer
Products &Machinery30%￥1,520.0billion

Aerospace
16%Aerospace
12%
Plant &Infrastructure
Engineering
7%

Gas Turbines &Machinery
14%

Plant &
Infrastructure
Engineering
10%

Gas Turbines &Machinery
13%

14

Kawasaki, let the good times roll !

Cautionary Statement
The performance outlook and the forecasts stated in this material were prepared by Kawasaki Heavy Industries, Ltd.
(hereinafter, KHI) based on the circumstances at the release point, and include potential risks and uncertain factorsthat relate to economic conditions, foreign currency exchange rates, tax rules, regulations and other factors.
Accordingly, please note that the actual operating results, financial position, and business deployment of KHI
may sometimes differ considerably from the descriptions in the present projections.