Financial Results for Second Quarter FY 2010
(for the year ending March 31, 2011)

November 2, 2010
Kawasaki Heavy Industries, Ltd.

Table of Contents

I. Consolidated Results for Second Quarter FY2010 II．Forecast for FY2010
1
 Consolidated Operating Performance Summary of Financial Results2 Forecast by Segment
 Details of Change in Profit I
3
 R&D/CAPEX/Number of Employees Details of Change in Profit II
4(Note) Change in Segment Information
 Financial Results by Segment
Disclosure
5
Ship & Offshore Structure
6
Rolling Stock
7
Aerospace
8
Gas Turbine & Machinery
9
Plant & Infrastructure
10Motorcycle & Engine
11
Precision Machinery12 Financial Condition and Cash Flows

13
14
15
16

I. Consolidated Results for Second Quarter FY2010

Summary of Financial Results(Billion Yen)

FY2009.1H
ActualOrders Received

403.0

FY2010.1H
Forecast
in July

ChangeActual-vs. FY2009.1Hvs. FY2009.1Hvs. Forecast in July

+ 210.4-

613.4

Net Sales

516.0

580.0

571.7

+ 55.6- 8.2

Operating Income/Loss

- 6.1

15.0

20.9

+ 27.0+ 5.9

Recurring Profit/Loss

- 1.2

14.0

21.2

+ 22.4+ 7.2

Net Income/Loss

- 6.2

7.0

12.3

+ 18.6+ 5.3

Yen / US$

96

90

90

Yen / EUR

133

115

116

Exchange Rates ( weighted-average )-1-< Orders Received >Significant increase as a whole due
to large-scale orders received in
Rolling Stock segment< Net Sales >Increase in sales as a whole due to asignificant sales increase for
emerging markets in Precision
Machinery segment< Profits >Profit improved significantly due tothe effects of sales increase and theimplementation of the fixed cost
reduction especially in mass
production businesses and otherfactors, despite the adverse impactof the appreciation of the yen

Details of Change in Profit I- FY2010.1H vs. FY2009.1H (Billion Yen)

【Operating Income/Loss】+ 27.0 （ FY2009.1H - 6.1  FY2010.1H 20.9 ）vs. Forecast in July + 5.9 billion yen（Forecast in July 15.0  Actual 20.9)
Adverse impact of fluctuation of foreign exchange rate - 3.7+1.5
Impact of decline in material price
Increase in provision for losses on construction contracts - 8.3+2.2
Expenses deferrals+5.7
Cost reduction (incl. fixed cost)+8.5
Other factors

Ch an ges in p ro duct m ix
an d o t h er fact o rs

+ 12.2inc l. inc re a se in provision
for losse s on c onstruc tionc ontra c ts - 10.9

FY2010.1H

20.9

D ecrease in sellin g, gen eral &adm in ist rat iv e ex p en ses+ 4.3
D ecrease in am o rt izat io n o f
n et t ran sit io n co st (N o t e)

+ 5.2
FY2009.1H- 6.1

E ffect s o fsales in crease

A dv erse im p act o ffluct uat io n o f
fo reign ex ch an ge rat e- 6.6+ 10.9Im p act o f declin e
in m at erial p rice

+ 1.0
Note: Amortization of net transition cost stemming from a change in accounting for retirement benefits andseverance costs (approx.13.0 billion yen per year) was completed in FY2009.

-2-

Details of Change in Profit II- FY2010.1H vs. FY2009.1H (Billion Yen)

【Non-operating Income/Expenses】- 4.5 （ FY2009.1H 4.9  FY2010.1H 0.3）

Net Interest expense ( incl. dividend income )Equity in income of unconsolidated subsidiaries and affiliates
Gain and loss on foreign exchange
Others【Extraordinary Income/Losses】- 0.3 （ - 0.7  - 1.1 ）+ 2.2 （ 2.5  4.8 ）- 5.2 （ 3.2  - 1.9 ）- 1.2 （ - 0.1  - 1.4 ）+ 5.2 ( FY2009.1H - 5.7  FY2010.1H - 0.5)
+ 6.9 （ - 6.9 0）- 1.7 （ 1.2  - 0.5 ）Provision for losses on damages suit
Others-3-

Financial Results by Segment(Billion Yen)

Orders Received

Net Sales

Operating Income/Loss

FY20091H

FY2010
1H

ChangeFY20091H

FY2010
1H

ChangeFY20091H

FY2010
1H

ChangeShip & Offshore Structure

2.7

36.4

+ 33.7

65.2

61.2

- 4.0

1.4

2.0

+ 0.5

Rolling Stock

39.5

117.7

+ 78.1

72.5

63.0

- 9.5

3.7

3.4

- 0.3

Aerospace

46.5

87.9

+ 41.4

73.3

83.0

+ 9.7

3.3

- 1.1

- 4.4

Gas Turbine & Machinery

99.8

65.3

- 34.5

83.4

99.2+ 15.8

1.4

6.1

+ 4.7

Plant & Infrastructure

37.5

77.3

+ 39.8

43.3

38.8

- 4.4

1.7

3.5

+ 1.8

Motorcycle & Engine

100.9

113.2

+ 12.2

100.9

113.2

+ 12.2- 13.3- 1.1+ 12.1

Precision Machinery

32.8

68.0

+ 35.234.2

60.9+ 26.6

- 0.6

8.6

+ 9.2

Others

42.9

47.2

+ 4.3

42.8

51.9

+ 9.1

- 0.9

0.9

+ 1.8

-

-

-

-

-

-

- 2.9

- 1.5

+ 1.4

403.0

613.4

+ 210.4

516.0

571.7

+ 55.6

- 6.1

20.9

+ 27.0Eliminations and corporate

Total

Note I : FY2009 figures are the recalculated figures based on the new industry segmentation and the new accounting standard which have been adopted since FY2010  Refer to Page 16
Note II: “Eliminations and corporate” includes some expenses incurred at Head Office which were not allocated to each industry segment for internal reporting-4-

Ship & Offshore Structure
Main Products： LNG carriers, LPG carriers, VLCCs, Bulk carriers, Submarines, Offshore structures
Note I : Segment denomination has changed from “Shipbuilding” to “Ship & Offshore Structure” in accordance with reorganization of company structure as of October 1, 2010
Note II: FY2009 Operating Income is the recalculated figures based on the new accounting standard which has been adopted since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）

Orders Received(Forecast in April 90.0)

100.0
.0
36.4

.0
1.8

2.7

1Q

2Q

10.4

16.1

3Q

FY2009 FY2010.1H （ vs. FY2009.1H ）Orders Received: Orders received of a submarine
Net Sales: Decrease in sales of large-scale vessels
Operating Income/Loss: Income improved due to profitability
improvement and other factors, despite increase in provision for losses
on construction contracts<Units of Orders Received and Sales of New Building Ships>

1.6

Orders Received.0(unit)Sales

FY2009.1H FY2010.1H FY2009.1H FY2010.1H

1Q

2Q

Net Sales

LNG carriers
Small-sized LNG carriers
LPG carriers
VLCCs
Bulk carriers
Submarines

FY2010
Forecast(Forecast in April 120.0)

Total

151.8
120.0

65.2

1Q

61.2
28.6

2Q

3Q

FY20091Q

2Q

FY2010
Forecast

3.3(Forecast in April 2.0)

2.0

1.5

1.0

0.8
1Q
2Q

- 0.6

3Q

1

2(2)
1(0)
7(5)
2(2)

12(8)
1(1)

1

16(11)

19(14)

 FY2010 Forecast （ vs. Forecast in April ）- Orders received was revised up through considering increase inorders received of new building ships- Operating income was revised down due to the adverse impact ofchange in assumed foreign exchange rate, and other factors
 (For Reference) Joint Venture in China

Operating Income/Loss

1.4

0

3(3)
1(1)
2(1)

Note: ( ) = Sales units by percentage-of-completion method

111.7
39.4

4(2)

FY20091Q

2Q

FY2010
Forecast

NACKS was established in Nantong in December 1995, as a joint venture
between KHI and China Ocean Shipping(Group) Company, the biggest
shipping company in China and its capacity was expanded in 2008.
At NACKS, various types of commercial vessels such as very large-size
container ships, VLCCs, bulk carriers and car carriers are built by utilizing
two large-scale docks for both domestic and overseas customers under thetechnical support from KHI. (NACKS is an equity method affiliate.)-5-

Rolling Stock
Main Products : Electric train cars (incl. Shinkansen), Electric and diesel locomotives, Passenger coaches,
Platform screen doors, Gigacell (High-Capacity, Full Sealed Ni-MH Battery)
Note: FY2009 figures are the recalculated figures based on the new industry segmentation (excl. crushing machine) and the new accounting standard which have been adopted
since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）(Forecast in April 130.0)

Orders Received

180.0

.0
.0

101.5

.0
.0

25.5

39.5

55.5

66.2

3Q

FY2009

117.7

.0
1Q

2Q

1Q

2Q

FY2010
Forecast

Net Sales(Forecast in April 145.0)

150.0

145.0

110.5
72.5

63.0

37.5

1Q

 FY2010.1H （ vs. FY2009.1H ）Orders Received: Significant increase due to large-scale orders
received of subway cars for Washington Metropolitan Area Transit
Authority
Net Sales: Decrease in sales for overseas market
Operating Income/Loss: Profitability remained the same level as in
the previous first half, despite the adverse impact of sales decrease andthe appreciation of the yen FY2010 Forecast （ vs. Forecast in April ）- Orders received was revised up due to large-scale orders received ofsubway cars from Washington Metropolitan Area Transit Authority- Operating income was revised down due to the adverse impact ofchange in assumed foreign exchange rate, and other factors

26.6
2Q

3Q

FY20091Q

2Q

Operating Income/Loss (For Reference) The Present Status of New Overseas Projects
・North America- Working to receive orders mainly for heavy rails and commuter rails- Light Rail Vehicles (LRVs) for U.S. market is currently under development
・High-speed railways- There are plans in U.S., Vietnam and other countries
・Dedicated Freight Corridor - Western Corridor Phase I (Delhi – Mumbai)- Japanese ODA project, working to receive orders for electric locomotives
・E&M system projects in Asian region- Working with other companies

FY2010
Forecast(Forecast in April 8.0)

8.7
7.0
5.2
3.7

3.4

1.9

1Q

1.7

2Q

3Q

FY20091Q

2Q

FY2010
Forecast-6-

Aerospace
Main Products : Aircrafts for Japan Ministry of Defense, Component parts for commercial aircrafts (BOEING , Embraer), Missiles
Note: FY2009 Operating Income is the recalculated figures based on the new accounting standard which has been adopted since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）

 FY2010.1H （ vs. FY2009.1H ）Orders Received: Increase in orders received for component parts for
BOEING including B777 and B787
Net Sales: Increase in sales for Japan Ministry of Defense (MOD) andsales of component parts for BOEING B787
Operating Income/Loss: Income decreased due to the adverse impactof the appreciation of the yen , increase in provision for losses on
construction contracts and other factors, despite sales increase(Forecast in April 200.0)

Orders Received

210.0
.0
.0
.0
.0
.0

171.3
87.9

79.9
46.5

36.5

11.4
1Q

2Q

3Q

FY2009

1Q

2Q

Net Sales

FY2010
Forecast(Forecast in April 215.0)

 FY2010 Forecast （ vs. Forecast in April ）- Orders received was revised up due to increase in orders received forMOD- Operating income was revised down due to the adverse impact ofchange in assumed foreign exchange rate, and other factors

215.0

188.8
119.3
83.0

73.3
34.2

26.6
1Q

2Q

3Q

FY20091Q

2Q

FY2010
Forecast

Operating Income/Loss.0(Forecast in April 4.0)

3.7

3.3

.0
.0

2.0

.0
.0

0.3

1Q
2Q

1Q

3Q

FY2009

- 1.8

- 1.9

<Sales units of component parts for commercial aircrafts>(unit)

Sales
B777
B767
Embraer170/175
Embraer190/195

2Q

FY2009.1H

FY2009

38
4
10
20

77
10
16
50

FY2010.1H FY2010 Forecast

32
7
8
42

64
16
14
87

-1.1

FY2010
Forecast For Reference- Aircrafts for Japan Ministry of Defense
The #1 test XC-2 transport aircraft manufactured at Kawasaki’s Gifu Works
completed a successful first flight in January 2010, and was delivered to MOD on
March 30, 2010 at the Works after a series of in-house testing.
- Component parts for commercial aircrafts
A new production facility (the South Plant) was completed in Kawasaki’s Nagoya
Works 1 in March, 2010 to support increasing production demands for the Boeing
787 Dreamliner. The South Plant is furnished with the same kind of state-of-the-art
equipment that is used in the North Plant which an extension was completed in July
2006. The new facility will enable Kawasaki to perform integrated production that
includes everything from composite component fabrication to forward fuselage
assembly.
- Space systems
A payload fairing for the H-IIA Launch Vehicle No.18 was shipped in June 2010.

-7-

Gas Turbine & Machinery
Main Products : Jet engines, Gas turbine co-generation system, Gas turbines & steam turbines for marines & land,
Diesel engines, Marine propulsion system, Aero-dynamic machinery
Note: FY2009 Operating Income is the recalculated figures based on the new accounting standard which has been adopted since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）

Orders Received

.0
.0
.0
.0
.0
.0

(Forecast in April 220.0)

226.2

220.0

138.5
99.8
52.3

1Q

33.0
2Q

3Q

FY2009

1Q

65.3

2Q

(Forecast in April 210.0)

Net Sales
0
0
0
0
0
0
0

210.0

191.3
128.8

99.2

83.4
49.9

44.7

1Q

2Q

3Q

FY20091Q

2Q

Operating Income/Loss
.0
.5
.0
.5
.0
.5
.0
.5
.0

FY2010
Forecast

 FY2010.1H （ vs. FY2009.1H ）Orders Received: Decrease in orders received for component parts forcommercial aircraft jet engines that had a large order received in theprevious first half, and for gas turbine-driven natural gas compressors
Net Sales: Increase in sales of gas turbine-driven natural gas
compressors and sales for Japan Ministry of Defense
Operating Income/Loss: Income increased due to sales increase, andother factors
 FY2010 Forecast （ vs. Forecast in April ）- Operating income was revised down due to the adverse impact ofchange in assumed foreign exchange rate, and other factors

FY2010
Forecast<Summary of Major Projects for Commercial Aircraft Jet Engines>(Forecast in April 10.0)

Aircraft

V2500
A320 and others

Trent1000
B787

TrentXWB
A350

Participation Type

Full Partner

RRSP（※)RRSP（※)

Share

Approx. 6%

Approx. 8.5%

Approx. 7%

9.0

8.9
6.1
1.2

1.4

1Q

2Q

Responsible
Components

4.0

3.9

（※）

3Q

FY20091Q

2Q

FY2010
Forecast-8-

Intermediate
Intermediate
Fan case, vane, disc,pressurepressure
low-pressure compressor blade compressor (IPC) compressor (IPC)
modulemoduleRisk & Revenue Sharing Partner

Plant & Infrastructure
Main Products: Industrial plants (cement, chemical and others), Power plants, LNG & LPG tanks, Municipal refuse incineration plants, Shield machines, Crushing machine
Note: FY2009 figures are the recalculated figures based on the new industry segmentation (incl. crushing machine) and the new accounting standard which have been adopted
since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）

Orders Received(Forecast in April 120.0)

135.6

.0

130.0

98.7

77.3

.0
.0

15.8

 FY2010.1H （ vs. FY2009.1H ）Orders Received: Increase in orders received for various types ofplants in both domestic and overseas markets
Net Sales: Decrease in large-scale projects for overseas customers
Operating Income/Loss: Income increased due to steady progress insome projects

37.5

32.0

.0
1Q

2Q

3Q

FY2009

1Q

2Q

Net Sales(Forecast in April 110.0)

107.5
43.3

100.0

59.0
20.4

16.5
1Q

 FY2010 Forecast （ vs. Forecast in April ）- Orders received was revised up due to increase in orders received forenvironment-related projects- Net sales was revised down through considering sluggish demand for
private-sector capital investment- Operating income was revised up due to improvement in profitability
by steady progress in some projects

FY2010
Forecast

2Q

3Q

FY2009

1Q

38.8

2Q

Operating Income/Loss(Forecast in April 6.0)

8.0

7.9

.0

 (For Reference) Joint Ventures in China
In 2006, KHI started a joint venture with Anhui Conch Cement Company
Ltd., China’s largest cement manufacturer. KHI has established three joint
ventures for the time being and set up an integrated system in China
encompassing the design, production, sales and after-sale services of waste
heat recovery power generation systems for cement plants and cement
producing facilities (Pre-heaters, Rotary Kilns and Roller Mills) withsophisticated technologies it has accumulated. KHI will contribute further tobring technologies such as a waste gasification system that can be integrated
with cement kilns and a membrane sewage treatment system, for environment
and energy conservation in China.

FY2010
Forecast

3.5

.0

1.7
1Q

.0

- 0.5

2Q

0.7
3Q

0.2
FY20091Q

2Q

FY2010
Forecast-9-Motorcycle & Engine
Main Products: Motorcycles, All-Terrain Vehicles(ATVs), Utility Vehicles, Personal Watercraft, General-purpose Gasoline Engines
Note: FY2009 figures are the recalculated figures based on the new industry segmentation (excl. industrial robots) and the new accounting standard which have been adopted
since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）(Forecast in April 260.0)

Net Sales

250.0
203.0
0

144.0

113.2

100.9
0

65.1

58.0

0
1Q

2Q

3Q

FY20091Q

2Q

3Q

FY2009

0.7

2Q

1Q

-1.1

FY2010
Forecast

Operating Income/Loss

1Q

2Q

FY2010
Forecast

.0
.0

- 3.9

.0

-4.0

-13.3
- 21.1.0(Forecast in April 0)- 27.0＜Whole Sales by Geografic Area for Consumer Products＞

Domestic
North America (incl. Canada)

EuropeEmerging Countries & Others

Total

FY2009.1H
Unit
Amount10
8.044(30)
31.1
36
29.0
99
19.1
189
87.2

FY2009Unit
Amount17
12.9
80(49)
56.3
72
56.2
228
45.1
397
170.5

 FY2010.1H （ vs. FY2009.1H ）Net Sales: Sales increase in Asian and other emerging countries, andother factors
Operating Income/Loss: Losses reduced significantly due to sales
increase and the effects of business restructuring measures
implemented through the previous fiscal year and other factors,
despite the adverse impact of the appreciation of the yen FY2010 Forecast （ vs. Forecast in April ）- Net sales was revised down due to slower-than-expected recovery of
motorcycle demand in U.S. and European markets and the adverse
impact of change in assumed foreign exchange rate, despite increasein sales of motorcycles in Asian and other emerging countries andsales of general-purpose gasoline engines- Operating income/loss was revised down due to the adverse impact
of change in assumed foreign exchange rate, while the effects ofimprovement in profitability by sales increase in Asian and otheremerging countries, improvement in product mix and additional fixed
cost reduction offset sales decrease in U.S. and European markets(Thousands of unit / Billion Yen)FY2010.1H
FY2010 Forecast
Unit
AmountUnit
Amount
8
6.3
16
11.7
51(27)
37.6 118(65)
78.3
34
23.6
68
46.7
125
28.6
279
71.9
218
96.1
481
208.6

Note: 1) Sales units and amount include the following products.
Units: Motorcycles, All-Terrain Vehicles(ATV), Utility Vehicles and Personal Watercraft(Jet Ski)
Amount: The products mentioned above and parts for those products.
2) Figures in the parenthesis ( ) represent motorcycle sales units.

 For Reference- A joint venture, CK&K, was established in China with Kwang Yang Motor Co.,
Ltd.(KYMCO) of Taiwan for production and sales of general-purpose gasoline
engines. Production started in January 2010. (CK&K is an equity method affiliate.)- New subsidiary, IKM, was established in India on July 1, 2010 to import and sell
motorcycles.

- 10 -

Precision Machinery
Main Products： Hydraulic components (pumps, motors & valves), Hydraulic systems for industrial use, Hydraulic marine machinery, Industrial Robots
Note: FY2009 figures are the recalculated figures based on the new industry segmentation (incl. industrial robots) and the new accounting standard which have been adopted
since FY2010  Refer to Page 16（Billion Yen / In accumulated amount）(Forecast in April 110.0)

Orders Received

.0
.0
.0
.0
.0
.0

140.0
84.9
13.1
1Q

32.8

54.8

2Q

3Q

68.0
35.0

FY2009

1Q

2Q

Net Sales

FY2010
Forecast(Forecast in April 110.0)

130.0
82.7
60.9

55.4
16.5
1Q

34.2

2Q

27.8

3Q

FY20091Q

2Q

Operating Income/Loss
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5

FY2010
Forecast(Forecast in April 8.0)

15.0
8.6

1Q

2Q

0.7

- 0.3

- 0.6

3Q

3.4

3.9

FY20091Q

2Q

FY2010
Forecast

 FY2010.1H （ vs. FY2009.1H ）Orders Received : Increase in orders received for hydrauliccomponents for construction machinery in emerging countries
Net Sales: Increase in sales of hydraulic machinery for construction
machinery and industrial robots for manufacturers of semiconductor
production equipments
Operating Income/Loss: Income improved due to improvement in
profitability by sales increase and high capacity utilization
 FY2010 Forecast （ vs. Forecast in April ）- Orders received and net sales were revised up due to significant
increase in hydraulic components for construction machinery inemerging countries- Operating income was revised up due to significant sales increase （For Reference） Businesses Development in China
In August 2006, production of hydraulic pumps started at Chinese subsidiary in
Suzhou to meet the increasing demand in China. Also, in Zhejiang, a joint venture of
hydraulic machinery manufacturing was established with a Chinese company andproduction started in April 2010. In order to provide the products manufactured at
the above two manufacturing companies to customers throughout China, a sales
subsidiary was established in Shanghai and its operation started in April 2010.
Through establishment of the subsidiaries and a joint venture, we have consolidated
our operating system to enhance our presence in Chinese construction machinery
market in which a tremendous growth potential is expected, and to further expand
and deepen our business operations.

- 11 -

Financial Condition and Cash Flows【Financial Condition】(Billion Yen)

FY2009End of March 2010

End of September 2010

1,352.4

1,318.9

Shareholders’ Equity

277.0

279.4

（Ratio of shareholders’ equity to total assets）(20.4%)（21.1%）

Interest-bearing debt

428.9

429.3

（Net Interest-bearing debt）（394.1）（394.1)Net Debt Equity Ratio

142%

141%

Total Assets

FY2010Note: Interest-bearing debt includes lease obligations【Cash Flows】（Billion Yen）

FY2009.1H

FY2010.1H

Cash flows from operating activities- 25.2

48.1

Cash flows from investing activities- 36.4- 26.1

Free Cash Flows- 61.6

22.0

Cash flows from financing activities

56.5- 20.0- 12 -

II. Forecast for FY2010

Consolidated Operating Performance(Billion Yen)

FY2009

vs. Forecast in April

ChangeFY2010 Forecast< Orders Received >Actualin Aprilin November

vs. Forecast
vs. FY2009
in April

Orders Received

1,001.2

1,240.0

1,340.0+ 338.7+ 100.0

Net Sales

1,173.4

1,280.0

1,280.0+ 106.50Operating Income/Loss

- 1.3

32.0

32.0

+ 33.30

Recurring Profit/Loss

14.2

32.0

32.0

+ 17.70

Net Income/Loss- 10.820.0

20.0+ 30.80

Yen / US$

93

90

83

Yen / EUR

130

115

115

Exchange Rates (actual & assumed)

Note I

Note I : Assumed rate for Yen/EUR was changed from 125 yen to 115 yen on July 30, 2010
Note II: Assumed rate is applied to the foreign exchange exposure as of November 2, 2010

(For Reference)
Impact on profit by FX fluctuation of 1 yen(Billion Yen)

Operating Recurring
IncomeProfit
US$
2.4
2.3
EUR
0.3
0.2

- 13 -

Forecast was revised up mainly in
Rolling Stock segment that had largescale orders received, and in Precision
Machinery segment where demand of
hydraulic components for construction
machinery in emerging countries isincreasing remarkably< Net Sales >Net sales remain unchanged because
sales increase in Precision Machinery
segment offsets sales decrease in Plant &Infrastructure segment that reflects
sluggish demand for private-sector capital
investment and in Motorcycle & Engine
segment that is affected largely by theadverse impact of change in assumed
foreign exchange rate

< Profits >Profits remain unchanged because theeffects of sales increase in Precision
Machinery segment and the measures toimprove profitability, such as fixed cost
reduction and improvement inproductivity, offset the adverse impact ofchange in assumed foreign exchange rate

Forecast by Segment(Billion Yen)

Orders Received

Net Sales

Operating Income/Loss

FY2009FY2010 Forecast

FY2009FY2010 Forecast

FY2009FY2010 Forecast

Actualin Aprilin November

Actualin Aprilin November

Actualin Aprilin November

Ship & Offshore Structure

16.1

90.0

100.0

151.8

120.0

120.0

1.5

2.0

1.0

Rolling Stock

66.2

130.0

180.0

150.0

145.0

145.0

8.7

8.0

7.0

Aerospace

171.3

200.0

210.0

188.8

215.0

215.0

3.7

4.0

2.0

Gas Turbine & Machinery

226.2

220.0

220.0

191.3

210.0

210.0

8.9

10.0

9.0

Plant & Infrastructure

135.6

120.0

130.0

107.5

110.0

100.0

7.9

6.0

8.0

Motorcycle & Engine

203.0

260.0

250.0

203.0

260.0

250.0

- 27.00- 4.0

Precision Machinery

84.9

110.0

140.0

82.7

110.0

130.0

3.4

8.0

15.0

Other

97.5

110.0

110.0

97.8

110.0

110.0

- 1.0

1.0

1.0

-

-

-

-

-

-

- 7.5

- 7.0

- 7.0

1,001.2

1,240.0

1,340.0

1,173.4

1,280.0

1,280.0

- 1.3

32.0

32.0

Eliminations and corporate
Total

Note I : FY2009 figures are the recalculated figures based on the new industry segmentation and the new accounting standard which have been adopted since FY2010  Refer to Page 16
Note II: “Eliminations and corporate” includes some expenses incurred at Head Office which were not allocated to each industry segment for internal reporting- 14 -

R&D/CAPEX/Number of Employees(Billion Yen / Persons)

FY2009ActualR&D Expenses
CAPEX(Construction Base)
Depreciation & Amortization
Domestic
Overseas
Number of Employees

FY2010 Forecast
in Aprilin November

Change

0

38.0

40.5

40.5

(17.2)-(16.0)

59.2

66.0

70.0

(34.3)-(23.4)

51.4

54.0

51.0

(23.5)-(23.3)

24,396

24,60024,600(24,712)-(24,661)

7,901

7,800

8,100

(7,914)-(7,848)32,29732,40032,700(32,626)-(32,509)

Note: Figures in parenthesis ( ) represent the results of the first half

- 15 -+ 4.0

Reasons for Change

Facility to increase
production in Precision
Machinery segment

- 3.0
0
+ 300
+ 300

Employment in overseas
subsidiaries

(Note) Change in Segment Information Disclosure＜Change in Industry Segment and Segment Denomination＞
Industry segment and segment denomination have been changed as stated below, in accordance with the newindustry segmentation for internal reporting which has been adopted since April 2010.
Change in Industry Segment
Crushing Machine business unit :(Previous) “Rolling Stock segment”  (Current) “Plant & Infrastructure Engineering segment”* “Plant & Infrastructure segment” as of October 1, 2010

Industrial Robots business unit :(Previous) “Consumer Products & Machinery segment”  (Current) “Precision Machinery segment”
Change in Segment Denomination（Previous) “Consumer Products & Machinery segment”  (Current) “Motorcycle & Engine segment”(Previous) “Hydraulic Machinery segment”  (Current) “Precision Machinery segment”＜Application of New Financial Accounting Standard for Segment Information Disclosure＞
With the previous accounting standard, operating income by industry segment was presented with reflecting
re-allocation of some expenses incurred at Head Office which were not allocated to each segment for internalreporting.
However, as a new accounting standard adopting "Management Approach" has applied since FY 2010 in Japan,such expenses will not have been re-allocated to each segment.
Accordingly, for the readers' convenience, recalculated FY2009 operating income based on the new accounting
standard is presented on certain pages of this material to easily compare with the financial results for the previous
fiscal year.
- 16 -

Kawasaki,
Working as One for the Good of the Planet

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.