Report of Earnings and Financial Statements for the
Six Months Ended September 30, 2020 (Consolidated)(Prepared pursuant to Japanese GAAP)
October 29, 2020
Listed company’s name:

Kawasaki Heavy Industries, Ltd.

Listed on:
Stock code:
URL:
Representative:
Contact:
Tel:

1st sections of the TSE, and NSE
7012
https://www.khi.co.jp/
Yasuhiko Hashimoto, President
Tatsuo Hoshino, Senior Manager, Accounting Department+81 3-3435-2130

Scheduled dates:
Submission of quarterly securities filing:
Commencement of dividend payments:
Supplementary materials to quarterly earnings:
Quarterly earnings presentation:

November 5, 2020
Available
Conducted (for institutional investors, analysts and thepress)(Amounts in millions of yen rounded down to the nearest million yen)

1. Consolidated Financial Results for the Six Months ended September 30, 2020
(April 1, 2020 – September 30, 2020)(1) Operating Results
Net sales
Six Months Ended
September 30, 2020
Six Months Ended
September 30, 2019
Note: Comprehensive income(Percentage figures represent changes versus the year-ago period)
Net income attributable
Operating income
Recurring profit
to owners of parent
million yen%
million yen%
million yen%

million yen%

657,325(10.8)(21,883)-(18,286)-(27,267)-

736,565

7.0

8,678

2.6

830

300.6

(3,733)-Six Months ended September 30, 2020:
Six Months ended September 30, 2019:
Earnings per shareyen

Six Months Ended
September 30, 2020
Six Months Ended
September 30, 2019¥(29,870) million¥(7,763) million-%-%

Earnings per share– diluted
yen(163.23)-(22.34)-(2) Financial Condition
Total assets

Net assets

million yen

million yen

Equity ratio%

September 30, 2020

1,978,868

441,236

21.5

March 31, 2020

1,957,845

471,562

23.3

For reference: Shareholders’ equity

September 30, 2020: ¥ 425,490 million
March 31, 2020:¥ 455,627 million

12. Dividends

Record date or term

End of firstquarteryen

End of second
quarter
yen

-

35.00

-

0.00

Year ended
March 31, 2020
Year ending
March 31, 2021
Year ending March 31,
2021 (forecast)

Dividend per share
End of third
End of fiscal
quarter
year
yen
yen

Full year
yen

-

0.00

35.00

-

0.00

0.00

Note: Revisions to the most recently announced dividend forecast: Yes
In the Company’s articles of incorporation, the dates of record are set as the last day of the fiscal second quarterand the last day of the fiscal year.

3. Forecast of Consolidated Earnings for the Year Ending March 31, 2021
(April 1, 2020 – March 31, 2021)
Net sales

Full year

million yen%

1,500,000(8.6)(Percentage figures represent changes versus the year-ago period)
Net income attributable Earnings per
Operating income
Recurring profit
to owners of parent
share
million yen%
million yen%
million yen%
yen(20,000)-

Note: Revisions to the most recently announced earnings forecast: Yes

2(25,000)-(27,000)-(161.63)

Notes1) Changes affecting the status of material subsidiaries (scope of consolidation): None2) Accounting procedures specific to preparation of quarterly consolidated financial statements: Yes*For further details, see “2.Consolidated Financial Statements (3)Notes on financial statements” onpage 16 in the Accompanying Materials.
3) Changes in accounting policies, changes in accounting estimates, and correction of errors(1) Changes in accounting policies in accord with revisions to accounting standards: None
(2) Changes in accounting policies other than (1): None
(3) Changes in accounting estimates: None
(4) Correction of errors: None
4) Number of shares issued and outstanding (common stock)(1) Number of shares issued as of period-end (including treasury stock)
September 30, 2020:
167,080,532 shares
March 31, 2020:
167,080,532 shares(2) Number of shares held in treasury as of period-end
September 30, 2020:
37,248 shares
March 31, 2020:
36,587 shares(3) Average number of shares during respective periods
September 30, 2020:
167,043,632 shares
September 30, 2019:
167,044,988 shares*The quarterly report of earnings and financial statements is exempted from quarterly review
procedures based on the Financial Instruments and Exchange act.
*Appropriate Use of Financial Forecasts and Other Important Matters
Forward-Looking Statements
These materials contain various forward-looking statements and other forecasts regarding performanceand other matters. Such statements are based on information available at the time of their preparation, anddo not mean that the Company promises to achieve these figures. Actual results may differ from thoseexpressed or implied by forward-looking statements due to a range of factors. For assumptions underlying
earnings forecasts and other information regarding the use of such forecasts, refer to “1. Qualitative
Information and Financial Statements (3) Consolidated earnings outlook” on page 10 in the
Accompanying Materials.
How to Obtain Supplementary Briefing Material on Quarterly Financial Results and Details of theQuarterly Financial Results Briefing
The Company plans to conduct a briefing for institutional investors, analysts and the press by conference
call on Thursday October 29, 2020, and to post the briefing material on quarterly financial results to be
used for the briefing on TDnet and the Company’s website simultaneously with the announcement offinancial results.

3

Accompanying Materials – Contents
1. Qualitative Information and Financial Statements

5(1) Consolidated operating results

5(2) Consolidated financial condition

10(3) Consolidated earnings outlook

10

2. Consolidated Financial Statements

11(1) Consolidated balance sheets

11(2) Consolidated statements of income and comprehensive income13(3) Consolidated cash flow statements

15(4) Notes on financial statements

16(Notes on the going-concern assumption)

16(Notes on significant changes in the amount of shareholders’ equity)

16(Accounting procedures specific to preparation of quarterly consolidated financial

16

statements)(Related to consolidated balance sheets)

16(Related to consolidated statements of income)16(Segment information)

18

3. Supplementary information on consolidated earnings forecasts for the fiscal year ending March
31, 2021

420

1. Qualitative Information about Financial Statements(1) Consolidated operating results
The impact of the spread of the novel coronavirus on the economy is gradually easing with theresumption of economic activities both in Japan and overseas and fiscal policies, etc. implemented bynational governments. At the same time, there are no signs yet of the pandemic subsiding, and theoutlook for the real economy remains uncertain due to concerns about matters such as waning policy
efficacy, deterioration of corporate earnings, curbed capital investment, worsening of the employment
situation, and stagnation in consumer spending.
In addition to this, uncertainty in the global economy is increasing further due to deteriorating
relations between the U.S. and China. In light of this, continued close monitoring of developments in
U.S.-China relations will be necessary.
Amid such an operating environment, the Group’s orders received in the first six months of the
fiscal year ending March 31, 2021 decreased versus the previous fiscal year, mainly in the Aerospace
Systems segment and the Energy System & Plant Engineering segment. Net sales decreased overall,due to decreases in the Aerospace Systems segment, the Motorcycle & Engine segment, and othersegments, despite increases in the Rolling Stock segment and other segments. Profits declined due toa deterioration in the Aerospace Systems segment and other factors, despite an improvement in
profitability in the Rolling Stock segment. Recurring profit deteriorated due to a decline in operating
income despite gains on foreign exchange and reversal of the provision for the in-service issues ofcommercial aircraft. Net income attributable to owners of parent decreased due to the decline inrecurring profit as well as impairment loss on fixed assets recorded under extraordinary loss and partial
reversal of deferred tax assets, despite gains on sales of fixed assets being recorded under extraordinary
income.
As a result, the Group’s consolidated orders received decreased ¥155.1 billion versus the same
period of the previous fiscal year to ¥502.2, consolidated net sales decreased ¥79.2 billion year on yearto ¥657.3 billion, operating loss deteriorated ¥30.5 billion year on year to ¥21.8 billion, recurring loss
deteriorated ¥19.1 billion year on year to ¥18.2 billion, and net loss attributable to owners of parent
deteriorated ¥23.5 billion year on year to ¥27.2 billion.

5

First-quarter consolidated operating performance is summarized by segment below.

Segment Information
Segment net sales, operating income, and orders received (billion yen)
Six Months ended September 30

2019(A)

2020(B)

Orders received

Change (B – A)

Six Months ended
September 30

Net

OperatingNet

OperatingNet

Operating

2019

2020

Changesales

incomesales

incomeSales

income(A)(B)(B – A)

Aerospace
Systems

250.8

9.7

168.5

(23.8)(82.3)(33.5)

158.7

72.4

(86.2)

95.6

5.0

104.5

4.4

8.9

(0.6)

124.0

95.8

(28.1)

98.2

3.2

99.0

3.4

0.8

0.2

104.6

102.4

(2.1)

Structure

37.1

(1.4)

38.2

(1.4)

1.1

0.0

26.5

22.5

(3.9)

Rolling Stock

59.3

(4.3)

69.1

(0.1)

9.8

4.1

39.1

30.3

(8.7)

Engine

147.2

(3.3)

139.7

(5.1)

(7.4)

(1.8)

147.2

139.7

(7.4)

Other

48.1

0.8

37.9

(0.1)

(10.2)

(1.0)

57.0

38.6

(18.3)

－

(0.9)

－

1.1

－

2.0

－

－

－

736.5

8.6

657.3

(21.8)(79.2)(30.5)

657.3

502.2

(155.1)

Energy System& Plant
Engineering
Precision
Machinery &RobotShip & Offshore

Motorcycle &Adjustments
Total

Notes: 1. Net sales include only sales to external customers.
2. The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainlyon estimated demand.

6

Aerospace Systems
Regarding the business environment surrounding the Aerospace Systems segment, there has beenstable demand from the Ministry of Defense in Japan amid the tight defense budget. With respect tocommercial aircraft, global passenger demand has been sluggish due to the novel coronavirus
pandemic, and demand for commercial aircraft airframes and jet engines has declined.
Amid such an operating environment, consolidated orders received decreased ¥86.2 billion year on
year to ¥72.4 billion due to decreases in component parts of airframes and jet engines for commercial
aircraft.
Consolidated net sales decreased ¥82.3 billion year on year to ¥168.5 billion due to decreases incomponent parts of airframes for Ministry of Defense and commercial aircraft, and component partsof commercial aircraft jet engines.
Operating loss deteriorated ¥33.5 billion year on year to ¥23.8 billion due to a decrease in sales.
Energy System & Plant Engineering
Regarding the business environment surrounding the Energy System & Plant Engineering segment,
in Japan, there is ongoing demand for replacing aging facilities for refuse incineration plants, while
over the medium to long term, demand for distributed power sources in Japan and overseas, and forenergy infrastructure development in emerging markets remains firmly-rooted. Meanwhile, theuncertain situation continues, as stagnation in economic activity and instability in resource prices dueto the novel coronavirus pandemic has resulted in developments such as customers revising their shortterm capital investment decisions
Amid such an operating environment, consolidated orders received amounted to ¥95.8 billion, adecrease of ¥28.1 billion compared to the same quarter of the previous year, when the Company
received orders for major repair work on domestic waste disposal facilities and large-scale projects inthe energy business.
Consolidated net sales increased by ¥8.9 billion year on year to ¥104.5 billion due to an increase in
the volume of work on domestic waste disposal facilities and higher sales of Gas Turbine Combined
Cycle (GTCC) power plants in Japan.
Operating income decreased ¥0.6 billion year on year to ¥4.4 billion due to losses on operations dueto the impact of the novel coronavirus pandemic despite an increase in revenue.

7

Precision Machinery & Robot
Regarding the business environment surrounding the Precision Machinery & Robot segment, inthe precision machinery field, the construction machinery market in China was the first to recoverfrom the impact of the novel coronavirus pandemic and the Company’s sales to the Chinese market
have exceeded the previous fiscal year’s level. Construction machinery markets outside China
stagnated, however, with demand declining significantly due to the impact of the pandemic. There
have been recent signs of recovery in construction machinery demand in regions other than China as
well, but the outlook remains uncertain due to the spread of infection. In the robot field, sales ofgeneral-purpose robots have been strong in the Chinese market where the recovery was quick,despite postponements of some projects to future periods due to the impact of the novel coronavirus
pandemic. With respect to robots for the semiconductor market, demand is expected to steadily
expand over the medium to long term given recent solid performance, despite the growing sense of
uncertainty due to the impact of the friction between the U.S. and China.
Amid such an operating environment, consolidated orders received decreased ¥2.1 billion year on
year to ¥102.4 billion, due to a decrease in hydraulic components for the construction machinery
market although an increase in robots for the semiconductor market.
Consolidated net sales ¥99.0 billion was on par with the previous year's result, due to a decrease in
hydraulic components for the construction machinery market although an increase in robots for thesemiconductor market.
Operating income ¥3.4 billion was on par with the previous year's result.
Ship & Offshore Structure
Regarding the business environment surrounding the Ship & Offshore Structure segment, despite
the emergence of demand for gas-fueled vessels in conjunction with tighter environmental regulations
taking shape, the situation remains challenging due to the prolonged slump in the marine transport
market, stagnation in business talks due to the novel coronavirus pandemic, and other factors.
Amid such an operating environment, consolidated orders received decreased by ¥3.9 billion to¥22.5 billion from the previous fiscal year due to a decline in orders for LPG carriers.
Consolidated net sales increased ¥1.1 billion year on year to ¥38.2 billion, mainly due to an increasein vessel repair sales, despite a decline in the volume of work on new-build vessels.
Operating loss of ¥1.4 billion was on par with the previous year’s result. The operating loss was
mainly due to the lower volume of work on new-build vessels and the posting of losses from operations,despite the increase in vessel repair sales.

8Rolling StockRegarding the business environment surrounding the Rolling Stock segment, the impact of the novel
coronavirus pandemic has led to a review of railway-related investment plans in Japan, and delays inwork processes as well as postponement and cancellation of biddings overseas. In the medium andlong term, however, relatively stable growth is expected around the world, due to development ofurban transportation as an environmental protection measure and to ease congestion in large cities
caused by increasing population concentration, as well as demand for railway infrastructure following
economic development in Asian countries.
Amid such an operating environment, despite receiving orders for Shinkansen rolling stock in the
period under review, consolidated orders received amounted to ¥30.3 billion, a decline of ¥8.7 billion
compared with the previous fiscal year, when the Company received orders for large-scale projects
from private and public railway operators in Japan.
Consolidated net sales increased ¥9.8 billion year on year to ¥69.1 billion, due to an increase insales of railcars for Japan and the other factors.
Operating income improved ¥4.1 billon year on year to an operating loss of ¥0.1 billion, due to anincrease in sales, despite a deterioration in the profitability of overseas projects caused by the impactof the novel coronavirus pandemic.
Motorcycle & Engine
Regarding the business environment surrounding the Motorcycle & Engine segment, the novel
coronavirus spread in the main markets of Europe, North America, and Southeast Asia, significantly
impacting these markets. Recent retail sales have exceeded the previous fiscal year’s level in the U.S.
market reflecting growing demand for off-road models, and sales have also recovered to the level ofthe previous fiscal year in the European market. Meanwhile, emerging markets continued to stagnatewith sales remaining below the previous fiscal year’s level.
Amid such an operating environment, consolidated net sales decreased ¥7.4 billion year on year to¥139.7 billion, due to significantly lower sales of motorcycles in emerging markets.
Operating income deteriorated ¥1.8 billion year on year to an operating loss of ¥5.1 billion, due tothe decrease in revenue, as well as the appreciation of the yen against the U.S. dollar, and emerging
market currencies, along with other factors.
Other Operations
Consolidated net sales decreased ¥10.2 billion year on year to ¥37.9 billion.
Operating loss deteriorated ¥1.0 billion year on year to ¥0.1 billion.

9(2) Consolidated financial condition(i) Assets
Current assets were ¥1,300.9 billion, a ¥42.2 billion increase from the previous fiscal year.
Fixed assets were ¥677.8 billion, a ¥21.1 billion decrease from the previous fiscal year, due toamortization of property, plant and equipment, and other factors.
As a result, total assets were ¥1,978.8 billion, a ¥21.0 billion increase from the previous fiscal year.
(ii) Liabilities
Interest bearing liabilities were ¥729.4 billion, a ¥161.9 billion increase from the previous fiscal
year.
Liabilities were ¥1,537.6 billion, a ¥51.3 billion increase from the previous fiscal year due to anincrease in interest bearing liabilities and other factors.
(iii) Net assets
Net assets were ¥441.2 billion, a ¥30.3 billion decrease from the previous fiscal year due to theposting of a net loss attributable to owners of parent and other factors.

(3) Consolidated earnings outlook
With respect to the earnings forecasts for the fiscal year ending March 31, 2021, the outlook forboth consolidated net sales and consolidated operating loss has improved compared with the previous
forecast. The Company forecasts consolidated net sales of ¥1,500.0 billion yen and consolidated
operating loss of ¥20.0 billion.
The Company is also forecasting consolidated recurring loss of ¥25.0 billion yen and net loss
attributable to owners of parent of ¥27.0 billion. ROIC and ROE are forecast to be -2.2% and -6.1%,
respectively. Consolidated orders are forecast to be ¥1,340.0 billion.
The Company’s earnings forecasts assume exchange rates of ¥106 to the U.S. dollar and ¥123 to
the euro.

Note regarding consolidated earnings outlook
The above earnings outlook is based on information available at the time of preparation, and includes
risks and uncertainties. We therefore discourage making investment decisions depending solely on thisoutlook. Please note that actual earnings may differ materially from this outlook, due to a variety ofimportant factors stemming from changes the external environment and/or the Company’s internal
environment. Important factors that impact actual operating performance include, but are not limited
to, the economic situation surrounding the Company’s scope of business, foreign exchange rates, inparticular the yen/dollar exchange rate, tax codes and other regulatory system-related issues.

102. Consolidated Financial Statements(1) Consolidated balance sheets
Million yen
As of
As of
March 31, 2020
September 30, 2020
AssetsCurrent assets
Cash and deposits
Trade receivables
Merchandise and finished products
Work in process
Raw materials and supplies
Other
Allowance for doubtful receivables
Total current assets
Fixed assets
Net property, plant and equipment
Buildings and structures
Other
Total property, plant and equipment
Intangible assets
Investments and other assets
Other
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Trade payables
Electronically recorded obligations - operating
Short-term debt
Income taxes payable
Provision for sales promotion expenses
Accrued bonuses
Provision for product warranties
Provision for losses on construction contracts
Advances received
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term debt
Retirement benefit liability
Provision for the in-service issues of commercial aircraft
jet engines
Other
Total non-current liabilities
Total liabilities

11

106,108
473,204
75,042426,256
130,359
51,176(3,367)
1,258,781

153,188434,995
56,325
462,667
140,368
56,848(3,408)1,300,985

193,931
288,639
482,570
21,358

174,944
291,183
466,128
22,248

196,973(1,838)
195,134
699,063
1,957,845

191,124(1,618)
189,506
677,883
1,978,868

261,159
110,526
166,188
6,116
12,17422,032
14,454
11,464
148,610
194,998

205,560
98,356
181,698
4,815
6,510
18,364
12,406
12,553139,076
274,181

947,726

953,524

160,000
188,859
129,846

190,000
196,758
133,522(*1) 15,689(*1) 10,550

44,161
538,556
1,486,283

53,276584,107
1,537,632

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity

104,484
54,542
326,626(133)
485,520

104,484
54,542
299,359(134)
458,251

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total net assets and liabilities

1,636
(272)
(11,311)(19,946)(29,892)
15,934
471,562
1,957,845

1,188
171
(15,212)(18,908)(32,761)
15,745441,236
1,978,86812

(2) Consolidated statements of income and comprehensive income
Consolidated statements of income
Million yen
As ofSeptember 30, 2019
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries and allowances
Research and development expenses
Other

Total selling, general and administrative expenses
Operating income(loss)
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gain
Reversal of provision for the in-service issues ofcommercial aircraft jet engines
Other

Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
Payments for the in-service issues of commercial aircraft
jet engines
Other

Total non-operating expenses
Recurring profit(loss)
Extraordinary income
Gain on sales of fixed assets
Gain on sales of sales of shares of subsidiaries and associates
Total extraordinary income
Extraordinary loss
Impairment loss
Total extraordinary loss
Income(loss) before income taxes
Income taxes
Net income(loss)
Net income attributable to non-controlling interests
Net income(loss) attributable to owners of parent

13

As of
September 30, 2020

736,565
629,707
106,857

657,325588,959
68,36627,38423,73947,05598,1798,678

27,47519,04143,732
90,249(21,883)

314
180
924
－
－

265
150
590
1,791
(*1) 3,005

1,473
2,893

2,573
8,376

1,860
5,772
(*1) 1,157

1,955
－
－

1,951
10,741
830

2,824
4,780
(18,286)(*2) 1,277－
1,277(*2) 3,236(*3) 1,581
4,817

－
－
2,107
5,122
(3,015)718(3,733)(*4) 3,916
3,916(17,385)9,454(26,840)426(27,267)

Consolidated statements of comprehensive income
Million yen
As ofSeptember 30, 2019
Net income(loss)
Other comprehensive income
Net unrealized gains (losses) on securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurement of defined benefit plans
Share of other comprehensive income(loss) of associates
accounted for using equity method
Total other comprehensive income(loss)
Comprehensive Income(loss) attributable to:
Owners of parent
Non-controlling interests

14

As of
September 30, 2020

(3,015)(26,840)(212)
123(4,014)
1,353(1,997)(396)
427(2,202)
1,038(1,898)(4,748)(7,763)(8,054)291(3,030)(29,870)(30,137)267

(3) Consolidated cash flow statements
Million yen
Six months ended
September 30, 2019
Cash flows from operating activities
Income(loss) before income taxes
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in provision for sales promotion expenses
Increase (decrease) in accrued bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for losses on construction contracts
Increase (decrease) in net defined benefit liability
Increase (decrease) in payments for the in-service issues ofcommercial aircraft jet engines
Interest and dividend income
Interest expense
Share of (profit) loss of entities accounted for using equity method(Gain) loss on sale of fixed assets(Gain) loss on sales of sales of shares of subsidiaries and associates(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables
Increase (decrease) in advance payments
Increase (decrease) in advances received from customers(Increase) decrease in other current assets
Increase (decrease) in other current liabilities
Other
Subtotal
Cash received for interest and dividends
Cash paid for interest
Cash paid for income taxes
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of property, plant, equipment and intangible assets
Proceeds from sales of property, plant, equipment and intangible
assetsAcquisition of investments in securities
Proceeds from sales of investments in securities
Acquisition of investments in subsidiaries and associates
Proceeds from sales of shares of subsidiaries and associates
Other
Net cash used for investing activities
Cash flows from financing activities
Net increase (decrease) in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Redemption of bonds
Cash dividends paid
Cash dividends paid to non-controlling interests
Proceeds from sale and leaseback transactions
Other
Net cash used for financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period15

Six months ended
September 30, 2020

2,107
30,133
－
(206)
5,335
(3,356)(1,168)(9,864)
4,833(1,478)(17,385)
30,223
3,916(134)(5,621)(3,617)(1,986)
1,109
5,596(5,139)

(495)
1,860
(924)
(1,277)－(93,246)(42,352)(49,292)(4,739)(20,308)(10,547)(44,466)
561(238,893)
722(1,863)(9,456)(249,491)

(415)
1,955
(590)
(3,236)(1,581)
41,030(30,368)(65,822)(3,915)(7,650)(142)(24,761)(5,471)(94,008)
1,556(1,874)(6,430)(100,757)(33,242)
1,509(29,746)
13,739(439)
458(2,931)－
1,614(33,030)

(474)
1,326
(82)
1,927
(357)
(13,668)

250,750
19,000(23,112)20,000(10,000)(5,863)
(503)
－
(289)
249,9812,401(30,139)
68,311
38,172

103,128
20,900(10,587)
60,000(20,000)(36)(531)
10,014(1,644)
161,24331
46,848102,546
149,395

(3) Notes on financial statements
Notes on the going-concern assumption
Not applicable
Notes on significant changes in the amount of shareholders’ equity
Not applicable
Accounting procedures specific to preparation of quarterly consolidated financial statements(Calculation of tax expense)
The Company calculates tax expense by rationally estimating its effective tax rate after applicationof tax effect accounting to pretax net income for the fiscal year which includes the first quarter underreview, and multiplying quarterly pretax net income by said estimated effective tax rate. If unable touse the estimated effective tax rate, the Company calculates tax expense by multiplying the statutory
effective tax rate by quarterly pretax net income adjusted to reflect material differences other than
temporary differences.
Income taxes are reported inclusive of income tax adjustments.
Related to consolidated balance sheets(*1) Provision for the in-service issues of commercial aircraft jet engines
The Company participates as a risk and revenue sharing partner on the Rolls-Royce Trent 1000
engine program, which has been impacted by the challenge of managing significant in-service issues.
Rolls-Royce continues to work hard to remedy this situation and has made further substantial progresson the implementation of long-term solutions and mitigation of the near-term impact on customers. In
the FY2020 2nd quarterly financial results, the Company has made a provision of the abnormal cost
related to in-service issues which the Company would cover as a member of this program.

Related to consolidated statements of income(*1) Reversal of provision for the in-service issues of commercial aircraft jet engines・
Payments for the in-service issues of commercial aircraftjet engines
The Company participates as a risk and revenue sharing partner on the Rolls-Royce Trent 1000
engine program, which has been impacted by the challenge of managing significant in-service issues.
Rolls-Royce continues to work hard to remedy this situation and has made further substantial progresson the implementation of long-term solutions and mitigation of the near-term impact on customers. In
the FY2020 2nd quarterly financial results, the Company has recorded increases in the abnormal cost
related to in-service issues which the Company would cover as a member of this program as nonoperating expenses and decreases in the cost as non-operating income.

16

(*2) Gain on sales of fixed assets
Six months ended September 30, 2019
Proceeds from the sale of former dormitory/company housing sites.

Six months ended September 30, 2020
Proceeds from the sale of former dormitories/company housing of the Company and subsidiaries.

(*3) Gain on sales of sales of shares of subsidiaries and associates
Proceeds from the sale of shares of subsidiaries and associates.

(*4) Impairment loss
Due to a decline in profitability of the assets related to the Sakaide Works of the Ship & Offshore
Structure segment given the current market environment.

17

Segment information
1. Six Months ended September 30, 2019 (April 1, 2019 – September 30, 2019)(1) Sales and income (loss) by reportable segment
Million yen

Aerospace Systems
Energy System & Plant Engineering
Precision Machinery & Robot
Ship & Offshore structure
Rolling stock
Motorcycle & Engine
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

250,896
95,60998,21937,13059,306147,235
48,167736,565
736,565

4,194
17,421
7,246
4,803
9
324
18,37652,376(52,376)-

255,090
113,031
105,465
41,93359,316
147,560
66,543788,941(52,376)
736,565

9,704
5,052
3,211
(1,476)(4,367)(3,368)
871
9,627
(948)
8,678

Million yen
IncomeAmountIntersegment transactions
99
Corporate expenses*(1,047)
Total(948)* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
Not applicable18

2. Six Months ended September 30, 2020 (April 1, 2020 – September 30, 2020)(1) Sales and income (loss) by reportable segment
Million yen

Aerospace Systems
Energy System & Plant Engineering
Precision Machinery & Robot
Ship & Offshore structure
Rolling stock
Motorcycle & Engine
Other
Reportable segment total
Adjustments*1
Consolidated total
Notes: 1. Breakdown of adjustments:

External sales

Intersegment
sales

Total sales

Operatingincome (loss)

168,595
104,580
99,02038,24869,194
139,784
37,901
657,325－
657,325

3,048
9,707
5,972
1,880
4
298
18,79939,711(39,711)－

171,643
114,288
104,993
40,12869,199140,083
56,701
697,037(39,711)657,325(23,865)
4,413
3,412
(1,419)(186)(5,169)(175)(22,989)
1,106(21,883)

Million yen
Amount(30)
1,137

IncomeIntersegment transactions
Corporate expenses*

Total
1,106
* Corporate expenses mainly comprise general and administrative expenses not attributed to reportablesegments.
2. Segment income adjustments are based on operating income reported on the consolidated statements
of income for the corresponding period.

(2) Impairment loss on fixed assets and goodwill by reportable segment
The Ship & Offshore Structure segment recorded an impairment loss on fixed assets. This
impairment loss recorded in the second quarter of the year under review amounted to ¥3,916
million.

19

3. Supplementary information on consolidated earnings forecasts for the fiscal year ending
March 31, 2021
(1) Net sales and operating income (loss)
Billion yen

Reportable segment

Outlook for the year ending March 31, 2021 (fiscal 2020)
Revised forecast
Forecast issued
Change(A)
August 6, 2020 (B)(A – B)

400.0
240.0

Operatingincome(loss)(25.0)
8.5

220.0
80.0
150.0
320.0
90.0

Net sales
Aerospace Systems
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore Structure
Rolling Stock
Motorcycle & Engine
Other
Adjustments
Total

1,500.0

420.0
240.0

Operatingincome(loss)(21.0)
6.0

10.0

200.0

(3.0)
(2.0)
(5.0)
1.0
(4.5)
(20.0)

80.0
150.0
280.0
90.0

Net sales

1,460.0

Year ended
March 31, 2020
(Fiscal 2019) (actual)(20.0)-

Operatingincome(loss)
(4.0)
2.5

7.0

20.0

(4.0)
(2.0)
(17.0)
5.0(4.0)(30.0)

40.0-

Net sales

40.0

532.5
242.9

Operatingincome(loss)
42.7
17.5

3.0

217.3

12.2

1.0
12.0
(4.0)
(0.5)
10.0

71.6
136.5
337.7
102.4

(0.6)
(3.8)
(1.9)
1.2
(5.3)
62.0

Net sales

1,641.3(2) Orders received

Reportable segment

Outlook for the year ending March 31, 2021 (fiscal 2020)
Revised forecast
Forecast issued
Change(A)
August 6, 2020 (B)(A – B)
310.0
360.0(50.0)
230.0
280.0(50.0)

Billion yen
Year ended
March 31, 2020
(Fiscal 2019) (actual)
414.9
252.3

Aerospace Systems
Energy System & Plant
Engineering
220.0
200.0
20.0
Precision Machinery &
Robot
100.0
120.0
(20.0)
Ship & Offshore Structure
70.0
70.0
Rolling Stock
320.0
280.0
40.0
Motorcycle & Engine
90.0
90.0
Other
Total
1,340.0
1,400.0(60.0)
Note: The Motorcycle & Engine segment’s orders received are equal to its net sales as production is based mainly on
estimated demand.

20

218.8
56.2
125.7
337.7
107.5
1,513.5

(3) Before-tax ROIC

Reportable segment
Aerospace Systems
Energy System & Plant
Engineering
Precision Machinery &RobotShip & Offshore Structure
Rolling Stock
Motorcycle & Engine
Total

Outlook for the year ending March 31, 2021 (fiscal 2020)
Revised forecast
Forecast issued
Change(A)
August 6, 2020 (B)(A – B)(%)
Year ended
March 31, 2020
(Fiscal 2019) (actual)

(4.8)

8.0

8.6

10.4

7.6

We didn’t disclose.

We didn’t disclose.

(6.9)
(3.2)
(5.3)
(2.2)

8.8
1.4
(7.2)
(2.6)
4.2

Notes: 1. Forecast’s assumed foreign exchange rates: ¥106 = US$1, ¥123= 1 euro
2. Before-tax ROIC = (income before income taxes + interest expense) / invested capital.

21