Financial Results for Third Quarter FY 2012
(for the year ending March 31, 2013)

January 31, 2013
Kawasaki Heavy Industries, Ltd.

Table of Contents

I. Consolidated Results for Third Quarter FY2012

 Summary of Financial Results Financial Results by Segment
 Details of Change in Profit I Details of Change in Profit II Financial Results by Segment
Ship & Offshore Structure
Rolling Stock
Aerospace
Gas Turbine & Machinery
Plant & Infrastructure
Motorcycle & Engine
Precision Machinery Financial Condition and Cash Flows

1
2
3
4
5
6
7
8
9
10
11
12

II．Forecast for FY2012

 Consolidated Operating Performance Forecast by Segment
 R&D/CAPEX/Number of Employees

13
14
15

I. Consolidated Results for Third Quarter FY2012

Summary of Financial Results(Billion Yen)

vs. FY2011.3Q

FY2011.3Q

FY2012.3Q

Orders Received

782.1

802.4

+ 20.3

Net Sales

906.3

885.8

- 20.4

Increased as a whole due to increase in orders
received in Rolling Stock and Aerospacesegments, despite decrease in orders receivedin Precision Machinery segment

Operating Income

47.2

22.9

- 24.3< Net Sales >Recurring Profit

58.1

31.4

- 26.6Net Income

33.6

19.3

- 14.3

Change< Orders Received >Decreased as a whole due to large decrease in
Precision Machinery and Ship & Offshore
Structure segments, despite increase in
Aerospace segment< Profits >Decreased as a whole due to decrease in
Precision Machinery and Rolling Stocksegments, despite increase in Aerospace segment

Exchange Rates ( weighted-average )Yen / US$

79.35

80.10

Yen / EUR

111.83103.00-1-

I. Consolidated Results for Third Quarter FY2012

Financial Results by Segment(Billion Yen)

Net Sales

Orders Received

Operating Income

FY2011
3Q

FY2012
3Q

ChangeFY2011
3Q

FY2012
3Q

ChangeFY2011
3Q

FY2012
3Q

ChangeShip & Offshore Structure

36.9

42.9

+ 6.0

87.1

68.6

- 18.4

4.1

4.4

+ 0.2

Rolling Stock

49.9

93.1

+ 43.2

94.6

94.1

- 0.4

4.9

- 0.5

- 5.4

Aerospace

114.1

138.3

+ 24.2

138.5

165.8

+ 27.2

5.9

9.3

+ 3.4

Gas Turbine & Machinery

123.3

131.6

+ 8.3

137.0

144.6

+ 7.5

8.0

4.6

- 3.3

Plant & Infrastructure

84.0

69.4

- 14.5

78.7

71.1

- 7.6

8.8

3.7

- 5.1

Motorcycle & Engine

154.2

158.8

+ 4.5

154.2

158.8

+ 4.5

- 4.5

- 2.0

+ 2.5

Precision Machinery

131.1

78.4

- 52.7

129.0

93.8

- 35.220.7

4.8- 15.9

Other

88.2

89.5

+ 1.2

86.7

88.7

+ 2.0

3.3

1.5

- 1.8

-

-

-

-

-

-

-4.0

- 2.9

+ 1.1

782.1

802.4

+ 20.3

906.3

885.8

- 20.447.2

22.9- 24.3Eliminations and corporate

Total

Note : “Eliminations and corporate” includes some expenses incurred at Head Office which were not allocated to each industry segment for internal reporting-2-

I. Consolidated Results for Third Quarter FY2012

Details of Change in Profit I- FY2012.3Q vs. FY2011.3Q 【Operating Income】- 0.1- 24.3 ( FY2011.3Q 47.2  FY2012.3Q 22.9 )(Billion Yen)

Increase in selling, general &administrative expenses

Impact of fluctuationof foreign exchange
rate

- 4.8

Effects ofsales decrease- 3.6

FY2011.3Q

Impact of changes
in product mix andother factors

47.2- 21.1
Impact of change
in material price+ 5.2

FY2012.3Q
22.9

-3-

Details of Change in Profit II

I. Consolidated Results for Third Quarter FY2012- FY2012.3Q vs. FY2011.3Q (Billion Yen)

【Non-operating Income/Expenses】- 2.3 ( FY2011.3Q 10.8  FY2012.3Q 8.5 )Net Interest expense ( incl. dividend income )Equity in income of unconsolidated subsidiaries and affiliates
Gain and loss on foreign exchange
Others【Extraordinary Income/Losses】

+ 0.2
- 0.0
- 0.9
- 1.5

( - 1.4  - 1.2 )( 7.1  7.0 )( 2.7  1.7 )( 2.4  0.9 )- 0.6 （ FY2011.3Q - 0.9  FY2012.3Q - 1.6 )Provision for environmental measures- 1.3( 0.0  - 1.3 )※Loss on impairment of fixed assets
※

+ 0.7

Loss on impairment of idle assets whose book values were written down to the recoverable amounts-4-( - 0.9  - 0.2 )I. Consolidated Results for Third Quarter FY2012

Ship & Offshore Structure
Main Products： LNG carriers, LPG carriers, VLCCs, Bulk carriers, Submarines, Offshore structures

 FY2012.3Q （ vs. FY2011.3Q )（Billion Yen / In accumulated amount）（Forecast in October 110.0）

Orders Received

Orders Received: Increased due to orders received of a LNG carrier and other vessels
Net Sales: Decreased due to decrease in amount of shipbuilding of large-scale bulk carriers
Operating Income: Increased due to cost reduction, decrease in provision for losses on
construction contracts and other factors, despite sales decrease<Units of Orders Received and Sales of New Building S hips>

110.0

Orders Received
FY2011.3Q

17.0

24.6

36.9

39.9

30.3

37.8

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

42.9

FY2012.3Q

1
1
1
6

1
2

8

4

(unit)Sales
FY2011 .3Q FY2 012.3Q

2(1)
2(1)
2(1)
21(14)
2(2)29(19)

1(1)
1(1)
2(2)
19(7)
1(1)
24(12)

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

1Q

2Q

3Q

FY2011

1Q

2Q

Net Sales

3Q（Forecast in October 80.0）

113.5
87.1

68.6

53.1

80.0

45.8

27.7

1Q

FY2012
Forecast

22.7

2Q

3Q

FY2011

1Q

2Q

3Q

FY2012
Forecast

Operating Income（Forecast in October - 2.0）

4.1
0.9

0.5

1Q

2Q

4.4

3.9

3.0
1Q

3Q

FY2011

-0.6

1.0
2Q

3Q

FY2012
Forecast

 FY2012 Forecast （ vs. Forecast in October ）Orders Received & Net Sales: Remain unchanged because of no significant change
Operating Income: Revised up due to the effect of change in assumed foreign exchange
rate, cost reduction and other factors<For Reference> Business Development in Overseas
NACKS was established in December 1995, as a fifty-fifty joint venture between KHI and
China Ocean Shipping (Group) Company (COSCO), one of the world’s largest shipping
company, and its capacity was expanded in 2008. At NACKS, various types of commercial
vessels are built for domestic shipping company such as COSCO as well as for Japanese andEuropean customers.
As a parent company of NACKS, KHI has also supported DACKS, which was initiallyestablished by NACKS and COSCO Group, since its establishment in July 2007. In order tomake it more competitive and further expand its operations, KHI acquired a 34% stake in
DACKS in April 2012. As a result, KHI’s actual ratio of investment in DACKS (including
indirect investment) is 49%.
Meanwhile, KHI decided to participate in a joint venture project for building drill ships etc.
in Brazil, where the demand for the drill ships & FPSO for the drilling and production of
offshore oil is rapidly increasing, executed a shareholders agreement with Estaleiro Enseada
do Paraguaçu S.A. (EEP) in May 2012 and acquired a 30% stake in EEP.
With a view to expanding operations and boosting profitability at two shipyards in China
and developing the new shipyard in Brazil as the third overseas shipyard, KHI will further
deepen cooperation between its bases at home and three overseas shipyards, and actively
pursue shipbuilding by taking advantage of the feature of each shipyard.

-5-

I. Consolidated Results for Third Quarter FY2012

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) FY2012.3Q （ vs. FY2011.3Q ）（Billion Yen / In accumulated amount）（Forecast in October 140.0）

Orders Received

140.0
93.1

42.1

49.9

2Q

3Q

66.0
25.3

22.6
1Q

66.9

FY2011

1Q

2Q

3Q

FY2012
Forecast（Forecast in October 130.0）

Net Sales
132.6

94.1

55.3

2Q

51.4

3Q

FY2011

4.9

5.1

1Q

2Q

3Q

FY2012
Forecast

Operating Income

0.1

0
1Q

2Q

（Forecast in October 2.0）

2.0

1.1
3Q

FY2011

Orders Received, Net Sales & Operating Income: Remain unchanged because ofno significant change<For Reference> Present Status of Overseas Projects

28.8

25.8

 FY2012 Forecast （ vs. Forecast in October ）

130.0

94.6

1Q

Orders Received: Increase in orders received for overseas market including highspeed rail cars for Taiwan and subway cars for Singapore
Net Sales: Remained the same level as in the previous third quarter because of sales
increase for Japan Railways (JR) companies, despite sales decrease for overseas
marketOperating Income: Deterioration in profitability due to provision for loss on
construction contracts for a certain overseas project

2Q

1Q

3Q

▲ 0.5
▲ 3.1

FY2012
Forecast

North America- Working to win orders mainly for heavy rails and commuter rails.
- Extension of product lineup such as efSET® and K-Star Express® to meet demandfor Medium- to High-speed rail projects.
- California High-speed Rail: Working with other Japanese companies aiming to win
the contract for E&M system including rail cars.
Asia- There are construction and expansion plans of the urban transport systems inseveral Asian cities, and High-speed railways projects in India- KHI will work to win new projects in the markets such as Taiwan and Shingapore,
where we have the solid track record.
- Dedicated Freight Corridor - Western Corridor (Delhi – Mumbai)
Japanese ODA project, working to receive orders for electric locomotives andmaintenance base facilities and others.
-6-

I. Consolidated Results for Third Quarter FY2012

Aerospace
Main Products : Aircrafts for Japan Ministry of Defense, Component parts for commercial aircrafts (Boeing , Embraer), Missiles

 FY2012.3Q （ vs. FY2011.3Q ）（Billion Yen / In accumulated amount）

Orders Received

327.2（Forecast in October 220.0）

Orders Received: Increase in orders received for Japan Ministry of Defense (MOD)and component parts for Boeing 777 and 787
Net Sales: Increased significantly due to sales increase for MOD including C-2
transport aircraft and component parts for Boeing 777 and 787
Operating Income: Increased due to sales increase, cost reduction and other factors

220.0
114.1
30.6
1Q

91.0

67.5

2Q

3Q

FY2011

1Q

Boeing 777

2Q

3Q

FY2012
Forecast（Forecast in October 250.0）

250.0
206.5
109.1

87.4
49.6

40.0
2Q

3Q

FY2011

1Q

2Q

3Q

FY2012
Forecast（Forecast in October 9.0）

Operating Income

12.0
5.9

4.3

3.0
0.8
2Q

3Q

FY2011<For Reference> Present Status of Main Projects
Aircrafts for MOD
In March 2012, KHI received orders of the first mass production of C-2 transport aircraft forMOD. KHI is working toward the commencement of the mass production of C-2, as well as the
P-1 patrol aircraft.

9.3

7.8

1Q

 FY2012 Forecast （ vs. Forecast in October )Orders Received & Net Sales: Remain unchanged because of no significant change
Operating Income: Revised up due to the effect of change in assumed foreignexchange rate, cost reduction and other factors

165.8

138.5

-0.8

FY2011.3Q FY2012 .3Q
63
66
19
19
Boeing 767
Boeing 787
18
41
Embraer170/175
10
11
73
55
Embraer190/195

34.4

Net Sales

1Q< Sales u nits of compo nen t parts for comm ercial aircrafts >(unit )

138.3

1Q

2Q

3Q

FY2012
Forecast

Component parts for commercial aircrafts
Boeing 777‐ KHI’s production rate for 777 program has increased 7 to 8.3 units per monthcorresponding to the increase in production rate by the Boeing Company.
Boeing 787- In September 2011, the first 787 was delivered to the airline by the Boeing
Company and regular flight service with 787 was started from November 1, 2011. KHI has
completed the production system at Kawasaki’s Nagoya Works I for ramp-up production.

-7-

I. Consolidated Results for Third Quarter FY2012

Gas Turbine & Machinery
Main Products : Jet engines, Gas turbine co-generation system, Gas engines, Diesel engines, Gas turbines & steam turbines for marine & land,
Marine propulsion system, Aero-dynamic machinery（Billion Yen / In accumulated amount）（Forecast in October 240.0）

Orders Received

240.0

227.2
131.6

123.3
79.7

65.4

31.3
1Q

32.5
2Q

3Q

FY2011

1Q

Net Sales

2Q

3Q

FY2012
Forecast（Forecast in October 210.0）

 FY2012 Forecast （ vs. Forecast in October ）Orders Received, Net Sales & Operating Income: Remain unchanged
because of no significant change<For Reference>
Major Projects for Commercial Aircraft Jet Engines

210.0

194.6
144.6

137.0
45.5

3Q

FY2011

1Q

2Q

3Q

FY2012
Forecast（Forecast in October 8.0）

8.0
3.3

3.9

1Q

2Q

8.0

7.7
4.6

3Q

FY2011

2.6

3.2

1Q

2Q

3Q

FY2012
Forecast

PW1100G - JM
Airbus A320neo
International Collaboration Program

RRSP（※)RRSP（※)

Share

Approx. 8.5%

Approx. 7%

Approx. 6%

Responsible
Components

Intermediate pressurecompressor (IPC) module

Intermediate pressurecompressor (IPC) module

Primary parts of the engine’s fan andlow-pressure compressor

First IPC module shipped to Rolls-Royce inMarch 2011.

Made decision to collaborate in a program fordevelopment and production.
Design work in progress.

Present Status（※）

Operating Income

TrentXWB
Airbus A350

Participation Type

45.3

2Q

Trent1000
Boeing 787

Aircraft

93.2

84.7

1Q

 FY2012.3Q （ vs. FY2011.3Q )Orders Received: Increase in orders received for component parts ofcommercial aircraft jet engines
Net Sales: Increased due to sales increase in industrial gas turbines and gas
engines, despite decrease in sales of turbines for land
Operating Income: Decreased due to increase in the R&D expense andother factors, despite sales increase

Development was completed and mass
production started in FY2010. To bedelivered in accordance with production
schedule of airplanes.

Risk & Revenue Sharing Partner

Preparation for the production for component parts of aircraft jet engines is proceeding at SeishinWork’s 4th plant completed in September 2012.

Energy and Environmental Products
The L30A of 30MW class Gas Turbine, which KHI completed development in February 2012, hasbeen operating very successfully at its first commercial plant. Also, KHI built an overhaul facility forgas turbines in Malaysia to enhance its after-sales services.
Meanwhile, the 110MW power plant which consists of 14 units of Kawasaki Green Gas Engines(received an order in September 2011) started full-scale operation in August 2012. Also, as the firstoverseas project, 2 units of gas engines (received an order in December 2011) were delivered for the
LNG terminal in Singapore in December 2012.
KHI will actively develop Energy and Environmental business in domestic and overseas markets.

-8-I. Consolidated Results for Third Quarter FY2012

Plant & Infrastructure
Main Products: Industrial plants (cement, chemical and others), Power plants, LNG & LPG tanks, Municipal refuse incineration plants,
Shield machines, Crushing machines（Billion Yen / In accumulated amount）（Forecast in October 130.0）

Orders Received

130.0

119.2
84.0

69.4

46.8

37.1

51.3

19.1
1Q

2Q

3Q

FY2011

1Q

2Q

3Q（Forecast in October 130.0）

Net Sales

78.7

71.1

56.2

<For Reference> Orders Received of Energy and Environmental Projects

46.4

23.8

19.8
2Q

3Q

FY2011

1Q

2Q

Operating Income

3Q

FY2012
Forecast（Forecast in October 11.0）

14.1

11.0
8.8
6.7
0.9
1Q

3.1

3.7

2Q

3Q

0.1
2Q

3Q

FY2011

 FY2012 Forecast （ vs. Forecast in October )Orders Received, Net Sales & Operating Income: Remain unchanged
because of no significant change

130.0

122.8

1Q

FY2012
Forecast

 FY2012.3Q （ vs. FY2011.3Q ）Orders Received: Decrease in orders received for domestic projects
including LNG tanks and municipal refuse incineration plants
Net Sales: Decreased due to sales decrease of large-scale overseas projects,
despite sales increase of material handling systems and municipal refuse
incineration plants
Operating Income: Decreased due to sales decrease and decline in profit
margin1Q

FY2012
Forecast- In parallel with an expected increase of worldwide energy consumption, a lot of
floating LNG facilities are planned to be constructed. Under these circumstances,
KHI’s proven track record of boilers for land and marine use (more than 1,200
units) and technical capability, which has realized reliable and robust boilers thatcan operate under severe offshore condition, are highly evaluated, and in July 2011,
KHI won the contract with Technip to supply 7 units of boilers for the Shell’s
floating LNG facility of “Prelude”, the world’s first floating LNG facility.
- In April 2012, KHI won the contract of 4 massive cryogenic tanks for Ichthys LNG
Project in Australia. This project is very important for Japan in terms of the stablesupply of energy and the decentralization of natural gas supply as approximately
70% of the Ichthys LNG to be delivered to Japan. KHI will support this projectbased on its proven track record and the EPC technologies.
-9-I. Consolidated Results for Third Quarter FY2012

Motorcycle & Engine
Main Products: Motorcycles, All-Terrain Vehicles(ATVs), Utility Vehicles, Personal Watercraft, General-purpose Gasoline Engines（Billion Yen / In accumulated amount）

Net Sales（Forecast in October 250.0）

250.0

235.2
158.8

154.2
106.2

103.9

59.6

1Q

53.4

2Q

3Q

FY2011

1Q

2Q

Operating Income

3Q

FY2012
Forecast

 FY2012.3Q （ vs. FY2011.3Q )Net Sales: Increased due to sales increase of motorcycles in UnitedStates and emerging markets mainly Indonesia, despite sales decrease inEuropean market
Operating Income: Improved due to sales increase, improvement in
profitability and other factors
 FY2012 Forecast （ vs. Forecast in October )Net Sales & Operating Income: Remain unchanged because of no
significant change（Forecast in October 2.0）

2.0
0.3

2Q

3Q

FY2011

1Q

1Q

2Q

3Q

-0.3
-2.3

-2.9

-2.2

-2.0

FY2012
Forecast-4.5＜Wholesales by Geografic Area for Consumer Products＞
FY2011.3Q
FY2011
Unit
Amount Unit
AmountDomestic
10
9.1
14
12.1
North Ame rica (incl. Canada ) 69 (38)44.2 121 (69)78.0Europe
31
26.2
57
42.2
Emerging Countr ies & O thers
234
53.5
309
71.0
Total
344
133.0
501
203.3

(Th ousands of uni t / Billion Yen)FY2012.3Q
FY2012 Forecast
Unit
AmountUnit Amount
10
9.1
14
12.1
73 (46)46.5 119 (74)
74.5
30
21.2
58
39.9
257
59.5
387
87.8
370
136.3
578
214.3

Note: 1) Sales un its and amount inclu de the following product s.
®

Units: M otorcycles, All-Terrain Vehicles(ATVs), Utility Vehicles and Person al Wat ercraft(Jet Ski )Amou nt: The products mentioned above and parts for those products.
2 ) Figures in the p arenthesis ( ) repres ent motorcycle sales units .

<For Reference> Businesses Development in Emerging Countries- In order to respond to market growth and further to reinforce thebusiness operation in Asian and other emerging countries, KHI started
construction of the new plant in Indonesia on September 7, 2012.
The expansion of the plant in Thailand is proceeding as planned.
- KHI announced the 2013 new models including “Ninja 250/300”,“Ninja ZX-6R” and “Z800”. On August 1, 2012, “Ninja 250/300”, ourglobal models, were launched in Indonesia, our core market, ahead ofother countries.
- Leisure motorcycle markets in emerging counties are favorable, andsales in emerging countries in 2012 increased from previous year.
- 10 -

I. Consolidated Results for Third Quarter FY2012

Precision Machinery
Main Products： Hydraulic components (pumps, motors & valves), Hydraulic systems for industrial use, Hydraulic marine machinery, Industrial Robots

 FY2012.3Q （ vs. FY2011.3Q ）（Billion Yen / In accumulated amount）

Orders Received

174.5（Forecast in October 130.0）

131.1

110.0

91.1
55.6

43.4

1Q

78.4

28.6
2Q

3Q

FY2011

1Q

Net Sales

2Q

3Q

130.0

129.0
93.8

85.2

67.0

40.4

36.1

2Q

3Q

FY2011

1Q

2Q

3Q

FY2012
Forecast

Operating Income
26.6
20.7

（Forecast in October 12.0）

14.5
7.1

1Q

2Q

3Q

FY2011

 FY2012 Forecast （ vs. Forecast in October ）Orders Received: Revised down due to slower-than-expected recovery of
hydraulic components for construction machinery in emerging countries mainly in
China and other factors
Net Sales: Remains unchanged because of no significant change
Operating Income: Revised down due to the effect of changes in product mix andthe effect of decrease in production volume（Forecast in October 130.0）

175.0

1Q

FY2012
Forecast

Orders Received & Net Sales: Decrease in orders received for and sales ofhydraulic components for construction machinery in emerging countries mainly in
China
Operating Income: Decreased due to decrease in sales, increase in fixed cost
resulting from capital expenditures which were executed past fiscal years and otherfactors

3.9

4.9

4.8

1Q

2Q

3Q

8.0

FY2012
Forecast<For Reference> Businesses Development in Emerging Countries
In August 2006, production of hydraulic pumps started at Chinese subsidiary in Suzhou.
Also, in Zhejiang, the joint venture of hydraulic machinery manufacturing was establishedwith a Chinese company and production started in April 2010, while the sales subsidiary inShanghai provides the products manufactured at the above manufacturing companies tocustomers throughout China.
Afterward, KHI reinforced business operation in China through the construction of the newplant at the subsidiary in Suzhou, expansion of the plant in Zhejiang and establishment of thesubsidiary for after-sales service in Shanghai.
On the other hand, as the expectation that the recession of Chinese construction machinery
market continues is increasing, we will watch the trend of this market closely. But thecontinued growth of this market over the medium- to long-term is expected as constructionof housing for low-income families and energy-and transportation-related infrastructure
projects still likely to go forward.
Meanwhile, spurred by a rapidly growing economy, India's hydraulic excavator market isbooming. In order to cater to the growing demand for local production, in February 2012,
KHI set up the joint venture with Wipro Limited in Bangalore for manufacture, sales, andservicing of hydraulic components for construction machinery.

- 11 -

I. Consolidated Results for Third Quarter FY2012

Financial Condition and Cash Flows【Financial Condition】(Billion Yen)FY2011
End ofDecember 2011

Total Assets

FY2012End ofDecember 2012

End ofMarch 2012

1,404.4

1,362.1

1,494.4

Shareholders’ Equity

309.7

306.0

311.0

（Ratio of shareholders’ equity to total assets）(22.0%)(22.4%)(20.8%)

Interest-bearing debt

491.6

407.1

587.1

（Net Interest-bearing debt）（455.7）（372.8）(556.3)

Net Debt Equity Ratio

147.1%

121.8%

178.8%

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

FY2011.3Q

FY2012.3Q

Cash flows from operating activities- 16.1- 104.2

Cash flows from investing activities- 51.4- 66.1

Free Cash Flows- 67.5- 170.3

Cash flows from financing activities

61.2

168.4

- 12 -

II．Forecast for FY2012

Consolidated Operating Performance(Billion Yen)FY2011
Actual

FY2012 Forecast
in October

Changein January

vs. FY2011

vs. Forecast in October

vs. Forecast
in October

Orders Received

1,311.8

1,350.0

1,330.0+ 18.2- 20.0Net Sales

1,303.7

1,300.0

1,300.0- 3.7

0Operating Income

57.4

36.0

40.0

- 17.4+ 4.0

Recurring Profit

63.6

50.0

50.0

- 13.60

Net Income

23.3

30.0

30.0

+ 6.7

0

Exchange Rates (actual & assumed)

Yen / US$

79.40

80

85

Yen / EUR

109.71

100

110< Orders Received >Revised down due to decrease in Precision
Machinery segment resulting from slowerthan-expected recovery of hydrauliccomponents for construction machinery inemerging countries mainly in China< Net Sales >Remains unchanged because of no
significant change< Profits >- Operating income is revised up due toincrease in Ship and Offshore Structure
and Aerospace segments resulting fromthe effect of change in assumed foreignexchange rate, despite decrease in
Precision Machinery segment

Note : Assumed rates are applied to the outstanding foreign exchange exposure as of the respective disclosure date
(For Reference)

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

Operating Recurring
IncomeProfitUS$
1.4 (3.0)0 (1.6)EUR
0 (0.2)0 (0)* Figures in the parenthesis ( ) represent impact as of October 31, 2012- 13 -- However, recurring profit and net income
remain unchanged because the effect ofchange in assumed foreign exchange rate
is little due to the progress of forward
contracts

II．Forecast for FY2012

Forecast by Segment(Billion Yen)

Orders Received
FY2011
ActualNet Sales

FY2012 Forecast
in Octoberin January

FY2011
ActualOperating Income

FY2012 Forecast
in Octoberin January

FY2011
Actual

FY2012 Forecast
in Octoberin January

Ship & Offshore Structure

39.9

110.0

110.0

113.5

80.0

80.0

3.9

- 2.0

3.0

Rolling Stock

66.0

140.0

140.0

132.6

130.0

130.0

5.1

2.0

2.0

Aerospace

327.2

220.0

220.0

206.5

250.0

250.0

7.8

9.0

12.0

Gas Turbine & Machinery

227.2

240.0

240.0

194.6

210.0

210.0

7.7

8.0

8.0

Plant & Infrastructure

119.2

130.0

130.0

122.8

130.0

130.0

14.1

11.0

11.0

Motorcycle & Engine

235.2

250.0

250.0

235.2

250.0

250.0

- 2.9

2.0

2.0

Precision Machinery

174.5

130.0

110.0

175.0

130.0

130.0

26.6

12.0

8.0

Others

122.2

130.0

130.0

123.2

120.0

120.0

3.8

3.0

3.0

-

-

-

-

-

-

- 8.8

- 9.0

- 9.0

1,311.8

1,350.0

1,330.0

1,303.7

1,300.0

1,300.0

57.4

36.0

40.0

Eliminations and corporate
Total

Note : “Eliminations and corporate” includes some expenses incurred at Head Office which are not allocated to each industry segment for internal reporting- 14 -

II．Forecast for FY2012

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

FY2011
Actual

FY2012
Forecast

ChangeR&D Expenses

39.9

45.0

+ 5.1

CAPEX
(Construction Base)

63.9

75.0

+ 11.1

Depreciation & Amortization

48.9

52.0

+ 3.1

Domestic

24,77025,400+ 630

Overseas

8,497

9,100

+ 603

33,26734,500+ 1,233

Number of Employees* No changes in the forecast for FY2012 from October 31, 2012.

- 15 -

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.