Investors Meeting for Fiscal 2007
(for the year ended March 31, 2008)

Apr. 30, 2008
Kawasaki Heavy Industries, Ltd.

Contents
・ Summary of FY2007 Results (Consolidated)
・ Breakdown of Increases/Decreases
in Profit for FY2007 Compared to FY2006
・ Interest-Bearing Debt and Cash Flows・ Business Results and Outlook by Segment
Shipbuilding
Rolling Stock
Aerospace
Gas Turbines & Machinery
Energy & Environmental Engineering
Consumer Products & Machinery
Industrial Hydraulic Products
・ R&D/Capital Expenditures/Number of Employees
・ Outlook for FY2008 by Segment
・ Outlook of Orders Received for FY2008
・ Business Portfolio (FY2007)

1234567891011121314Summary of FY2007 Results (Consolidated)
Orders Received & Net Sales

Profits(Billion \)(Billion \)2,00080

1,780.0
1,592.6

1,500

1,438.6

1,610.7

1,501.0

1,460.0

76.9

69.1
55.0

60

1,000

40500

2035.129.700FY2006

FY2007

FY2008FY2006

FY2007

FY2008
Projection

Projection

Orders Received

Net Sales

Operating Income

ActualExchange Rates
FY2006117.00152.00Net Income（Billion￥）

Exchange Rates

USD/￥EUR/￥

30.0

FY2007115.00162.00FY2006（Actual）

FY2007（Actual）

FY2008（Projection）

Operating Income

６９．１

７６．９

５５.０

Net Income

２９．７

３５．１

３０.０

AssumedExchange Rates
FY2008100.00160.001

Breakdown of Increases/Decreases in Profit
for FY2007 compared to FY2006
yOperating income(＋７.７billion 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

yNon-operating income(＋７.１billion yen）

Increase in net interest expenses
Gain on sales of marketable securities (FY2006 ￥0.8 billion →FY2007 ￥0.4 billion)
Increase in equity in income of non-consolidated subsidiaries and affiliates(FY2006 ￥2.6 billion →FY2007 ￥7.6 billion)
Loss of foreign exchange (FY2006 ￥13.3 billion →FY2007 ￥11.5 billion)- ０.１- ０.４+ ４.９+ １.８+ ０.９Others

yOther income+ １.１+ ９.８- ６.２-１１.１- ３.９+１８.０(－２.１billion yen)

Gain on contribution of securities to employee’s retirement benefit trust+ １.３(FY2006 ￥0 →FY2007 ￥1.3 billion )Losses on impairment (FY2006 ￥0 →FY2007 ￥2.1 billion)
Others- ２.７- ０.７
2

Interest-Bearing Debt and Cash Flows
Ｂ／Ｓ

Cash Flows(Billion \)(Billion \)1,500

1,357.9

1,284.0

1,194.4

1,378.7

200%

150%

1,000

80
60

75.7

71.4
53.7
45.7

45.8

40500

353.8
44.6

319.8
37.6

304.2

276.4

39.3

39.8

2050%

0FY2004
FY2005
FY2006
FY2007
Cash on hand and in banks
Interest-Bearing Debt
Total assets
Net D/E Ratio (right scale)Net debt
Shareholders' equity
Net D/E ratio

FY2005
282.1
237.5
119%

FY2006
264.8
290.4
91%

(Billion \)FY2007
236.5
313.1
75%

9.2

2.50
FY2004-20-40FY2004
309.2
201.4
154%

26.6

100%

FY2005

FY2006

-36.5

-43.3

FY2007-17.7-60
C/F from operating activities
Free Cashflows-49.0
C/F from investing activities＊About ￥150 billion of interest-bearing debt has been reduced in the last five years ＊ We have consecutively made positive free cash flows for the last seven years,
due to profit increase and implementation of some measures to reduce receivables
generating about ￥170 billion.
and inventories.

3Shipbuilding
Operating Income & Operating Income to Sales

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

251.3

250
200
150

3.2

44%

180.0
141.3

135.6

2.02

120.0

108.8

0100

FY2006

0%FY2007-2502%

FY2008
Projection-2%-2.2

0-4
FY2006

FY2007

FY2008
Projection

Orders Received-4%Net Sales

Operating Income

Operating Income to Sales(vessel)

LNG carriers
Small-sized LNG carriers
LPG carriers
VLCCs
Bulk carriers
Submarines
TotalOrders Received
FY2006
FY2 0 0 73223822
11328

FY20066(3)282(2)
18(5)Sales
FY2 0 0 7
6 (4 )
3 (1 )
152 (1 )
1 7 (6 )Note: ( ) = Sales units based on percentage-of -completion method

Business results for FY2007＊Large orders received of 28 vessels such as LNG carriers and Bulk carriersand Submarines＊Return to profitability due to sales increase of LNG carriers and LPG carriers
and improvement of shipbuilding price
Outlook for FY2008＊Decrease in sales of LNG carriers, LPG carriers and Submarines＊Slight decrease in profit:(+) Increase in profit due to sales increase of high priced vessels(-) Adverse impact of a rise in steel price4

Rolling Stock
Operating Income & Operating Income to Sales

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

330.0
300

1513.1

8%

269.1
184.2

200

183.2 171.7

210.0

107.1

8.0

6%
4%

52%

10000%
FY2006

0FY2007

FY2008
ProjectionFY2006

FY2007

Orders Received

Net Sales

FY2008
Projection

Business results for FY2007＊Large-scale orders received for North America－Additional order of R160 for N.Y. subway (260 cars/ US$450 mil)For reference only
Large-scale orders received for FY2006－Passenger cars for New York Metropolitan Transportation Authority’s

Metro-North Railroad (300 cars/ US$700mil)－Subway System for Taipei City by the consortium of Kawasaki, Marubeni Co
and CTCI (About ￥57.0bil)＊Decrease in profit due to sales decrease of large-scale projects for overseas

Operating Income

Operating Income to Sales

Outlook for FY2008＊Increase in sales for Asia and U.S. and additional sales from
EARTHTECHNICA Co which became a wholly owned subsidiary of KHI as ofApril 1, 2008
＊Slight increase in profit:(+) Increase in profit due to sales increase for Asia and U.S.
(-) Adverse impact of an assumed exchange rate of 100 yen against US dollar

5Aerospace
Operating Income & Operating Income to Sales

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

300

255.6

269.1

270.0
237.3

15

202.5

200

13.4

200.0

6%
10.8
4%

105.0

100

52%

000%

FY2006

FY2007

FY2008FY2006

Operating IncomeNet Sales

FY2008
Projection

Projection

Orders Received

FY2007

Operating Income to Sales

Sales units for commercial aircraft and components(unit)Sales
FY2006
FY 2 0 0 7B777
B767
Embraer170/175
Embraer190/195

7313377982
126979Business results for FY2007＊Decrease in orders received, sales and profit owing to closing stage for development ofthe P-X(Patrol plane) and C-X(Container plane) for JDA
Outlook for FY2008＊Decrease in sales for JDA＊Decrease in profit due to sales decrease for JDA and amortization of initial cost for
B787 project for BOEING

6

Gas Turbines & MachineryOperating Income & Operating Income to Sales

Orders Received & Net Sales(Billion \)

250

227.4
204.8

200

(Billion \)

250.0
185.4

183.3

13.3

158%200.09.89.0101506%4%

10052%

500%00FY2006

FY2006

FY2007
Orders Received

Net Sales

FY2008
Projection

Business results for FY2007＊Increase in orders received of commercial aircraft jet engines andmarine diesel engines＊Increase in sales and profit of commercial aircraft jet engines andaero-dynamic machinery

FY2007

FY2008
Projection

Operating Income

Operating Income to Sales

Outlook for FY2008＊Increase in sales of commercial aircraft jet engines, industrial gas turbines andmarine diesel engines＊Decrease in profit due to adverse impact of a rise in material price andan assumed exchange rate of 100 yen against US dollar

7Energy & Environmental Engineering
Operating Income & Operating Income to Sales

Orders Received & Net Sales(Billion \)(Billion \)20015010.812150.2

142.5
122.0

9.0

9130.0
110.0

106.0

12%

100

69%
6%

33%
FY2006500-30FY2006

FY20070%
FY2007-2.4

FY2008
Projection-3%FY2008
Projection

Orders Received

Net Sales

Business results for FY2007＊Decrease in orders received of large-scale projects for overseas

For reference only
Large-scale orders received for FY2006
・Ferronickel plant/ Korea・Urea production facility/ Pakistan
・Cement plant/ Vietnam＊Increase in sales of large-scale industrial plants for overseas＊Large increase in profit due to rationalization effect by the merger ofplant engineering business unit and environmental engineering business unit
and sales decrease of unprofitable projects

Operating Income

Operating Income to Sales

Outlook for FY2008＊Continuing of selective order-taking policy＊Decrease in sales and profit of large-scale industrial plants for overseas andcompletion of large-scale environmental plant8

Consumer Products & MachineryOperating Income & Operating Income to SalesNet Sales(Billion \)(Billion \)

500
403.7

433.9

420.0

30

27.58%
19.6

400

6%

20300

10.010200
1002%

00%
FY2006

0FY2006

FY2007

FY2008
Projection

Sales by Region for Consumer Products（Thousands of Unit / Billion \)RegionDomestic
NorthAmerica
EuropeOthersTotal

FY2006
FY2007
Unit
AmountUnit
Amount21
15.9
2015.2
254(140)183.7 230(124)
177.1
97
80.9
118
110.7
130
32.6
151
39.6
502
313.1
519
342.6

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.

4%FY2007

FY2008
Projection

Operating Income

Operating Income to Sales

Business results for FY2007＊Sales of Motorcycles：
Increase in European market, while Decrease in U.S. market＊Continuing a high-level sales of industrial robots＊Decrease in profit due to sales decrease of motorcycles for U.S. and adverse
impact of a rise in material price
Outlook for FY2008＊Decrease in profit due to adverse impact of a rise in material price andan assumed exchange rate of 100 yen against US dollar

9Industrial Hydraulic Products
Operating Income & Operating Income to Sales

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

150

9.1

1092.310072.9

100.0 100.0
84.0

89.0

6.010%

666.6

4

5015%

5%

20%

00
FY2006

FY2007

Orders Received

Net Sales

FY2008
Projection

Business results for FY2007＊Increase in sales and profit of industrial hydraulic products for construction
machinery mainly for Chinese market

FY2006

FY2007

FY2008
Projection

Operating Income

Operating Income to Sales

Outlook for FY2008＊Increase in sales of industrial hydraulic products for construction machinery＊Profit at the same level as FY2007:(+) Increase in profit due to sales increase of industrial hydraulic products forconstruction machinery(-) Adverse impact of a rise in material price10

R&D/Capital Expenditures/Number of Employees(Billion￥/ Persons)

FY２００６
Actual

FY２００７
Actual

FY２００８
Projection

R&D

33.8

36.2

41.0

Capital Expenditures

39.3

50.5

110.0

Depreciation andAmortization

30.2

37.4

49.0

Domestic

22,872

23,54224,800Overseas

6,339

7,021

7,800

Number of Employees

29,211

30,56332,60011

Outlook for FY2008 by Segment(Billion￥）

Operating Income

Net Sales
FY２００７
Actual

FY２００８
Projection

FY２００７
Actual

FY２００８
Projection

Shipbuilding

141.3

120.0

3.2

2.0

Rolling Stock

171.7

210.0

7.1

8.0

Aerospace

237.3

200.0

10.8

5.0

Gas Turbines & Machinery

185.4

200.0

13.3

9.0

Energy & Environmental Engineering

142.5

110.0

10.8

9.0

Consumer Products & Machinery

433.9

420.0

19.6

10.0

Industrial Hydraulic Products

84.0

100.0

9.1

9.0

Others

104.5

100.0

2.5

3.0

Total

1,501.0

1,460.0

76.9

55.0

Assumed Exchange Rates
USD=￥１００/EUR=￥１６０12

Outlook of Orders Received for FY2008（Billion￥）

Orders Received
FY２００６
Actual

FY２００７
Actual

FY２００８
Projection

Shipbuilding

135.6

251.3

180.0

Rolling Stock

269.1

183.2

330.0

Aerospace

255.6

202.5

270.0

Gas Turbines & Machinery

204.8

227.4

250.0

Energy & Environmental Engineering

150.2

106.0

130.0

Consumer Products & Machinery

403.7

433.9

420.0

Industrial Hydraulic Products

72.9

92.3

100.0

Others

100.6

113.9

100.0

Total

1,592.6

1,610.7

1,780.013

Business Portfolio (FY2007)

Orders Received

Industrial Others
7%Hydraulic
Products6%

Consumer
Products &Machinery
27%

Net Sales

Industrial Others
Hydraulic
7%
Products6%

Shipbuilding
16%￥1,610.7billion

Rolling
Stock
11%

Aerospace
13%
Energy &Environmental
Engineering
6%

Gas Turbines &Machinery
14%

Consumer
Products &Machinery
29%

Shipbuilding
9%
Rolling
Stock
11%￥1,501.0billion

Energy &Environmental
Engineering
10%

Aerospace
16%

Gas Turbines &Machinery
12%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.