Financial Results for FY 2010
(for the year ended March 31, 2011)

April 28, 2011
Kawasaki Heavy Industries, Ltd.

Table of Contents

I. Consolidated Results for FY2010
 Summary of Financial Results
 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 FY2011
 Consolidated Operating Performance Forecast by Segment
 R&D/CAPEX/Number of Employees(Note) Change in Segment Information
Disclosure

13
14
15
16

I. Consolidated Results for FY2010

Summary of Financial Results(Billion Yen)

FY2009ChangeFY2010vs. FY2009

ActualForecast in
January

Actualvs. FY2009

vs. Forecast
in January

Orders Received

1,001.2

1,340.0

1,270.6+ 269.3- 69.4

Net Sales

1,173.4

1,280.0

1,226.9+ 53.4- 53.1

Operating Income/Loss

- 1.3

40.0

42.6

+ 43.9+ 2.6Recurring Profit

14.2

46.0

49.1

+ 34.8+ 3.1

Net Income/Loss- 10.829.0

25.9+ 36.8- 3.1

Exchange Rates ( weighted-average )Yen / US$

93

86

Yen / EUR

130

113

-1-

< Orders Received >Significant increase as a whole mainly
due to large-scale orders received in
Rolling Stock segment< Net Sales >Increase as a whole due to asignificant sales increase in Precision
Machinery segment with growth inhydraulic components sales toemerging construction machinery
markets< Profits >Profit improved significantly as awhole due to the effects of sales
increase in Precision Machinery
segment and the measures to improve
profitability, such as fixed cost
reduction, in Motorcycle & Engine
segment and other factors, despite theadverse impact of the appreciation of
the yenDetails of Change in Profit I- FY2010 vs. FY2009 【Operating Income/Loss】
vs. Forecast in January+ 43.9 ( FY2009 - 1.3  FY2010 42.6 )(Billion Yen)

+ 2.6 billion yen（Forecast in January 40.0  Actual 42.6 )Impact of fluctuation of foreign exchange rate
Impact of change in material priceEffects of sales decrease
Other factors

Changes in product mix
and other factors

+ 0.3
- 1.2
- 5.3
+ 8.8

+ 19.5FY2010
Cost variance based onhigh production
Decrease in selling, general &administrative expenses

42.6

+ 9.2

+ 3.9
Decrease in amortization of
net transition cost (Note)+ 10.5

FY2009- 1.3

Adverse impact ofEffects offluctuation ofsales increase
foreign exchange rate
Impact of change + 12.6
in material price- 12.4+ 0.6

Note: Amortization of net transition cost stemming from a change in accounting
for retirement benefits and severance costs was completed in FY2009.

-2-

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

【Non-operating Income/Expenses】- 9.1 ( FY2009 15.6  FY2010 6.5 )Net Interest expense ( incl. dividend income )Equity in income of unconsolidated subsidiaries and affiliates
Gain and loss on foreign exchange
Others

- 0.5
+ 2.6
- 9.4
- 1.7

（ - 1.7  - 2.3 ）（ 6.5  9.2 ）（ 10.9  1.4 ）（0  - 1.8 ）【Extraordinary Income/Losses】+ 7.5 ( FY2009 - 18.1  FY2010 - 10.5 )Loss on impairment of fixed assets- 6.7 （ - 3.1  - 9.9 ）※3+ 7.6 （ - 7.6 
0）※4+ 6.9 （ - 6.9 0）- 0.2 （ - 0.3  - 0.6 ）※1

Business restructuring expenses on Motorcycle & Engine segment

Provision for losses on damages suit
Others※1※2

Loss on impairment of fixed assets in subsidiaries whose book values were written down to the recoverable amounts
Loss on impairment of fixed assets mainly in Motorcycle & Engine segment whose book values were written down to the recoverable amounts※3 Expenses estimated to need to liquidate the excess inventory (¥6.3bil.), Expenses on early retirement of employees (¥1.3bil.)※4 Estimated loss for the company in case of losing a suit for damages by owner of refuse incineration plants※2-3-

Financial Results by Segment(Billion Yen)

Orders Received

Net Sales

Operating Income/Loss

FY2009FY2010ChangeFY2009FY2010ChangeFY2009FY2010ChangeShip & Offshore Structure

16.1

78.9

+ 62.8

151.8

118.4

- 33.4

1.5

- 1.0

- 2.5

Rolling Stock

66.2

187.1

+ 120.8

150.0

131.1

- 18.9

8.7

8.1

- 0.5

Aerospace

171.3

206.7

+ 35.3

188.8

196.8

+ 7.9

3.7

3.0

- 0.7

Gas Turbine & Machinery

226.2

187.5

- 38.6

191.3

202.6

+ 11.3

8.9

9.5

+ 0.6

Plant & Infrastructure

135.6

119.9

- 15.6

107.5

89.0

- 18.5

7.9

8.2

+ 0.3

Motorcycle & Engine

203.0

234.4

+ 31.3

203.0

234.4

+ 31.3- 27.0- 4.9+ 22.0Precision Machinery

84.9

148.9

+ 64.0

82.7

140.3

+ 57.6

3.4

22.3+ 18.9Others

97.5

106.8

+ 9.2

97.8

114.0

+ 16.1

- 1.0

2.5

+ 3.6

-

-

-

-

-

-

- 7.5

- 5.3

+ 2.2

1,001.2

1,270.6+ 269.3

1,173.4

1,226.9+ 53.4

- 1.3

42.6

+ 43.9Eliminations 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）（Forecast in January 100.0）

Orders Received

67.2

78.9
60.0

36.4
1.8

2.7

1Q

2Q

 FY2010 （ vs. FY2009 )Orders Received: Significant increase due to orders received of a submarine
and 11 bulk carriers
Net Sales: Decrease in sales of large-scale vessels
Operating Income/Loss: Deterioration in profitability due to increase inprovision for losses on construction contracts<Units of Orders Received and Sales of New Building Ships>

16.1

10.4

1.6

3Q

FY20091Q

2Q

3Q

FY2010FY2011
Forecast

Net Sales（Forecast in January 120.0）

151.8
111.7
39.4

1Q

93.2

65.2

118.4

110.0

FY2010FY2011
Forecast

61.2
28.6

2Q

3Q

FY2009

1Q

2Q

3Q

4.9
3.3
0.8

2.0

1.5

FY2010

1Q

- 0.6

2Q

3Q

 FY2011 Forecast （ vs. FY2010） Note: ( ) = Sales units by percentage-of-completion method
Orders Received: Decrease in orders received of new building ships
Net Sales: Net sales are expected to decrease due to sales decrease of largescale vessels
Operating Income/Loss: Loss is expected to expand due to the adverse
impact of the appreciation of the yen, and other factors<For Reference> Joint Venture in China

Operating Income/Loss

1.4(unit)

Orders Received
Sales
FY2009 FY2010 FY2009 FY2010
LNG carriers
6 (3)
3 (2)
1
1 (1)
Small-sized LNG carriers
LPG carriers
2 (1)
4 (2)
VLCCs
1 (0)
Bulk carriers
11
15 (7) 23 (13)Submarines
1
2 (1)
2(2)
Total
1
12
26 (12) 33 (20)FY20091Q

2Q

3Q

FY2011
Forecast-1.0（Forecast in January 1.0）

-4.0

NACKS was established in Nantong, Jiangsu 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 typesof commercial vessels such as very large-size container ships, VLCCs, bulk carriers and car
carriers are built for domestic shipping company such as COSCO as well as for Japanese andEuropean customers.
Under close partnership between KHI and COSCO groups, we will expand its operations
and increase profitability by utilizing building capacity of two large-scale docks.
(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 January 180.0）

Orders Received

187.1
150.0

124.1
101.5 117.7
25.5

39.5

1Q

2Q

55.5

66.2

3Q

FY2009

1Q

Net Sales

2Q

3Q

131.1

110.5

150.0

95.5

72.5

63.0

37.5

26.6
2Q

3Q

FY20091Q

Operating Income/Loss

2Q

3Q

3.7

FY2010FY2011
Forecast（Forecast in January 8.0）

8.7

8.1
5.9

5.2

7.0

3.4

1.9
1Q

FY2011
Forecast（Forecast in January 145.0）

150.0

1Q

FY20101.7
2Q

3Q

FY20091Q

2Q

3Q

FY2010FY2011
Forecast

 FY2010 （ vs. FY2009 ）Orders Received: Significant increase due to large-scale orders received ofsubway cars for Washington Metropolitan Area Transit Authority
Net Sales: Decrease in sales for overseas market
Operating Income/Loss: Income remained the same level as in theprevious fiscal year due to profitability improvement and other factors,
despite sales decrease FY2011 Forecast （ vs. FY2010 ）Orders Received: Orders received is expected to decrease compared with in
the previous fiscal year that had large-scale orders received for overseas
marketNet Sales: Net sales are expected to increase due to sales increase foroverseas market
Operating Income/Loss: Income is expected to decrease due to the adverse
impact of the appreciation of the yen and other factors, despite sales increase<For Reference> Present Status of New Overseas Projects
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 demand for
Medium- to High-speed rail projects
High-speed railways :- KHI self-developed efSET® (Environmentally Friendly Super Express Trains), a new
high-speed train that will achieve maximum service speed of 350km/h to satisfy demandfor overseas markets, and completed principle designs by the end of March 2010.
- California High-speed Rail: Working with other Japanese companies aiming to win E&M
system including rail cars.
- There are plans in India, Vietnam and other countries.
E&M System Projects in Asian region :Taichung City Railway System: Won the package contract of 36 cars and E&M system undercooperation with other companies. KHI as a leader of consortium will play its role to oversee
the whole project and system integration as well as supply the cars and rail yard facilities.

-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）

Orders Received（Forecast in January 210.0）

260.0
206.7

171.3
11.4
1Q

46.5
2Q

87.9

79.9

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

Sales

123.7

3Q

FY20091Q

2Q

3Q

FY2010FY2011
Forecast（Forecast in January 215.0）

196.8

188.8

220.0

135.0

119.3

83.0

73.3
34.2

26.6
2Q

3Q

FY20091Q

2Q

3Q

FY2010FY2011
Forecast

Operating Income/Loss（Forecast in January 2.0）

3.7

3.3

2Q

- 1.9

2.0
0.3

1Q

B777
B767
B787
Embraer170/175
Embraer190/195

36.5

Net Sales

1Q

 FY2010 （ vs. FY2009 ）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) and sales ofcomponent parts for Boeing B787
Operating Income/Loss: Income decreased due to the adverse impact of theappreciation of the yen and other factors, despite sales increase

3Q

1Q

FY2009

- 1.8

8.0

3.0

2Q

- 1.1

3Q

FY2010FY2011
Forecast

FY2009FY2010

77
10
16
16
50

64
16
22
14
91

 FY2011 Forecast （ vs. FY2010 )Orders received: Increase in orders received for MOD and component parts for
Boeing B787
Net Sales: Net sales are expected to increase due to increase in sales for MOD andsales of component parts for Boeing including B777 and B787
Operating Income/Loss: Income is expected to increase due to sales increase,profitability improvement by cost reduction and other factors, despite the adverse
impact of the appreciation of the yen<For Reference> Present Status of Main Projects
Aircrafts for MOD :The #2 test XC-2 transport aircraft was manufactured at Kawasaki’s Gifu Works anddelivered to MOD on March 29, 2011 at the Works. KHI will continue to work towardcommencement of the mass production.
Component parts for commercial aircrafts :B777‐According to the production rate increase for Boeing B777 program announced byBoeing, KHI’s production rate for the program has increased to 7 units per month from thesecond half of FY2010. During FY2012, the production rate is expected to increase up to 8.3
units per month.
B787- The North Plant and the South Plant at Kawasaki’s Nagoya Works I have been
furnished with the state-of-the-art equipment and the production system for ramp-up
production has been established. These facilities have enabled Kawasaki to perform
integrated production that includes everything from composite component fabrication to
forward fuselage assembly.

-7-

Gas Turbine & Machinery
Main Products : Jet engines, Gas turbine co-generation system, Gas turbines & steam turbines for marine & 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（Forecast in January 220.0）

226.2
187.5
138.5

113.6

99.8
52.3

1Q

33.0
2Q

220.0

3Q

FY2009

1Q

65.3

2Q

3Q

FY2010FY2011
Forecast（Forecast in January 210.0）

Net Sales

202.6

191.3

210.0

149.6

128.8

99.2

83.4

49.9

44.7

 FY2010 （ vs. FY2009 )Orders Received: Decrease in orders received for component parts for commercial
aircraft jet engines that had a large order received in the previous fiscal year, and forgas turbine-driven natural gas compressors
Net Sales: Increase in sales of gas turbine-driven natural gas compressors and diesel
generator sets
Operating Income/Loss: Income increased due to sales increase, and other factors
 FY2011 Forecast （ vs. FY2010 ）Orders Received: Increase in orders received of gas turbine-driven natural gas
compressors
Net Sales: Net sales are expected to increase due to sales increase in component
parts for commercial aircraft jet engines, despite sales decrease in marine machineryand gas turbine-driven natural gas compressors
Operating Income/Loss: Income is expected to decrease due to the adverse impactof the appreciation of the yen and increase in the amortization expenses ofcomponent parts for newly developed commercial aircraft jet engines, and otherfactors<For Reference>
Gas Turbine Division : Major Projects for Commercial Aircraft Jet Engines

1Q

2Q

3Q

FY20091Q

2Q

3Q

FY2010（Forecast in January 10.0）

Operating Income/Loss

9.6

8.9
6.1
1.4

1Q

2Q

3Q

FY20091Q

2Q

Present Status

5.0

3Q

Aircraft
Participation Type
Share
Responsible Components

9.5

4.0

3.9
1.2

FY2011
Forecast

FY2010FY2011
Forecast

Trent1000
B787

TrentXWBA350RRSP（※)
Approx. 8.5%
Intermediate pressure compressor (IPC) module
Development was completed and mass production
started in FY2010. To be delivered in accordancewith production schedule of airplanes.

RRSP（※)
Approx. 7%
Intermediate pressure compressor (IPC) module
First IPC module shipped to Rolls-Royce inMarch 2011.

（※）

Risk & Revenue Sharing Partner

Machinery Division : Gas Engines
In response to the increased demand for dispersed power source in domestic and overseas
markets and the increasing awareness of environmental issues, KHI will expand its sales ofself-developed Kawasaki Green Gas Engine that achieved world record with 49 %generating efficiency.

-8-Plant & Infrastructure
Main Products: Industrial plants (cement, chemical and others), Power plants, LNG & LPG tanks, Municipal refuse incineration plants,
Shield machines, Crushing machines
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 January 130.0）

135.6
105.4

98.7
15.8
1Q

120.0

77.3

37.5

2Q

119.9

32.0

3Q

FY20091Q

2Q

3Q

FY2010FY2011
Forecast

Net Sales（Forecast in January 100.0）

107.5
43.3

 FY2010 （ vs. FY2009 ）Orders Received: Decrease in large-scale projects for overseas customers
Net Sales: Decrease in large-scale projects for overseas customers
Operating Income/Loss: Income increased due to steady progress in someprojects, and other factors

89.0

59.0
20.4

16.5

130.0

38.8

 FY2011 Forecast （ vs. FY2010 )Orders Received: Orders received remain the same level as in the previous
fiscal year due to orders received of environment-related projects andprojects related infrastructure for emerging countries
Net Sales: Net sales are expected to increase due to sales increase in largescale projects for overseas customers
Operating Income/Loss: Income is expected to increase due to sales
increase, and other factors

56.4<For Reference> Joint Ventures in China
1Q

2Q

3Q

FY20091Q

2Q

3Q

FY2010FY2011
Forecast

Operating Income/Loss（Forecast in January 9.0）

7.9
1.7
1Q

- 0.5

2Q

3.5
0.7
3Q

11.0

8.2
4.6

0.2
FY20091Q

2Q

3Q

FY2010In 2006, KHI started a joint venture with Anhui Conch Cement Company Ltd.,
China’s largest cement manufacturer. KHI has established three joint ventures forthe time being and set up, in China, an integrated system for waste heat recovery
power generation systems for cement plants and cement producing facilities.
As well as further intensifying partnership with CONCH, KHI will develop andcontribute to bring new technologies such as Zero Emission Eco Town System(ZEET) that is an integration of cement plant with waste treatment technology andsludge processing technology in order to establish new business model for global
environment conservation.

FY2011
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）

Net Sales（Forecast in January 240.0）

234.4

203.0

159.2

144.0
58.0

1Q

113.2

100.9

2Q

260.0

65.1

3Q

FY20091Q

2Q

3Q

FY2010

0.7

2Q

3Q

FY20101Q- 1.1

FY2011
Forecast

Operating Income/Loss
1Q

2Q

3Q

FY2009

- 3.9

5.0

- 2.6

- 4.9

FY2011
Forecast（Forecast in January - 4.0）

- 13.3- 21.1

 FY2010 （ vs. FY2009 )Net Sales: Increase in sales due to demand growth in Asian and otheremerging countries and the effects of liquidation of the excess inventory
in North America
Operating Income/Loss: Losses reduced significantly due to sales
increase, the effects of improvement in profitability and fixed cost
reduction and other factors, despite the adverse impact of the appreciationof the yen FY2011 Forecast （ vs. FY2010 )Net Sales: Net sales are expected to increase due to sales increase in
Asian and other emerging countries and other factors, despite the adverse
impact of the appreciation of the yen
Operating Income/Loss: Profitability is expected to return due to sales
increase, the effects of impairment of fixed assets implemented in theprevious fiscal year and other factors, despite the adverse impact of theappreciation of the yen- 27.0<Business Development in Emerging Markets>＜Wholesales by Geografic Area for Consumer Products＞(Th ousand s of uni t / Billion Yen)

Domestic
North Ame rica (incl. Canada )Europ eEmerging Countries & Others

Total

FY2009FY2010FY2011 Forecast
Unit
AmountUnit
AmountUnit
Amount
17
12.9
14
11.3
15
12.1
80(49)
56.3 118(67)78.5 123(73)
89.3
72
56.2
67
47.7
65
49.1
228
45.1
272
61.0
304
67.4
397

170.5

471

198.5

507

217.9

Note: 1) Sales un its and amount i ncl ude th e following product s.
Un its: M otorcycles, All-Terrain Vehicles (ATVs), Utility Vehi cles and Personal Watercraft(J et Ski)
Amount: The products ment ioned above and p arts for those p roducts.
2 ) Figures in the p arenthesis ( ) represent motorcycle sales units.

Since KHI started motorcycle business in the Philippines in 1974, KHI
established subsidiaries in Indonesia, Thailand and Brazil to manufacture and sell
motorcycles. In emerging markets, as demand for motorcycles is expected to
expand in the coming years due to further economic growth and increased
purchasing power, KHI focuses on expansion and reinforcement of business
operations in those markets. In India, KHI established new subsidiary in 2010 toimport and sell motorcycles in order to cultivate its market.

- 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）

Orders Received（Forecast in January 150.0）

180.0
148.9
106.7

84.9
13.1
1Q

32.8
2Q

54.8

68.0
35.0

3Q

FY2009

1Q

Net Sales

2Q

3Q

FY2010（Forecast in January 140.0）

FY2011
Forecast

170.0

140.3

16.5
1Q

34.2
2Q

60.9
27.8

3Q

FY20091Q

Operating Income/Loss

2Q

3Q

FY2010FY2011
Forecast（Forecast in January 18.0）

22.3

25.0

14.6
8.6
1Q

2Q

0.7

- 0.3

- 0.6

3Q

3.4

3.9

FY20091Q

2Q

3Q

 FY2011 Forecast （ vs. FY2010 ）Orders Received & Net Sales: Orders received and net sales are expected
to increase due to increasing demand of hydraulic components forconstruction machinery in emerging countries
Operating Income/Loss: Income is expected to increase due to sales
growth, and other factors

99.0

82.7

55.4

 FY2010 （ vs. FY2009 ）Orders Received : Increase in orders received for hydraulic components forconstruction machinery in emerging countries
Net Sales: Increase in sales of hydraulic components for construction
machinery and industrial robots for manufacturers of semiconductor
production equipments
Operating Income/Loss: Income improved due to improvement in
profitability by sales growth and increased capacity utilization

FY2010FY2011
Forecast<Businesses Development in China>
In August 2006, production of hydraulic pumps started at Chinese subsidiary in
Suzhou to meet the increasing demand of hydraulic components for construction
machinery in China. In April 2010, production of hydraulic components started in ajoint venture with a Chinese company in Zhejiang, while a sales subsidiary inShanghai provides the products manufactured at the above manufacturing
companies to customers throughout China.
In order to respond to the increased demand in China, KHI group as a whole
focuses on upgrading production by building a new plant in Suzhou, expanding theplant in Zhejiang, and increasing production capacity at main factory in Japan.

- 11 -

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

FY2009End of March 2010

FY2010End of March 2011

1,352.4

1,354.2

Shareholders’ Equity

277.0

289.0

（Ratio of shareholders’ equity to total assets）(20.4%)(21.3%)

Interest-bearing debt

428.9

429.1

（Net Interest-bearing debt）（394.1）(381.9)Net Debt Equity Ratio

142%

132%

Total Assets

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

FY2009FY2010Cash flows from operating activities

30.1

81.9

Cash flows from investing activities- 63.2- 52.9

Free Cash Flows- 33.028.9

Cash flows from financing activities

35.9- 18.8- 12 -

II. Forecast for FY2011

Consolidated Operating Performance(Billion Yen)FY2010< Orders Received >FY2011
ChangeActualForecast

Orders Received

1,270.6

1,360.0+ 89.4

Net Sales

1,226.9

1,360.0+ 133.1

Operating Income

42.6

50.0

+ 7.4

Recurring Profit

49.1

52.0

+ 2.9

Net Income

25.9

32.0

+ 6.1

Continuous increase in orders received is expected
mainly in Aerospace and Precision Machinery segments,
while decrease in orders received is expected in Rolling
Stock segment that had large-scale orders received in
the previous fiscal year

< Net Sale >Net sales are expected to increase as a whole, due toincrease in sales of a large-scale project for overseas
customer in Plant & Infrastructure segment and sales ofhydraulic components for construction machinery inPrecision Machinery segment< Profits >Exchange Rates (actual & assumed)

Yen / US$

86

83

Yen / EUR

113

115

Note : Assumed rates are applied to the outstanding foreign exchange exposure as of April 28, 2011

(For Reference)

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

US$
EUR

Operating Recurring
IncomeProfit
3.1
3.5
0.3
0.2

- 13 -

Profits are expected to increase due to the effects ofsales growth in emerging countries especially inMotorcycle & Engine and Precision Machinery
segments, as well as the company-wide measures toimprove profitability, such as fixed cost reduction andimprovement in productivity, despite the adverse impactof the appreciation of the yenForecast by Segment(Billion Yen)

Orders Received

Net Sales

Operating Income/Loss

FY2010FY2011

ChangeFY2010FY2011

ChangeFY2010FY2011

ChangeShip & Offshore Structure

78.9

60.0

- 18.9

118.4

110.0

- 8.4

- 1.0

- 4.0

- 3.0

Rolling Stock

187.1

150.0

- 37.1

131.1

150.0

+ 18.9

8.1

7.0

- 1.1

Aerospace

206.7

260.0

+ 53.3

196.8

220.0

+ 23.2

3.0

8.0

+ 5.0

Gas Turbine & Machinery

187.5

220.0

+ 32.5

202.6

210.0

+ 7.4

9.5

5.0

- 4.5

Plant & Infrastructure

119.9

120.0

+ 0.1

89.0

130.0

+ 41.0

8.2

11.0

+ 2.8

Motorcycle & Engine

234.4

260.0

+ 25.6

234.4

260.0

+ 25.6

- 4.9

5.0

+ 9.9

Precision Machinery

148.9

180.0

+ 31.1

140.3

170.0

+ 29.7

22.3

25.0

+ 2.7

Others

106.8

110.0

+ 3.2

114.0

110.0

- 4.0

2.5

2.0

- 0.5

-

-

-

-

-

-

- 5.3

- 9.0

- 3.7

1,270.6

1,360.0+ 89.41,226.9

1,360.0+ 133.1

42.6

50.0

+ 7.4

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 -

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

FY2009FY2010FY2011

ActualActualForecast

R&D Expenses

38.0

37.0

43.0

CAPEX
(Construction Base)

59.2

55.3

76.0

Depreciation & Amortization

51.4

50.3

55.0

Domestic

24,396

24,511

25,000Overseas

7,901

8,195

8,200

32,29732,70633,200

Number of Employees- 15 -

(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.