Explanatory Meeting for Fiscal Year Ended March 2011 Outline of Answers to Main Questions
Q: What is the state of production at the plants following the earthquake?
A: Despite the fact that the earthquake damaged five of our plants in Ibaraki Prefecture, we made efforts for an early recovery, so all of the plants had restarted production by March 28. The present operating rate of Tsuchiura Works, the main plant of Hitachi Construction Machinery, is about sixty percent of that before the earthquake. [Note: the operating rate as of April 25 is about eighty percent.]
There has not been any delay in production at overseas plants because they have stocks of components shipped before the earthquake.
Q: Has the earthquake caused any change in the procurement of components from suppliers?
A: Most components are being delivered as planned, although there is some delay in deliveries of a limited number of components. Components that Hitachi Construction Machinery itself manufactures fully meet the required quantities. Therefore, production will increase as the supply of some of the components recovers.
Q: How much did the earthquake affect the business results of fiscal 2010?
A: The earthquake caused a reduction of about ¥10 billion in sales of ¥773.8 billion, and a reduction of about ¥2.4 billion in the operating income of ¥41.5 billion.
Q: What measures will you take for the power supply restriction?
A: We are planning to move forward production by shifting working days at plants in the summer to May and June, and to install in-house power generators.
Q: What is your forecast for demand of hydraulic excavators worldwide for fiscal 2011?
A: We expect demand to rise by about twenty percent in fiscal 2011 compared with fiscal 2010. We expect demand in China, which represents about half of the entire demand, to continue to grow soundly, and demand for rental companies in the US and other developed countries to grow steadily.
Q: The business results forecast for fiscal 2011 was not announced. Please tell us the reason for this.
A: The forecast of the business results for fiscal 2011 was not announced because at the present time it is not possible to rationally estimate the effect of the state of the recovery of the supply chain damaged by the earthquake and of the power supply restrictions on our production and sales. We are expecting sales and profits to increase in fiscal 2011, as in fiscal 2010. We will announce the forecast of the business results as soon as we become able to do so.
