Hitachi Construction Machinery : Financial Results for the Third Quarter Ended December 31, 2020 (IFRS)

January 29, 2021

Consolidated Financial Results for the Third Quarter Ended December 31, 2020

(IFRS)

Listed company: Hitachi Construction Machinery Co., Ltd. (HCM)

Stock exchange: Tokyo (first section)	Code number: 6305
URL https://www.hitachicm.com/global/

Representative: Kotaro Hirano, President and Executive Officer

Scheduled date for submission of the Quarterly Securities Report: February 10, 2021

Scheduled date of commencement of payment of dividends: ―

Supplementary materials to the financial statements have been prepared: Yes

Presentation will be held to explain the financial statements: Yes (for institutional investors, analysts and journalists) (Rounded off to the nearest million)

1. Consolidated results for the third quarter ended December (April 1, 2020 to December 31, 2020)

1. Consolidated results

(The percentages indicated show changes from the same period of the previous fiscal year.)

									Adjusted		Income before				Net income
			Revenue					Net income	attributable to
				Operating income		income taxes
											owners of the parent
			Millions of	%		Millions of		%		Millions of		%		Millions of	%	Millions of	%
			yen						yen					yen				yen		yen
December 31,		558,727	(18.7)			18,298		(68.9)		11,833		(78.8)	6,377	(83.9)	3,126		(91.1)
2020
December 31,		687,188	(7.5)			58,742		(31.0)		55,837		(29.2)	39,524	(31.8)	35,112		(31.6)
2019
Note: "Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses.
			Net income attributable to		Net income attributable to
		owners of the Parent per share	owners of the Parent per share
			(basic)				(diluted)
					Yen							Yen
December 31,			14.70						14.70
2020
December 31,			165.11				165.11
2019
References: Share of profits (losses) of investments accounted for using the equity method
December 31, 2020: ¥675million December 31, 2019: ¥2,726million
(2)	Consolidated financial position
			Total assets			Total equity			Total equity attributable to	Equity attributable to owners
										owners of the parent		of the parent ratio
			Millions of yen					Millions of yen					Millions of yen			%
December 31,			1,165,541				538,987							485,006			41.6
2020
March 31,			1,167,567				525,111							473,537			40.6
2020
2. Dividends status
						Cash dividends per share
			First		Second				Third		Year end			Total
			Quarter		Quarter			Quarter
			Yen			Yen				Yen		Yen			Yen
March 31,		－		36.00				－	24.00			60.00
2020
March 31,		－		10.00				－
2021
March 31,
2021														－			－
(Projection)

Year-end dividends for the fiscal year ending March 2021 are to be determined.

Note: Changes involving the dividend states for the fiscal year ending March 2021: None

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

3. Consolidated earnings forecast for the full year ending March 2021 (April 1, 2020 to March 31, 2021)

(The percentages indicated show changes from the same period of the previous fiscal year.)

											Net income
			Adjusted		Income before		Net income attributable to	attributable
	Revenue				to owners of
		Operating income	income taxes		owners of the parent
				the parent
											per share
		%	Millions of		%			%		%	Yen
March 31,	Millions of yen	yen		Millions of yen		Millions of yen
2021	770,000	(17.3)	40,000		(47.8)	34,000		(49.3)	20,000	(51.4)	94.05

Notes: Changes in consolidated earnings forecast: None

*Notes

1. Important changes in the scope of the consolidation during period(changes involving specific subsidiaries accompanying changes in the scope of consolidation): None
2. Changes in accounting policies; changes in accounting estimates

[1]	Changes in accounting policies required by IFRS	None
[2]	Changes in accounting policies other than those in [1]	None
[3]	Changes in accounting estimates	None

1. Number of outstanding shares (common shares)
   [1] Number of outstanding shares (including treasury shares)

December	2020	215,115,038
March	2020	215,115,038
[2] Number of treasury shares
December	2020	2,462,696
March	2020	2,461,867

1. Average number of common shares outstanding during the fiscal year (shares)
   December 2020 212,652,785
   December 2019 212,654,406

Indication of audit procedure implementation status

This earnings report is exempt from audit procedure.

Explanation on the appropriate use of results forecasts and other important items

Any forward-looking statements in the report, including results forecasts, are based on certain assumptions that were deemed rational as well as information currently available to the Company at this time. However, various factors could cause actual results to differ materially. Please refer to ''1. Management Performance and Financial Conditions,

1. Outlook for the Fiscal Year Ending March 2021'' of the attachment for conditions serving as assumptions for results forecasts.

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

Index of the Attachment
1. Management Performance and Financial Conditions ...........................................................................	2
(1) Management Results.........................................................................................................................	2
(2)	Outlook for the Fiscal Year Ending March 2021 .............................................................................	4
(3)	Analysis of Financial Condition .......................................................................................................	5
2. Consolidated Financial Statements.........................................................................................................	7
(1)	Consolidated Balance Sheets ............................................................................................................	7
(2)	Consolidated Statements of Income and Comprehensive Income....................................................	8
	Consolidated Statements of Income .................................................................................................	8
	Consolidated Statements of Comprehensive Income .......................................................................	9
(3)	Consolidated Statements of Changes in Equity ..............................................................................	10
(4)	Consolidated Statements of Cash Flows.........................................................................................	12
(5)	Notes on Consolidated Financial Statements..................................................................................	13
	(Notes on the Preconditions for a Going Concern) ........................................................................	13
	(Note on consolidated statements of income) ................................................................................	14
	(Segment Information) ...................................................................................................................	15

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

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1. Management Performance and Financial Conditions

(1) Management Results

As a direction of the HCM Group's medium-term management strategy, in order to further strengthen the value chain business, on which the Group has been focusing, the Group is using digital technology to provide deeper solutions at every point of contact with customers, and is working to transform itself into a corporate structure that is resilient to change.

During the 3Q of the current fiscal year (April 1, 2020 to December 31, 2020), revenues from rental and used equipment increased year on year, but overall revenues fell sharply to ¥558,727 million (a decrease of 18.7% year on year). This was mainly due to a decrease in sales of new construction machinery and parts and services due to a deterioration in the market caused by COVID-19, a decrease in sales of new mining machinery and parts and service due to restrained capital expenditure reflecting sluggish resource prices and other factors, and the impact of the yen's appreciation compared to the previous fiscal year. These factors were partially offset by an increase in sales of rental and used equipment compared to the same period of the previous fiscal year in the value chain business, which is at the forefront of our consideration.

As for consolidated income items, adjusted operating income was ¥18,298 million (a decrease of 68.9% year on year), mainly due to a decrease in revenue and the impact of yen appreciation. Quarterly profit attributable to owners of the parent was ¥3,126 million (a decrease of 91.1% year on year), affected by a decline in adjusted operating income, a decrease in the share of profits of investments accounted for using the equity method attributed to overseas subsidiaries, income tax expenses, and non-controlling interests' gains and losses.

Business results by segment are described below.

1. Construction Machinery Business

Demand for hydraulic excavators in the consolidated cumulative 3Q was lower than that in

the same period of the previous fiscal year in major regions except China and Japan. Mining companies restrained capital investment, thus demand for mining machinery, particularly from small and medium-sized mining companies, continued declining.

As a result, although the revenues from rental and used equipment rose, revenues for the consolidated cumulative 3Q amounted to ¥499,480 million (a decrease of 19.2% year on year), mainly due to the decline in sales of new machinery and parts services, as well as the impact of the yen's appreciation, due to the sluggish markets caused by COVID-19.

Adjusted operating income was ¥12,928 million (a decrease of 75.3% year on year), mainly due to a decrease in revenue and the impact of yen appreciation.

2. Solution Business

This segment consists primarily of Bradken Pty Limited and its subsidiaries, which are

engaged in the parts service business in the after-sales service of mining facilities and machinery, and H-E Parts International LLC and its subsidiaries, which provide service solutions.

Sales of consumables for mineral processing facilities operating at mining companies remained steady, reaching ¥61,608 million (a decrease of 12.2% year on year). Despite a decrease in sales revenues in the 3Q of the fiscal year, the effect was relatively smaller compared to the Construction Machinery Business.

Adjusted operating income was ¥5,370 million (a decrease of 15.8% year on year), due in part to the effects of business restructuring, despite the decrease in revenue and the impact of the yen's appreciation.

The above revenues of segment 1 and 2 are figures before intersegment adjustments.

(English translation of "KESSAN TANSHIN" originally issued in the Japanese language.)

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