Komatsu : > 2nd Quarter Report FY2022

(Translation)

This document has been translated from the Japanese original for the convenience of overseas stakeholders. In the event of any discrepancy between this document and the Japanese original, the original shall prevail.

Quarterly Report

From July 1, 2022 to September 30, 2022

(Second Quarter of the 154th Fiscal Year)

KOMATSU LTD.

Second Quarter of the 154th Fiscal Year (from July 1, 2022 to September 30, 2022)

Quarterly Report

Certain References and Information:

1. This is an English translation of the Quarterly Securities Report ("Shihanki Hokokusho") filed via the Electronic Disclosure for Investors' Network ("EDINET") system as set forth in Article 27-30-2 of the Financial Instruments and Exchange Act of Japan. Komatsu Ltd. filed its Quarterly Securities Report for the three months ended September 30, 2022 with the Director-General of the Kanto Local Finance Bureau on November 11, 2022. The Quarterly Securities Report contains, among other information, Quarterly Consolidated Financial Statements for the three months and six months ended September 30, 2022. Material information in the Quarterly Securities Report, other than the Quarterly Consolidated Financial Statements, has already been reported by Komatsu Ltd. in its press release dated October 31, 2022. Attached is an English translation of Quarterly Consolidated Financial Statements for the three months and six months ended September 30, 2022.
2. In this report, Komatsu Ltd. is hereinafter referred to as the "Company" and together with its consolidated subsidiaries as "Komatsu."

Cautionary Statement with respect to forward-looking statements:

This report contains forward-looking statements that reflect managements' views and assumptions in the light of information currently available with respect to certain future events, including expected financial position, operating results and business strategies. These statements can be identified by the use of terms such as "will," "believes," "should," "projects," "plans," "expects" and similar terms and expressions that identify future events or expectations. Actual results may differ materially from those projected, and the events and results of such forward- looking assumptions cannot be assured. Any forward-looking statements speak only as of the date of this report, and the Company assumes no duty to update such statements.

Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are not limited to, unanticipated changes in demand for Komatsu's principal products, owing to changes in the economic conditions in Komatsu's principal markets; changes in exchange rates or the impact of increased competition; unanticipated costs or delays encountered in achieving Komatsu's objectives with respect to globalized product sourcing and new information technology tools; uncertainties as to the results of Komatsu's research and development efforts and its ability to access and protect certain intellectual property rights; the impact of regulatory changes and accounting principles and practices; and the introduction, success and timing of business initiatives and strategies.

Financial Information

1. Basis of preparation of the quarterly consolidated financial statements

The quarterly consolidated financial statements of the Company are prepared in accordance with the accounting principles generally accepted in the United States of America, pursuant to Article 4, Supplementary Provisions of the "Ordinance on Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements," the Ordinance of the Cabinet Office No. 64 of 2007.

2. Audit certification

Pursuant to Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act of Japan, the quarterly consolidated financial statements for the three months ended September 30, 2022 and for the six months ended September 30, 2022 were reviewed by KPMG AZSA LLC.

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Quarterly Consolidated Financial Statements

Consolidated Balance Sheets (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries as of September 30, 2022 and March 31, 2022

			September 30, 2022			March 31, 2022
Assets	Millions of yen		Ratio (%)		Millions of yen		Ratio (%)
Current assets
Cash and cash equivalents (Note 16)		¥	320,824				¥	315,360
Time deposits (Note 16)			766					1,310
Trade notes and accounts receivable, net (Notes 4 and 10)			1,036,061					954,580
Inventories (Note 5)			1,275,024					988,011
Other current assets (Notes 15, 16 and 17)			200,090					162,020
Total current assets			2,832,765	56.6			2,421,281	55.7
Long-term trade receivables, net (Notes 4, 10 and 16)		624,102		12.5			501,868		11.5
Investments
Investments in and advances to affiliated companies			50,404					45,913
Investment securities (Note 6)			10,510					8,377
Other			3,538					3,493
Total investments			64,452	1.3			57,783	1.3
Property, plant and equipment
- less accumulated depreciation and amortization of ¥1,031,539
million at September 30, 2022 and ¥997,069 million at March 31, 2022		868,219	17.3			819,749	18.9
Operating lease right-of-use assets			63,192		1.3			61,516		1.4
Goodwill (Note 3)		226,313		4.5			187,615		4.3
Other intangible assets			180,388		3.6			169,003		3.9
- less accumulated amortization (Notes 3 and 7)
Deferred income taxes and other assets (Notes 15, 16 and 17)		143,114		2.9			128,707		3.0
Total assets		¥	5,002,545		100.0		¥	4,347,522		100.0

			September 30, 2022			March 31, 2022
Liabilities and Equity	Millions of yen		Ratio (%)		Millions of yen		Ratio (%)
Current liabilities
Short-term debt (Note 16)		¥	471,588				¥	241,746
Current maturities of long-term debt (Note 16)			255,488					276,623
Trade notes, bills and accounts payable			356,110					338,974
Income taxes payable			53,724					68,337
Current operating lease liabilities			17,762					16,981
Other current liabilities (Notes 10, 15, 16 and 17)			425,792					381,360
Total current liabilities		1,580,464	31.6			1,324,021	30.5
Long-term liabilities
Long-term debt (Note 16)			443,485					429,011
Liability for pension and retirement benefits			98,929					93,407
Long-term operating lease liabilities			46,585					43,458
Deferred income taxes and other liabilities (Notes 10, 15, 16 and 17)			120,803					101,348
Total long-term liabilities		709,802	14.2			667,224	15.3
Total liabilities			2,290,266		45.8			1,991,245		45.8
Commitments and contingent liabilities (Note 14)
Equity
Komatsu Ltd. shareholders' equity
Common stock:
Authorized 3,955,000,000 shares
Issued 973,450,930 shares
Outstanding 945,570,024 shares at September 30, 2022 and
945,312,564 shares at March 31, 2022		69,660					69,393
Capital surplus			135,936					139,572
Retained earnings:
Appropriated for legal reserve			48,081					47,903
Unappropriated			2,011,928					1,902,501
Accumulated other comprehensive income (loss) (Notes 9 and 15)			360,731					122,414
Treasury stock at cost,
27,880,906 shares at September 30, 2022 and 27,833,236 shares at March 31, 2022		(49,186)					(49,272)
Total Komatsu Ltd. shareholders' equity			2,577,150	51.5			2,232,511	51.4
Noncontrolling interests		135,129		2.7			123,766		2.8
Total equity			2,712,279		54.2			2,356,277		54.2
Total liabilities and equity	¥	5,002,545		100.0		¥	4,347,522		100.0

The accompanying Notes are an integral part of these Quarterly Consolidated Financial Statements.

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Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries

Six months ended September 30, 2022 and 2021

Consolidated Statements of Income

		Six months ended		Six months ended
		September 30, 2022		September 30, 2021
	Millions of yen	Ratio(%)			Millions of yen		Ratio(%)
Net sales (Notes 10, 12 and 15)	¥	1,618,735		100.0			¥	1,291,400		100.0
Cost of sales (Notes 7, 8 and 15)		1,147,450		70.9				932,561		72.2
Selling, general and administrative expenses (Notes 3, 7, 8 and 11)		258,534		16.0				224,019	17.3
Other operating income (expenses), net (Note 9)		(1,117)		(0.1)				1,464	0.1
Operating income		211,634		13.1				136,284		10.6
Other income (expenses), net
Interest and dividend income		5,012		0.3				2,135	0.2
Interest expense		(10,892)		(0.7)				(5,749)	(0.4)
Other, net (Notes 6, 8, 9 and 15)		22,005		1.4				3,839	0.3
Total		16,125		1.0				225		0.0
Income before income taxes and equity in
earnings of affiliated companies		227,759		14.1				136,509	10.6
Income taxes (Note 9)
Current		63,806						45,238
Deferred		(4,939)						(6,541)
Total		58,867		3.6				38,697	3.0
Income before equity in earnings of affiliated companies		168,892		10.4				97,812		7.6
Equity in earnings of affiliated companies		2,072		0.1				1,485	0.1
Net income		170,964		10.6				99,297		7.7
Less: Net income attributable to noncontrolling interests		8,396		0.5				6,156		0.5
Net income attributable to Komatsu Ltd.	¥	162,568		10.0			¥	93,141		7.2
				Yen
Per share data (Note 13):
Net income attributable to Komatsu Ltd.:
Basic	¥	171.96					¥	98.56
Diluted	¥	171.94					¥	98.53

The accompanying Notes are an integral part of these Quarterly Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

		Millions of yen
	Six months ended		Six months ended
	September 30, 2022		September 30, 2021
Net income	¥	170,964		¥	99,297
Other comprehensive income (loss), for the period, net of tax
Foreign currency translation adjustments (Note 9)		247,983			10,658
Pension liability adjustments (Notes 8 and 9)		279			1,787
Net unrealized holding gains (losses) on derivative instruments (Notes 9 and 15)		(38)			942
Total		248,224			13,387
Comprehensive income		419,188			112,684
Less: Comprehensive income attributable to noncontrolling interests		19,779			5,459
Comprehensive income attributable to Komatsu Ltd.	¥	399,409		¥	107,225

The accompanying Notes are an integral part of these Quarterly Consolidated Financial Statements.

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