Edited Transcript of 6302.T earnings conference call or presentation 9-May-19 4:30am GMT

The glide shows sales by region. Next is predict although fiscal year 2019. The glide shows abstract of fiscal year 2019 forecast. Orders are projected ought progress down ought JPY 930 billion, reflecting the ongoing uncertainties surrounding just conditions. Net sales are projected ought progress up ought JPY 905 billion above the uphold of the favorable orders during a fiscal year 2018. although regards ought operating income, I'll harmony more details afterward when I report nearly each segment. Operating allowance is projected ought progress down slightly or nearly even from the foregoing year at JPY 72 billion, reflecting unclear expectation of just country at each segment. We used to similar ought allege an annual dividend of JPY 112 per share.

From this point on, permit me debate details of each segment. at the employ of time, I'd similar ought concentrate my comments chiefly above fiscal year 2019 forecast. First, the machine Components segment. The small-to-medium gear reducer just is expected ought allege favorable conditions at coarse the regions calm although China where we are carefully examining just conditions, which land weaken slightly year-on-year. We are continuing with energetic investment at new produce development and domestic competence expansion, calm attaining growth over cooperation with Lafert Group. although a result, although fiscal year 2019, we scheme orders and sales ought remain nearly at the same flat although at fiscal year 2018. We also scheme operating allowance ought remain unchanged at JPY 11 billion.

For the Precision machine segment, we dine a weaker hypothesis nearly flexible machine although fiscal year 2019, when the China-related trade is expected ought reply ought a ordinary level, although it also depends above the development of ongoing U.S. China business friction. calm during although now, we kept a normalized hypothesis unchanged. although during precision and other equipment, cryogenic device is expected ought remain strong, calm the demand although semiconductor-related models will apt remain at an adjustment phase although the time being, calm although some modes which are expected ought recover from the second half of the year. although a result, orders are projected ought progress down year-on-year, chiefly due ought the diminish at flexible machinery. calm the sales are expected ought remain nearly at the same flat year-on-year, although, some precision and other equipment, namely semiconductor-related device and a semiconductor produce device are apt ought exhibit some sales growth. Operating allowance projection is also even at JPY 18 billion.

Next is Construction machine segment. although during hydraulic excavators, we dine a slightly weak just hypothesis although China and a well hypothesis although North America and other overseas markets also although during Japan. although during mobile cranes, we dine a weak hypothesis although Japan and a well hypothesis although North America. although hydraulic excavators, we will pattern investments although competence expansion at Japan and overseas ought strengthen produce furnish capacity. although cranes, we will further collaboration among LBC and HSC, although a originate orders are projected ought be below JPY 300 billion, due chiefly ought the diminish at hydraulic excavators. Sales are apt ought remain nearly even or slightly up, supported by the little expand at mobile cranes. Operating allowance is slightly down ought JPY 21.5 billion, reflecting the diminish of hydraulic excavators at China.

Next is Industrial Machinery. Demands although mainstay material handling device from the electricity utility and steel industries are apt ought remain strong. Sales expansion of new logistic system, Magic Racks, is anticipated, calm the demand although other models are mainly strong. We will pattern our proactive investment into produce development at order ought commercialize steel tube stand Forming manufacturing street and the boron neutron clutch therapy although medical equipment. although a result, orders are expected ought increase, calm the sales are down slightly year-on-year due ought produce mix. Operating allowance is projected ought decline year-on-year due ought investment at produce development.

The steamer just is projected ought remain stagnant. This year, we wish ought accept orders although 4 vessels and ought dispatch 4 vessels although well, headmaster ought a year-on-year expand at orders and diminish at sales due ought the shortage of steamer patch projects that we had final year. Operating allowance is nearly 0.

Next is Environmental device & Plants. The markets are projected ought be well at ordinary throughout of fiscal 2019. The land mill trade -- at this business, we aim ought acquire medium-scale force generation contracts and ought collaborate with SFW ought acquire contracts, specially at Southeast Asia. Orders are up slightly year-on-year and the sales are also up supported by the backlog from fiscal year 2018. Operating allowance is projected ought decline slightly due ought less favorable brim depending above this project. I will jump this glide although it's been already explained.

Let me satisfy above ought the progress of the Medium-Term Management plot 2019. at response ought favorable just conditions, the company announced an upward revision of its predict at can and November 2018. We were able ought outperform the revised predict with fiscal year '18, sales of JPY 903 billion exceeding the JPY 900 billion signal although reported earlier and FY '19 predict of JPY 905 billion, significantly outperforming the guidance. Operating allowance ratio of more than 8% has been already achieved. Our predict is ought acquire 8% although fiscal year 2019. at this environment, we are proactively making leading investment and R&D investment. These figures dine been revised upward compared with the October predict ought JPY 130.5 billion at CapEx and JPY 57.9 billion at R&D expenses. These are the complete numbers although 3 years.

The charts above the glide shows net sales, operating allowance and operating allowance ratio mentioned earlier. The October predict is above the left and the revised predict is above the right. although I mentioned earlier, sales are projected ought be above JPY 900 billion flat and operating allowance ratio of 8% is ought be maintained.

Next glide shows inherent policies and their initiatives. There are 5 inherent policies. I used to similar ought accept you over some of the initiatives above next page onward. inherent policy quantity 1 is, come firm growth. The glide shows growth at the global markets. Sales by district is above the left and overseas sales by trade fragment is above the right. although you can yell on from these graphs, our overseas sales now exceeds JPY 500 billion with the fragment of complete sales being more than 55%. Growth is driven chiefly by mass-produced machine such although machine Components, Precision Machinery, material Handling device and Environmental device & Plants. Those are the growth drivers. inherent policy 2 is, grow a high favour company by making investment indispensable ought do the expected roles of each business.

The glide shows the trends of leading investment above the left and R&D expenses above the right. We dine been making proactive leading investment at the mass-produced, high-profitability and high-growth product, namely apparatus Components and the Precision machine products. calm the R&D investment is dedicated ought new produce development of high-growth segments also although next generation future middle products.

The glide shows a concrete initiative beneath inherent policy 1 and 2. at March 2018, we dine established the fourth mill at Vietnam ought produce gear reducer parts. Here are some details. The Vietnamese entity was established uphold at August 2005, chiefly manufacturing gear reducer motors, expanding competence with the second and the third plant. With the tendency competence expansion although the first time at nearly 10 years, this to help strengthening of the PTC business.

Basic policy 3 is, produce glorious products and services over a tireless commitment ought better operational quality. The list shows trends at sales of aftersales service. Aftersales service dine been steadily growing reaching nearly JPY 180 billion although fiscal year 2018, and it is projected ought surpass JPY 170 billion although fiscal year 2019. The company will summary ought concentrate above this area. This is one sample of inherent policy 3. above can 7, we dine released i-Connect, a produce peculiarity management system although injection molding machines using IoT. We will summary ought heighten our aftersales offerings, no impartial although injection molding machines calm during although others although well.

Basic policy 4 is, actively further M&A and trade alliances. The glide shows one sample of execution. It's an acquisition of Lafert masses at Italy final year. I won't progress into details here although the transaction has been already disclosed. Our aim is ought trace synergy and amplify our coverage at the PTC business. The acquisition is significant from the perspective of sustainable development goals, SDGs. We can promote ought SDG quantity 8 and 9, labor productivity and a sustainable industrialization.

The glide shows the tendency country of newly consolidated companies. These companies are already making significant contribution ought the fracture of the Sumitomo heavy industries masses with complete sales exceeding JPY 80 billion although fiscal year 2018 and JPY 100 billion although fiscal year 2019 according ought our forecast.

Last calm during no least, inherent policy quantity 5 is, energetic promotion of corporate social responsibilities. First above products and services. during fiscal year 2018, we dine formulated our CSR policy over discussions with each department. And during fiscal year 2019, we are planning ought occupation above our CSR and materiality. Second, above the environment. during fiscal year 2018, we disclosed CO2 emissions during the employ of sold products above climax of -- during manufacturing. And during fiscal year 2019, we are planning ought occupation above the reduction of CO2 emissions during use, specifically by giving (inaudible) ought environmental deed at the produce development process. Third, society. We dine announced our diversity promotion declaration at fiscal year 2016, and started working above female energetic participation initiatives. during fiscal year 2018, we worked above occupation street reform and employee health management at appendix ought that. during fiscal year 2019, we are planning ought elaborate concrete actions beneath those initiatives. final calm during no least, news dissemination or communication. We will heighten the content of our integrated explain and age a compelling novel above our corporate estimate enhancement and expand campaign with ESG analysts and other investors ought heighten our CSR activities.

Before closing, we used to similar ought explicit our deepest apologies ought our customers, shareholders and other stakeholders although the large inconvenience caused by our improper inspections. entertain accept our apologies. at meaning of the findings and the recurrence prevention measures, recommended by the investigation committee ought pattern sure we never quote the same mistakes again. no sole the divisions concerned calm during also the Sumitomo heavy Industries group, although a whole, will progress uphold ought the basics and sincerely device the 8 recurrence prevention measures announced above March 28 beneath the supervision of the Board of Directors. Once again, entertain accept our deepest apologies. We will pattern each pains ought hinder the recurrence of the problem. With this, I used to similar ought complete my remarks. Thank you.

[Statements at English above this transcript were spoken by an interpreter gift above the alive call.]