KOMATSU LTD. Q3 FY2025 earnings call

Takeshi Horikoshi shared Q3 financial results. Slide 4 showed net sales up 3.5% to JPY 1.02 trillion, OP down 12.7% to JPY 142 billion, etc. Slide 5 detailed segment sales and profits. Slide 6 on Construction, Mining & Utility Equipment business sales by region. Slide 7 covered 9 months period. Slide 8 showed segment sales and profits for 9 months. Slide 13 presented consolidated balance sheet. Kiyoshi Hishinuma explained fiscal '25 business results projection, demand trends in major markets for 7 major products, North America, Europe, Southeast Asia, Japan, mining equipment, etc.

Third quarter: Construction, Mining & Utility Equipment business sales up 3% y-o-y to JPY 945.8 billion, segment profit down 17.9% to JPY 120.7 billion; Retail Finance revenues up 6.2% y-o-y to JPY 32.1 billion, segment profit up 29.9% to JPY 9.1 billion; Industrial Machinery & Others business sales up 11.8% y-o-y to JPY 55.8 billion, segment profit up 47.7% to JPY 10.7 billion. Nine months period: Construction, Mining & Utility Equipment business sales down 2.2% y-o-y to JPY 2.688 trillion, segment profit down 14.7% to JPY 362.6 billion; Retail Finance revenues up 1.1% y-o-y to JPY 93.1 billion, segment profit up 19.1% to JPY 26 billion; Industrial Machinery & Others business sales up 10.9% y-o-y to JPY 162.7 billion, segment profit up 81.1% to JPY 27.3 billion

Full year outlook unchanged from October projection. Demand for 7 major products in fiscal '25 Q3 preliminary estimate up 3% y-o-y, full year outlook 0% to minus 5% y-o-y. North America demand in fiscal '25 up 1% y-o-y, projection 0% to minus 5% y-o-y. Europe demand in fiscal '25 Q3 up 7% y-o-y, projection same as previous year. Southeast Asia demand in fiscal '25 Q3 down 6% y-o-y, projection revised to 0% to minus 5%. Japan demand in fiscal '25 Q3 down 14% y-o-y, projection minus 10% to minus 15%. Mining equipment demand in fiscal '25 Q3 down 21% y-o-y, projection minus 10% to minus 15%. Parts sales in fiscal '25 Q3 up 6.1% y-o-y to JPY 265.5 billion, aftermarket accounted for 54%

Sluggish demand for mining and general construction equipment in Indonesia, cost increase due to tariffs affecting demand, yen exchange rate fluctuations, potential further deterioration of demand in Indonesia, minerals in excess supply with weak prices and complex mining conditions affecting investments, non-tariff related costs rising

Q: Recap on Q3 results, positive and not as expected.

A: Takeshi Horikoshi explained sales excess due to FX, volume and price shortfalls, breakdown of construction and mining business shortfalls and positives.

Q: Situation in Indonesia, risks of further deterioration.

A: Hishinuma and unknown executive discussed current situation and potential decline in next fiscal term.

Q: Mining equipment demand outlook, parts and services demand.

A: Unknown executive talked about mining equipment demand trends, shift from greenfield to brownfield investments, aftermarket demand.

Q: Tariffs, selling prices impact.

A: Takeshi Horikoshi discussed tariff impact projection, selling price increases and no last-minute demand drop.

Q: Mining equipment demand in North America, price increase impact on profits.

A: Kiyoshi Hishinuma talked about North America construction and mining equipment demand, Hishinuma discussed price increase impact on profits.

Q: Free cash flow, FX impact.

A: Unknown executive and others discussed free cash flow expectations and FX impact.

Q: Selling prices, cost offset, precious metals aftermarket.

A: Unknown executive and others discussed selling price increase offsetting costs, precious metals aftermarket business.

Q: Rare earth export control impact, FX optimal level.

A: Kiyoshi Hishinuma talked about rare earth export control impacts and unknown executive discussed FX optimal level.

Q: P&L details on volume, etc.

A: Unknown executive explained P&L details on volume, product mix, area mix