The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Tomohiko Sano - JP Morgan Chase & Co, Research Division - Analyst
: I'd like to have the additional comments on the background. On Page 18, would you comment on the geography and the business type? Considering
the future risk, how much mining-related assets do you have? This is my first question.
Unidentified Company Representative
Sorry, initial part was inaudible.
Question: Tomohiko Sano - JP Morgan Chase & Co, Research Division - Analyst
: Yes. My second question is on AHS. When you refer to the progress of the midterm plan, you said that currently, 221 AHS are operational. According
to the figure for FY '21 in midterm plan, it has shown as 380. Would you comment on the environment to achieve the target? You said before, the
idle ratio in Indonesia is high, but I assume COVID-19 might boost demand for autonomous unmanned trucks and services. Do you see any change
of idle rate of 221 AHS? And competitors' fleet size is about 300 or so. And given that, how do you think about increasing that fleet size in FY '20
and '21? This is my final question.
Question: Tomohiko Sano - JP Morgan Chase & Co, Research Division - Analyst
: May I confirm that utilization in the mines with AHS is better than those without AHS?
Question: Tsubasa Sasaki - Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Analyst
: I have 2 questions. One is a follow-up on the previous question. This is related to Page 8. Currently, the external condition of mining equipment is
not good. And it is difficult to foresee what's going to happen because of COVID-19. However, if you look at the manufacturing companies of Japan,
an old saying comes to mind. In times of difficulty, you can tell the true worth of a person. Some companies are using this pandemic as an opportunity
such as reducing fixed cost, strengthening sales capability and improving productivity. I think many Japanese companies are using this crisis to
strengthen their company foundation.
So for Komatsu, your utilization rate at the plants are declining due to this pandemic. I think this is a good opportunity to strengthen your foundation,
such as reducing fixed cost. So considering that you have this opportunity, what measures, initiatives do you have to strengthen your business
foundation? Can you elaborate on this point?
Unidentified Company Representative
Regarding your question about whether we are going to strive to strengthen our corporate structure and become leaner in light of COVID-19, as
the impact was so fast and significant, honestly speaking, we have not thought about measures that are specific and a response to COVID-19 in
particular. However, at Komatsu, currently, about 90% of our employees who work at the headquarters office are now working from home. So to
that end, we believe there may be opportunities to reallocate people where appropriate.
Apart from this, as Mr. Ogawa mentioned, we are currently conceptualizing a structural reform plan that includes drastic fixed cost reduction. The
plan will be put together going forward.
Question: Tsubasa Sasaki - Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Analyst
: My second question is about mining equipment demand trends. Earlier, you talked about KMC and weakness in underground and Indonesia.
Relatively speaking, mining was not as affected by COVID-19. And as you said in the presentation, your initial demand forecast was minus 10% to
20% year-on-year. If you break demand down by coal and noncoal applications, I presume coal is weak, but how is noncoal demand trends? Can
you comment on your assumptions behind your minus 10% to 20% forecast? Also, if you have a sales breakdown for mining equipment by
commodity for last year, that would be great.
Unidentified Company Representative
On Page 29, the demand outlook for new original equipment in mining is shown, which is minus 10% to minus 20%. Like mentioned earlier, we
expect Indonesia to continue to be weak. And weakness is also anticipated in the CIS region due to coal prices. The mining measures continue to
be brisk. However, we forecasted demand to decline due to the weak regions. Also by commodity, for Indonesia, we expect low coal price impact
to continue. Commodity price-wise, as you know, currently, gold is strong and so is iron ore and copper. Going forward, we need to monitor the
impact that COVID-19 has on demand, which will affect price trends and we will also need to watch customer investment behavior closely. We are
not able to give a forecast at this moment. But in any case, we will closely monitor the situation.
Regarding the breakdown by commodity, last fiscal year, out of close to JPY 1 trillion of mining sales, coal accounted for approximately 40% of
sales. The next largest commodity was copper at about 20% to 30%. Iron ore was smaller in contribution at 10% to 15%. Gold was close to 10%.
That's the rough breakdown. Does this answer your question?
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