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 - JPMorgan Chase & Co, Research Division - Analyst
: First of all, I'd like to ask you a supplementary question about the supply chain situation. The CFO talked about shipping earlier, and I'd like to know,
is there a situation where, because of lead time and delivery considerations, you have to use air freight? And that not be burdening your profitability?
Also, more specifically, I believe you have been exporting from China to Russia, Indonesia and other countries as part of your cross-sourcing activities.
Could you explain if there have been any changes in this area over the past 3 months?
Masatoshi Morishita - Komatsu Ltd. - Senior Exec. Officer & GM of Business Coordination Dpt & Komatsu Economic Strategy Research Center
Yes, this is Morishita. First of all, the situation of the ships. You asked whether we have to use air freight. That happens most frequently for parts.
Basically, parts are usually shipped by container ships. However, there is a shortage of container capacity, especially for North America and also
Europe. For such markets, although it may result in increase in costs, if there is a machine failure at our customer or other such emergencies, we
send parts by air. We do this while managing the cost.
As part of the cross-sourcing initiative, we have a 2-line strategy, which we call CE, for 20 tons from our plant in China. We are sending them to
Russia and Indonesia. However, we are facing various problems in terms of ship logistics. Especially in Russia, we are facing a situation where the
vessels are getting very tight. However, we are considering various ways to ensure that we will be able to supply the number of units initially
planned.
Question: Tomohiko Sano - JPMorgan Chase & Co, Research Division - Analyst
: I'd like the second question to Mr. Horikoshi. How is the profit margin trending for mining equipment in the third quarter? And how it is likely to
change in the fourth quarter? Could you explain further in terms of geography and utilization?
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