1

Komatsu NTC’s Operations

September 16, 2014

Masayuki UegakiChairman of the Board

Komatsu NTC Ltd.

Investors Meeting (September 16, 2014)

2Komatsu’s Industrial Machinery Business and Komatsu NTC (as of March 31, 2014)

Defense Systems

Other

Komatsu NTC

KELK Komatsu Industries

Gigaphoton

Breakdown of sales: Komatsu NTC

Transfer machines48%

Machining centers8%

Grinding machines9%

Crankshaft millers10%

Wire saws8%

Laser cutting machines

5%

SubsidiariesIn Japan

and abroad12%

Sales: JPY73 bn

2008年～

ア

1992年～

NIPPEI TOYAMA EUROPE GmbH1996～

2004年～

2005年～NIPPEI TOYAMA(THAILAND)Co.,LTD

2008年～NIPPEI TOYAMA INDIA PRIVETE.,LTD

1963年～

1984年～

NTC AMERICA Corp.

1994年～2010年

1990 2000 2010

1950

1951～

1963年～

1984年～

2008年～

1938～

0 1970 1980

1945年～

Breakdown of sales: Industrial Machinery and Others

89.6% 10.4%

Construction, Mining and Utility Equipment

Industrial Machinery and Others

Breakdown of sales: KomatsuConsolidated sales: JPY1,953.6 bn Total sales: JPY203.9 bn

Japan

Abroad

NIPPEI TOYAMA Corporation Komatsu NTC Ltd.

Komatsu Ltd. Began production of machine tools for construction equipment (Industrial Machinery Div)

Komatsu Machinery Corp.

USA: Sales and service subsidiary of machine toolsEurope: Sales and service subsidiary of machine toolsChina: Sales and service subsidiary of machine toolsChina: Sales and service subsidiary of machine tools

Thailand: Sales and service subsidiary of machine toolsIndia: Sales and service subsidiary of machine tools

China: Manufacturing, sales and service subsidiary of wire saw parts

DALIAN BOHAI NIPPEI MACHINE TOOL Corporation

NIPPEI TOYAMA SHANGHAI TRADING Co., Ltd.

NTC (Changzhou) Semiconductor Equipment Co., Ltd.

Dai-NipponHeikiCo., Ltd.

Fukuno Steel Industry Co., Ltd. Toyama Machine Industry Co.,

Ltd.

Nippei Industrial Co., Ltd.

3Main Products

TECHNOLOGY & RELIABILITY

Our products make customer contributions in a variety of manufacturing processes of their automobiles.

New brand

Eternal Commitment to High Quality

Taking up the challenge of nanotopology

Engine-related partsCylinder headCylinder block

CamshaftCrankshaft

Solar panel

Connecting rod

4

Sales and operating profit by product

Profitability

Merger with Komatsu Machinery Corp.

NIPPEI TOYAMA Komatsu NTC

Transfer machinesWire saws

Machining centersLaser cutting machines

Grinding machinesOperating profit ratioCrankshaft millers

Subsidiaries (Japan & abroad)JPY in bn

140

120

100

80

60

40

20

Projected

5

35 GW210 GW

872 GW

2,019 GW

3,155 GW

0

1,000

2,000

3,000

2010 2020 2030 2040 2050

Markets

Increase of emission regulation-compliant cars→ Compact engines, hybrids, electric vehicles ⇒Increase in capital investment related to powertrain (engines and drive units)

Wire saws

Source: “Energy Technology Perspective 2012,” IEA

Electric vehicles

Fuel cell vehicles

Plug-in vehicles

Hybrid carsConventional gasoline cars

Fuel economy

Electric on the go

Compact engines

-20%

-10%

0%

10%

20%

30%

40%

0

20

40

60

80

100

120

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19Production shift: Japan, USA & Europe Emerging countriesAverage annual growth of 5% worldwide but declining rate of growth

◆ Global demand for automobiles by powertrainIf the trend continues as it is today, gasoline-powered cars should peak out around 2040.

◆ Demand for automobiles by region

⇒ Steady capital investment related to automobile production

Machine tools

Source: Technology Roadmaps Solar Photovoltaic Energy (May 2010), IEA

◆ Long-range projection of solar cells

Cum

ulat

ive in

stall

ed P

V ca

pacy

(GW

)

☆If cost reduction advances, we can expect long-range growth of the market.☆We can also expect renewal demand.

[Preconditions]Power generation cost ≦JPY14/KWh

Due to overinvestment in facilities in 2011, demand remained slack in the following 3 years. The supply-and-demand balance has been corrected in 2014.

EPIA2017(Max.)projectionEPIA2017(Ave.)projectionEPIA2017(MIN.)projection

New

powe

r gen

erat

ion

（GW

)

◆ Short-term projection (solar panel installations)

Conversion of annual growth rate of 5 to 10 GW into the amount of wire saws: 700 to 1,400 units per year.

Million units Growth rate

YoY growth rate

Emerging countries

Japan

North America

Europe

Source: Global Market Outlook for Photovoltaics, EIPA

Source: IHS Automotive2014/6/30

6

Machine tools Wire saws

1) Growth of existing businesses

2) Structural reforms

Growth based on innovation1) Product development and differentiation

2) Expansion of business domain

Tasks

Development and launch of industry pacesetting DANTOTSU products by emphasizing environmental conservation, ICT, economy and safety

Development of products designed to meet next-generation powertrains (energy savings and compactness)

Development of next-generation products(by incorporating technologies designed to substantially cut down customers’ production costs)

Development of new markets

Businesses

Standardization (modularization), shortening lead-time from orders received to shipment

Expansion of parts and service operations

More applications of core technologies and products and business expansion in the supply chainProposals to improve customers’ productivity through ICT applications, and preventive maintenance

Reinforcement of operations in China, Asia and North America

Structural reforms: Improvements of SVCs and fixed costs, reinforcement of price and SVM management, and improvement of OVCs (claim expenses)

Reforms of procurement and production system

7Lead-time Reduction Efforts: Modularization of Customer-specified Parts

At present, we design parts specified by each customer, which makes it very difficult for us to improve lead-time, quality and costs.

Modularization

We will first consolidate models and promote modularization at the time of model changes.

1) Design man-hour:-70%

2) Design lead-time: 5 months ⇒ 2.5 months

Modularization of jibs as the next task⇒ Use of CAM

5) Manpower shift to development

3) Quality improvementImprovement of design quality by means of assessment In advance

4) Cost reduction・Reduction of SVCs by reviewing

design drawings.・Reduction of design expenses

Started in January 2014.

Projected reduction of design manpower for transfer machines and machining centers due to modularizationNote: Modularization is an important effort

of reforming production system.

(Parts applicable to modularization)

Man-hour comparison

New design Modularization-based design

DevelopmentProduction designRate of modularization

8Development Designed for Production Support Needs –Growing out of only selling machines-

By assessing how far we, a machine tool maker, can penetrate into customers’ production from the viewpoints of both maker and user, we will not only strive to develop new business models but also make contributions to Komatsu Group’s production reforms.

Core technologies

Applied technologies

Product develop-ment

【Lifecycle costs of Japanese automakers’ flexible transfer lines】

0

500

1,000

1,500

2,000

2,500JPY in mn

【Conditions for preliminary calculation】No. of machines: 10 units, cycle time: 3min (500units/month)Years of use: 10, Charge: JPY5,000/hour

Tool (control) expenses

Production control expenses

【Technology development for production support service】Engine

development Facilities review Production preparation Production

【Engine development and production flow】

Process design

Arrangement of facilities

Production of facilities

OperatorsTool

exchange

Maintenance

Quality control

Production control

Process improvement

NTC’s current domain

○Production support domain

【Development of production support technologies in collaboration with related departments of Komatsu】

【R&D operations】Manufacturing

Engineering CenterResearch Division

【NTC】

【Manufacturing Engineering Dept 】Engines at the Oyama Plant

・Energy saving・High speed・Tool monitoring・Machine maintenance・Machining

・Controllers・Adaptive technologies・Analysis technologies・Common network platform

Operation data

Performance validation

Adaptive control

Network platformNTC-developed key technologies

Process control data

・New controller ・Tools, machining technologies・Monitoring technology ・Analysis technologies

Production support technologies

・Process control・Preventive maintenance・Process improvement

“Users’ viewpoints”“Leading-edge technologies”

“Machinery maker”

“Difficult for NTC by itself”

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Thank you for your interest in Komatsu NTC.