Annual Report 2008

AbcdeKawasaki Heavy Industries, Ltd. and Consolidated SubsidiariesAs of March 31, 2008 and 2007 ANNUAL REPORT 2008Q:grounds of its Kobe headquarters plant, but isscheduling further additions to its production facilitiesthis fiscal year.The KHI Group is making substantialcapital investments. How is thisimpacting your financial position?Strengthening the KHI Group’s financial positionhas been an issue for some time, but as performancehas improved in recent years, we have madesteady progress toward reducing interest-bearingdebt. At the end of fiscal 2008, interest-bearingdebt stood at ¥276.4 billion, and the debt-to-equity(D/E) ratio was 82%. Under our medium-term plan,the target is to reduce the D/E ratio to 100% orless, but along with the increase in capital investmentsfor business expansion going forward, theoutlook is for an increase in interest-bearing debt.We are planning to increase capital investments thisfiscal year by a multiple of two over the previous fiscalyear, to ¥110 billion. Under Global K, we wereplanning on total investments over five years of¥300 billion, but because of the need to increaseproduction to meet demand, we believe, at present,that the total amount of capital investments willexceed ¥350 billion.Q:Looking ahead, we will give close attention to ourfinancial position and will use every means at ourdisposal to keep the D/E ratio below 100% andincrease our return on capital. After the KHI Groupattains the objectives of Global K, to continue togrow, it will be necessary to make aggressiveinvestments in R&D and capital. Accordingly, weintend to make the investments that are neededin the medium-to-long term.In closing, do you have a specialmessage you would like to giveto KHI shareholders?As I mentioned previously, the KHI Group hascompleted its structural reforms and is now poisedto move toward the next stage in its growth. Thisfiscal year will be the midpoint in our Global K planand will be a crucial time for confirming where westand as well as take the necessary measures tosecure growth going forward. The deterioration inthe operating environment is a major cause for concern,but in the medium-to-long term, my judgmentis that the growth potential and power of theKHI Group is steadily increasing. We are committedto continuing to exert our fullest efforts to reachthe goals of Global K and look forward to thesupport and cooperation of our shareholders.11