Annual Report 2008

ANNUAL REPORT 2008Percentage of Net SalesSales(Millions of yen)Orders Received(Millions of yen)Order Backlog(Millions of yen)5.6%100,00080,00060,00040,00020,00033,51236,87146,26066,64984,028100,00080,00060,00040,00020,00035,39636,06550,18172,91892,33530,00020,00010,00010,7069,90014,74121,01029,31700 004 05 06 07 08 04 05 06 07 08 04 05 06 07 08Note: The hydraulic machinery business was formerly included in KHI’s Other business segment; however, in view of its growing importance in theKHI Group’s sales and activities, the results of this business have been reported separately beginning with the fiscal year under review. Datafor previous years have been reclassified and adjusted according to the new segment reporting format, and comparisons with the previousyear have been based on the reclassified and adjusted data.Business ResultsOrders in the Hydraulic Machinery segment increased ¥19.4billion, or 26.6% over the previous fiscal year, to ¥92.3 billion,mainly because of a larger volume of orders from the constructionmachinery industry.Sales expanded ¥17.4 billion, or 26.1%, to ¥84.0 billion, supportedby brisk sales of hydraulic products for constructionmachinery, and operating income rose ¥3.1 billion, or 50.4%,to ¥9.1 billion.OutlookThe market for construction machinery is expanding worldwidealong with activities to improve the social infrastructurein the BRICs and the VISTA* countries, the next group ofemerging industrializing economies. Kawasaki PrecisionMachinery Ltd. (KPM) is the core company in this segment,and to respond to rising demand for hydraulic machinery foruse in construction machinery, KPM is continuing to strengthenits production and marketing systems and capabilities.* VISTA stands for Vietnam, Indonesia, South Africa, Turkey, and Argentina.In addition, Kawasaki Precision Machinery (China) Ltd. (KPM(China)) is expanding its plant for the production of hydraulicequipment for construction machinery, and the new facilitieswent into operation in July 2008. Established in August 2006,KPM (China) has engaged in the assembly of knockdown setsof hydraulic pumps, and the new facilities are now engagingin the assembly of knockdown sets of hydraulic motors andreduction gears.KPM is currently working to strengthen its international networkof five manufacturing and marketing facilities, whichcomprises KPM’s headquarters plant and the facilities ofKawasaki Precision Machinery (U.K.) Limited; KawasakiPrecision Machinery (U.S.A.), Inc.; Flutek, Ltd. (in Korea); andKPM (China). KPM is focusing especially on increasing overallcustomer satisfaction by developing and supplying highquality,high-performance products, responding quicklyand accurately to customer needs, and providing strongafter-sales services.First, in the previous year, KPM built a new plant for the productionof core parts on the grounds of its headquarters plantin Kobe, Japan, and is currently moving forward with constructionon a new plant for manufacturing hydraulic pumps forconstruction machinery. This new plant is scheduled to beginoperations in June 2009, and, at that time, KPM’s headquartersplant will be renovated to increase production capacityfor various types of hydraulic equipment.25