Kawasaki Heavy Industries Ltd. · TSE:7012
Kawasaki Heavy Industries — Investor Presentation (September 2006)
41 slides from Kawasaki Heavy Industries's investor presentation, September 2006
Slide 1: FY2006-FY2010 Medium-Term Business Plan: Global Kawasaki
FY2006-FY2010 Medium-Term Business Plan [Global ) “Global Kawasaki”—The Next Exciting Stage KAWASAKI HEAVY INDUSTRIES, LTD. September 2006
Slide 2: Contents
Contents Section 1：Review of 21 (FY2000–FY2006) Section 2：Global (FY2006–FY2010) • Positioning of New Medium‐Term Business Plan 3 • Basic Strategies: Selectivity and Concentration 7 • Corporate Vision 4 • Quantitative Targets 11 • Basic Objectives 5 • Plans for Allocation of Management Resources 13
Slide 3: Overview of K21 (FY2000-FY2006)
Overview of 21 (FY2000–FY2006) Selectivity and Concentration Developing Businesses for Core businesses businesses structural reform ・Aerospace ・Rolling Stock ・Shipbuilding ・Consumer Products & ・Gas Turbines & ・Plant & Infrastructure Machinery Machinery Engineering “Quality Followed by Quantity” Focu
Slide 4: Overview of K21: Consolidated Operating Results
Overview of 21: Consolidated Operating Results （Billions of Yen） ROIC target: 9% 60 10% Operating income（left scale） Income before tax（left scale） ROIC（right scale） 50 8%8% 40 6%6% 30 20 4%4% 10 2%2% 0 0%0% -10 -20 -2% -30 -4% FY2006 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 (Forecast) ROIC*
Slide 5: Positioning of New Medium-Term Business Plan
Positioning of New Medium-Term Business Plan ・Position Global K as a medium-term business plan that will guide efforts during the next five years, with a view to achieving progress in the next decade. ・Under K21, we intensively restructured and stabilized management. The Global K initiative will dri
Slide 6: Corporate Vision
Corporate Vision KHI aims to become a leading global enterprise that enriches lifestyles and helps safeguard the environment through its core businesses, which encompass land, sea and air transportation systems, and the energy and environmental engineering sectors. Enriching lifestyles and helping s
Slide 7: Basic Objectives
Basic Objectives “Quality Followed Selectivity and Stronger Non-Price by Quantity” Concentration Competitiveness Become a highly profitable, globally recognized enterprise ① Implement ongoing reforms to establish a sustainable growth cycle ② Achieve steady growth in keeping with the “Global Kawasaki
Slide 8: Business Domains
Business Domains Main Business Domains Transportation Energy & Environmental Industrial Defense equipment Engineering infrastructure Leisure vehicles Rolling Stock Aerospace Gas Turbines & Machinery Consumer Products & Machinery Energy & Environmental Engineering Industrial Robots Shipbuilding Indus
Slide 9: Basic Strategies: Selectivity and Concentration
Basic Strategies Selectivity and Concentration: KHI 10 Years in the Future 10 Years in the Future A world-class maker of rolling stock systems that draws on top Four Core businesses Rolling Stock technologies and quality A leader in Japan’s aerospace industry, with solid competitiveness Aerospace in
Slide 10: Selectivity and Concentration: Core, Developing and Self-sufficient Businesses
Selectivity and Concentration: Four Core Businesses, a Developing Business and Self-sufficient Businesses “Global Kawasaki” Industrial Robots, Shipbuilding and Consumer Products & Machinery Gas Turbines & Machinery Industrial Hydraulic Products Energy & Environmental Rolling Stock Engineering Aerosp
Slide 11: Selectivity and Concentration: Positioning of Business Units/Products
Selectivity and Concentration: Positioning of Business Units/Products Businesses with Businesses Requiring Core Businesses Developing Businesses Stable Earnings Structural Realignment •Drivers of sustainable Strengthen competitiveness growth Achieve consistent •Expand earnings through through aggres
Slide 12: Businesses Requiring Structural Realignment
Selectivity and Concentration: Businesses Requiring Structural Realignment Businesses requiring structural realignment (including public works-related businesses) Decide policies z Strategic value for KHI Group z Medium-term earnings outlook in light of market climate and competitiveness Strengthen
Slide 13: Quantitative Targets
Quantitative Targets • Improve ROIC (investment efficiency) • Strengthen profitability • Increase ratio of income before tax to • Reinforce financial position sales FY2010 Targets • ROIC*: 14％ • Net sales: ¥1,560 billion • Income before • Operating income: ¥100 billion tax margin: 5.8％ • Income befo
Slide 14: Quantitative Targets (Progress)
Quantitative Targets (Progress) （％） (Billions of Yen) (Billions of Yen) 20 2,000 120 Net sales （left scale） ROIC Income before tax margin Operating income （right scale） Income before tax （right scale） 15 1,500 90 10 1,000 60 5 500 30 0 0 0 FY2005 FY2006 FY2008 FY2010 05年度 FY2005 06年度 FY2006 08年度 FY2
Slide 15: Plans for Allocation of Management Resources
Plans for Allocation of Management Resources • Focus on core and Management Aggressive developing businesses Growth Global • Maximize investment resources investments efficiency Kawasaki ① Capital investment plan ・ Invest ¥300 billion over five years, or ¥60 billion annually ・ Invest ¥13 billion mor
Slide 16: Resource Allocation Plan 1: Capital Investment
Resource Allocation Plan 1: Capital Investment (Billions of Yen) 80 Actual investment Planned investment: Average ¥ 60 billion annually 60 40 20 0 FY2003 FY2004 FY2005 FY2006 FY2008 FY2010 Priority Areas Rolling Stock Set up and strengthen production structure at Hyogo Plant, including new productio
Slide 17: Resource Allocation Plan 2: R&D Investment
Resource Allocation Plan 2: R&D Investment (Billions of Yen) 60 Actual investment Planned investment: Average ¥ 40 billion annually 45 30 15 0 FY2003 FY2004 FY2005 FY2006 FY2008 FY2010 Priority Areas Rolling Stock High-speed trains, bogies, LRVs and systems integration technologies Aerospace Commerc
Slide 18: Resource Allocation Plan 3: Personnel
Resource Allocation Plan 3: Personnel (Number of Employees) 35,000 Actual numbers New hires: Average 1,000 people annually 30,000 25,000 20,000 ～ ～ 15,000 0 FY2003 FY2004 FY2005 FY2006 FY2008 FY2010 Hiring domestically and abroad • Intensive, regularly scheduled effort to secure new graduates and on
Slide 19: Priority Initiatives
Priority Initiatives ① Strengthen technological capabilities ② Encourage ⑥ Promote CSR market-oriented thinking and action Global Kawasaki ⑤ Strengthen ③ Accelerate Group management global business capabilities development ④ Create and cultivate new products and businesses 17
Slide 20: Priority Initiative 1: Strengthen Technological Capabilities
Priority Initiative 1: Strengthen Technological Capabilities Technological Development capabilities • Reinforce basic and elemental technologies • Enhance systems integration capabilities and electronics and control technologies • Broaden applications for new materials Technology: a key source of ea
Slide 21: Priority Initiative 2: Encourage Market-Oriented Thinking and Action
Priority Initiative 2: Encourage Market-Oriented Thinking and Action Generate profits from the market Become more Strengthen non-price market-focused competitiveness ① Improve added value by proposing differentiation based on customer value ② Respond flexibly to market change ③ Constantly reform bus
Slide 22: Priority Initiative 3: Accelerate Global Business Development
Priority Initiative 3: Accelerate Global Business Development Expand presence in target markets Optimize global production Form alliances with and procurement capabilities overseas partners Global Kawasaki Reduce currency risks Increase as well as enhance human resources globally 20
Slide 23: Priority Initiative 4: Create and Cultivate New Products and Businesses
Priority Initiative 4: Create and Cultivate New Products and Businesses Socioeconomic and macroeconomic analyses (Society, economy, energy resources, environment, etc.) Overhaul technologies and create new businesses Energy Transportation systems Environmental protection Cultivate next-generation co
Slide 24: Priority Initiatives 5 and 6
Priority Initiatives 5 and 6 ⑤ Strengthen Group Management Capabilities ■ Adopt internal company system and independent company management (strive for optimization of the Company’s individual parts) ・Strive for efficiency and flexibility ・Clarify management responsibilities ■ Create a smaller, stron
Slide 25: Rolling Stock
Rolling Stock Vision Become one of the world’s top manufacturers of rolling stock systems through world- class technologies and quality, including in high-speed rail offerings Basic strategies Japan • Develop and supply an array of rolling stock as Japan’s leading comprehensive manufacturer in this
Slide 26: Rolling Stock: Quantitative Targets
Quantitative Targets Developing LRVs Powered FY2010 ROIC: 15％ By Gigacell Batteries (Billions of Yen) (Billions of Yen) Development is scheduled 200 20 for completion in FY2007 Net sales（left scale） Operating income（right scale） ROIC Features of 15.6% ① Barrier-free because door sills are only a sma
Slide 27: Aerospace
Aerospace Vision Become a global aircraft manufacturer ・A leader in Japan’s aerospace industry ・An aircraft manufacturer with solid international competitiveness in terms of quality, price and delivery speed Basic strategies Defense • Develop and secure prime contracts for mass production of P-X/C-X
Slide 28: Aerospace: Quantitative Targets
Quantitative Targets FY2010 ROIC: 12％ Main Commercial Aircraft Production and Sales Plans (Billions of Yen) (Billions of Yen) 360 24 Development and mass production of P-X/C-X Net sales（left scale） Operating income（right scale） Parts‐sharing and simultaneous development ROIC ・2007: First flights 12.
Slide 29: Gas Turbines & Machinery
Gas Turbines & Machinery Vision Draw on world-class power plant technologies in the energy and transportation fields to cultivate global operations Basic strategies Energy • Develop high-efficiency products and new models and step up investments to cultivate foreign markets • Build a business struct
Slide 30: Gas Turbines & Machinery: Quantitative Targets
Quantitative Targets FY2010 ROIC: 13％ New High-Efficiency Models under Development (Billions of Yen) (Billions of Yen) 320 20 Energy Net sales（left scale） • M7A-03 gas turbine engine Operating income（right scale） This is based on the M7A–02, which has a solid track ROIC record in cogeneration, and w
Slide 31: Consumer Products & Machinery, Industrial Robots
Consumer Products & Machinery, Industrial Robots Vision Consumer Products & Machinery Evolve as a manufacturer of leisure vehicles and engines with a top-level brand in high-quality, high- performance market segments Industrial Robots A world-leading industrial robot manufacturer with a reputation b
Slide 32: Consumer Products & Machinery: Quantitative Targets
Quantitative Targets FY2010 ROIC: 22％ Global Network for Consumer Products & Machinery (Billions of Yen) (Billions of Yen) 40 Manufacturing Akashi Works 600 Net sales（left scale） 22.0% R&D Motorcycles, small gasoline engines, parts Operating income（right scale） ROIC Kawasaki Motors 18.0% Manufacturi
Slide 33: Energy & Environmental Engineering
Energy & Environmental Engineering Vision Harness our proprietary technologies in clean energy and environmental facilities in Japan and abroad to become a top engineering enterprise with advanced planning and proposal capabilities Basic strategies Clean energy • Establish full turnkey capabilities
Slide 34: Energy & Environmental Engineering: Quantitative Targets
Quantitative Targets Gigacell and Plasma Enhanced Melter FY2010 ROIC: 21％ (PEM) for Asbestos Treatment (Billions of Yen) (Billions of Yen) Promote the use of natural energy through power 180 12 storage technologies Net sales（left scale） ● Develop nickel-metal hydride Gigacell batteries Operating inc
Slide 35: Shipbuilding
Shipbuilding Vision Become one of the world’s most profitable shipbuilders and increase resistance to market fluctuations by drawing on world-class gas carrier technologies and cost- competitive Chinese shipyards Basic strategies • With Sakaide Works functioning as a mother plant for overseas busine
Slide 36: Shipbuilding: Quantitative Targets
Quantitative Targets FY2010 ROIC: 35％ Phase Two Expansion at NACKS (Increase from one to two docks） (Billions of Yen) (Billions of Yen) 180 9 Total investment of 2 billion yuan (approx. ¥28 billion） Net sales（left scale） Operating income（right scale） Investment to fund 500m x 80m construction dock,
Slide 37: Industrial Hydraulic Products
Industrial Hydraulic Products Vision A top maker of hydraulic products that draws on its hydraulics technologies to satisfy customers worldwide with its technologies, services and quality Basic strategies • Strengthen global operating structure, which encompasses bases in Japan, the United States, E
Slide 38: Industrial Hydraulic Products: Quantitative Targets
Quantitative Targets FY2010 ROIC: 32％ Expansion of KPM’s Main Plant (Billions of Yen) (Billions of Yen) Respond to growing demand for hydraulic 100 10 equipment used in construction machinery Net sales（left scale） ● Total investment: Approx. ¥2 billion Operating income（right scale） 34.1% ROIC ● Comp
Slide 39: Segment Sales, Operating Income and Operating Margin
Segment Sales, Operating Income and Operating Margin (Billions of Yen) Segment sales Operating income and Operating margin FY2005 FY2006 FY2005 FY2006 FY2008 FY2010 FY2008 FY2010 (Actual) (Forecast) (Actual) (Forecast) Rolling Stock 168.3 175.0 160.0 190.0 8.8 5.2% 10.0 5.7% 9.0 5.6% 12.0 6.3% Aeros
Slide 40: Segment ROIC
Segment ROIC （%） Segment ROIC FY2005 FY2006 FY2008 FY2010 (Actual) (Forecast) Rolling Stock 13.3% 15.6% 14.0% 15.0% Aerospace 7.9% 5.6% 5.0% 12.0% Gas Turbines & 7.2% 9.0% 9.0% 13.0% Machinery Consumer Products & Machinery, 13.3% 18.0% 15.0% 22.0% Industrial Robots Energy & Environmental (22.7%) 4.7
Slide 41: Cautionary Statement
Cautionary Statement The performance outlook and forecasts stated in these materials were prepared by Kawasaki Heavy Industries, Ltd. (hereinafter, KHI), based on the circumstances as of the release date, and include potential risks and uncertain factors that relate to economic conditions, foreign c
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