Total sales increased on a local currency basis thanks to increased demand in China, CIS and Indonesia in the second half period of FY2016. As impacted by the Japanese yen's appreciation, however, FY2016 sales declined by 1.6% from the previous fiscal year, to JPY1,576.5 billion. Segment profit decreased by 4.3% to JPY161.6 billion.

Revenues declined by 9.0% from the previous fiscal year, to JPY 49.0 billion, as adversely affected by the Japanese yen's appreciation, even though an increase in assets in North America and some other regions. Segment profit dropped by 66.6% from the previous fiscal year, to JPY 4.4 billion, mainly affected by allowance for doubtful account recorded mainly in China.

In the construction, mining and utility equipment business, we expect an increase in sales for FY2017 from FY2016, as we anticipate a recovery of demand for mining equipment, which has been slack for the last few years, and the effects of adding Joy Global Inc. (currently, Komatsu Mining Corp.), a leading U.S. manufacturer of mining equipment which we closed the acquisition in April this year, to our consolidated accounting. With respect to profits, we project a decline, mainly affected by a significant amount of temporary expenses (such as fair values of inventory assets in cost of sales and amortization of intangible assets) to record for the first year of acquisition.

In the retail finance business, we anticipate a decrease in revenues, affected by the Japanese yen’s appreciation. Meanwhile, we expect an increase in segment profit, as no more allowance will be needed for doubtful accounts in China.

In the industrial machinery and others business, we expect an increase in both sales and segment profit, as we anticipate an increase in the volume of sales of presses and machine tools.

As preconditions for our projection, we are assuming the foreign exchange rates as follows: USD1=JPY 105, EUR1=JPY 115 and RMB1=JPY 15.0.

Although we see signs of recovery in some markets, they haven't upturned for full-momentum growth, remaining uncertain into the future. Under such a market environment, we have been focusing our efforts on 1) Growth strategies based on innovation, 2) Growth strategies of existing businesses, and 3) Structural reforms designed to reinforce the business foundation.

With respect to SMARTCONSTRUCTION, we have not only worked to broaden the range of intelligent Machine Control models, the core of solutions, but also began their sales in April 2016, whereas they were conventionally limited to rental. As of June 2017, our intelligent Machine Control models were deployed at over 2,800 construction and civil engineering jobsites on a cumulative basis. With an eye to aggressive sales overseas, we demonstrated SMARTCONSTRUCTION at the ConExpo2017, a major international fair of construction equipment held in Las Vegas, U.S.A. in March 2017.

In the mining equipment business, we exhibited the Innovative Autonomous Haulage Vehicle with no cab at the MINExpo INTERNATIONAL® 2016, a leading international fair of mining equipment also held in Las Vegas, U.S.A. We are striving to improve the safety and productivity of mining by aggressively promoting optimal operation, remote control and unmanned operation of mining equipment, thereby committed to becoming an indispensable partner of our customers.

In April 2017, we closed the acquisition of Joy Global Inc., a leading manufacturer of mining equipment in the United States, and changed its trade name to Komatsu Mining Corp. Now we are better positioned to not only expand our product line-up with super-large mining equipment, drills and underground mining equipment, but also provide a wide range of solutions to customers.

With regard to the integration process of Komatsu Mining Corp., we are developing specific plans in six months of the acquisition by anticipating about three years ahead. We believe it's a substantial project in which we can dynamically expand our mining equipment business, a long-range core business of Komatsu, and provide new value to customers.

In line with the current mid-range management plan, we have worked to establish the market position of DANTOTSU No. 1 in Asia, our stronghold market in emerging ones and a future-promising market for construction equipment. Specifically, we have focused efforts to strengthen our operation by preparing for local product and human resource developments in Asia. In the aftermarket business, we have stepped up efforts to expand sales of parts for periodic replacement and attachments. We have also worked to broaden the product mix of attachments, including those of Lehnhoff Hartstahl GmbH, a German manufacturer of attachments, which we acquired in the previous fiscal year. As a result, we achieved the record-high quarterly sales of parts in FY2016.

While focusing efforts to develop DANTOTSU products for conventional markets, we will also continue to strengthen our competitiveness in the aggregate and cement sectors, expand application-specific models, and boost the forest machinery business.

In the industrial machinery and others business, Komatsu Industries Corp. opened the Techno Innovation Center in Komatsu City, Ishikawa Prefecture, Japan. The Center not only exhibits Komatsu Industries' flagship PVS1353 press brake and H1F200-2 Servo press among others, but also offers visitors to experience its latest IoT-based Sheet-Metal Network.

We have doubled sales from the early 2000s, while keeping fixed costs about constant. We will continue to uphold the policy of separating costs from growth into the future, while promoting investment in future growth and working to aggressively cut down production costs and maintain an appropriate level of fixed costs.

With respect to shop floor of manufacturing sites, we are promoting efforts to reform our production by networking not only our manufacturing plants but also suppliers through the KOM-MICS which allows for real-time "visualization" of machine performance. We are also working to accelerate the delivery speed of products and parts and achieve appropriate inventories by connecting market information directly to our plants.

The corporate source of value creation is employees. As we believe that diversity powers the growth of our company and individual employees, we are committed to providing workplaces and systems which enable each and every employee of the Komatsu Group to have motivation and pride and demonstrate his/her talents to the fullest extent. We will also continue our efforts for human resource development.

The Komatsu Group has been aggressively engaged in all three areas of environment, social and corporate governance concerns.

With respect to environmental concerns, we have been concerting our efforts to develop products, service and solutions, which feature fuel economy based on our estimate that about 90% of total CO₂ emissions in the life cycle of construction equipment comes from machines in use by customers.

Use of our intelligent Machine Control hydraulic excavators in SMARTCONSTRUCTION has proven a 20 to 30% reduction of CO₂ emissions thanks to reduced time of machine operation and construction periods resulting from automatic control of buckets.

In the area of social concerns, the Komatsu Group upholds the principle of CSR efforts in core businesses, and makes CSR efforts in which we can capitalize on our strengths, thereby fulfilling social responsibilities. In some regions and countries of the world, acquisition of operating, maintenance and manufacturing skills of construction equipment will result in the development of local economies and support for employment. We will continue to support human resource development in tune with local conditions.

With respect to corporate governance, based on The KOMATSU Way, the principle of our corporate actions, we ensure the vitalization of the board of directors, communication with all stakeholders, and compliance with the Rules of Business Community, among others. Concerning the board of directors, we have appointed three outside directors in a total of eight directors. Our board of auditors consists of three outside auditors and two inside auditors. In this manner, we work to ensure the transparency and objectivity of management. As part of risk management efforts, we started compliance risk audits in FY2008.