© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.

Regional Market Environments and Projections

Business Result for the Third Quarter ended December 31, 2016

January 30, 2017

Senior Vice President and Executive Officer

Yasushi Ochiai

Hitachi Construction Machinery Co., Ltd.

2

20 10 14

23 28 40

31 24 20 20

26

15

23

27 25

27 31

30 31 34

17

10

13

19 24

24 27

26 23

23

23

29

40

48 44

36 32

32 38 39

32

15

28

38 39

34

32

24 17 17

44

73

111

70

42 50

30

19 22

25

161

151

230 225

202

211

183

155 151

159

0

25

50

75

100

125

150

175

200

225

250

'08 '09 '10 '11 '12 '13 14 '15 '16 '16

Global Demand Trend for Hydraulic Excavators 1

＊Estimates by HCM

(Distributing, copying, or forwarding prohibited)

（K Units）

＊Excluding Chinese manufacturer

Year-on-Year Change *Emerging Countries: China, Asia/Oceania, and others

Emerging Countries 2016：51% (Y-0-Y Change:+3%)

'15'16

Previous

Outlook

'16

Present

Outlook

-15% -3% +3%

-36% +15% +31%Russia, CIS,

E Europe -46% -8% -8%

Africa -34% -8% -8%

Middle East -2% -45% -45%

Latin America -38% -22% -22%

-25% -29% -29%

India +29% +50% +50%

Indonesia -38% +11% +29%

Others +0% +1% +4%

0% +19% +22%

-4% -12% -12%

-3% +3% +13%

-23% -17% -17%

China

N America

W Europe

Japan

Total

Others

Asia & Oceania

Japan

Western Europe

North America

Asia Oceania

Others

Total

＊Incl. India

China

Previous

Outlook

Present

Outlook

3

-150%

-100%

-50%

0%

50%

100%

150%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q-40%

-20%

0%

20%

40%

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

<Japan> 2

-150%

-100%

-50%

0%

50%

100%

150%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY1６

/1Q

2Q

3Q

・住宅投資：済(10%)

・公共投資：済(-5%)

・設備投資：済(4%)

・油圧、ミニ、WL需要：済

Market Environment: Housing/Public Spending and Capex (y-o-y) (K units) Demand Trend for Mini Excavators

*Estimates by HCM

(K units) (K units) Demand Trend for Hydraulic Excavators Demand Trend for Wheel Loaders

*Estimates by HCM *Estimates by HCM

*Source: MLIT, Cabinet Office, and

Construction Surety Company

New housing starts (number of houses)

Capex （Orders for machinery, excluding foreign demands)

Public spending （Public work orders）

◇ Public investment turned downward, though capital investment and housing investment are both on a continuously increasing trend.

◇ During the third quarter (from October to December 2016), the demand for construction machinery decreased in reaction to last-

minute demands before the emissions regulations.

(The demand for hydraulic excavators, mini excavators, and wheel loaders decreased by 10%, 24% and 19% year-on-year,

respectively.)

4

-100%

-50%

0%

50%

100%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-1%

0%

1%

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

<Europe> 3

-100%

-50%

0%

50%

100%

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

1.5%

0.5%

-0.5%

主要国GDP：済

◇ 16年1～3月ＧＤＰはユーロ圏全体で堅調に推移するも、2Q以降は下振れリスク有。 ◇ 建設機械需要は英国で減少も、全体では増加傾向。 （対前年油圧7%増、ミニ12%増, ホイール10%増）

FY16 1Q

FY16 2Q

◇ ＧＤＰはユーロ圏全体で堅調に推移。 ◇ 建設機械需要は英国で減少も、全体では増加傾向継続。 （対前年油圧7%増、ミニ4%増、ホイール8%増）

◇ GDPはユーロ圏全体で緩やかな回復が持続。 ◇ 油圧ショベル需要は仏での需要低迷の影響等により微減。(対前年5%減)

FY15 3Q

◇ GDPはユーロ圏全体で緩やかに回復。 ◇ 油圧ショベル需要は仏での需要低迷の影響等により減少。(対前年12%減)

FY15 2Q

◇ GDPはユーロ圏全体で緩やかな回復が持続。 ◇ 油圧ショベル需要は仏での大幅減等を受け、全体では微減。(対前年同期比6%減)

FY15 1Q

GDP Growth Rate in Major Countries (q-o-q) (K units) Demand Trend for Mini Excavators

*Source: IMF, etc *Estimates by HCM

Demand Trend for Hydraulic Excavators (K units) (K units) Demand Trend for Wheel Loaders

*Estimates by HCM *Estimates by HCM

France

UK

Germany

Italy

Others

UK

Germany

France

EUR zone

France

UK

Germany

Italy

Others

France

UK

Germany

Italy

Others

◇ GDP growth remained flat throughout the Euro zone. ◇ The demand for construction machinery throughout the Euro zone remains on a continuously increasing

trend, despite a decrease in the UK. (The demand for hydraulic excavators, mini excavators, and wheel loaders increased by 19%, 21% and 11% year-on-year, respectively.)

5

75%

100%

125%

150%

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

4Q

Residential Non-residential State & local

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

-10%

-5%

0%

5%

10%

0

500

1000

1500

2000

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13 1

Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

4Q

<North America>

＊Bureau of Economic Census, US Census Bureau

＊Bureau of Economic Census, US Census Bureau

4

0

5

10

15

20

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

GDP Growth Rate, Housing Starts in US (K units) (K units) Demand Trend for Hydraulic Excavators

*Estimates by HCM

Construction Spending in US (y-o-y) Demand Trend for Mini Excavators (K units)

*Estimates by HCM

GDP （q-o-q/Right axis)

（Seasonally adjusted） Housing starts (Left axis)

◇ 15年度 ◇ 16年度

◇ Housing starts remained brisk; however, construction spending in the public sector is continuously on a

downward trend.

◇ Regarding construction machinery, the demand for hydraulic excavators continuously decreased by 16%

year-on-year, while the demand for mini excavators increased by 3% year-on-year.

6

0

10

20

30

40

50

60

70

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

<China>

0%

10%

20%

30%

40%

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

4Q

0

5

10

15

20

（％）

North China -30%/-21%/34%/226%

North West 51%/-19%/41%/89%

South West 1%/-8%/100%/82%

North East -21%/-23%/2%/2%

South Middle China 8%/-13%/59%/64%

East China 7%/-20%/52%/103%

Total China 6%/-15%/58%/83%

FY15 4Q FY16 1Q/2Q/3Q

(6.8%) (8.0%)

0%

20%

40%

60%

80%

100%

FY131H 2H

FY141H 2H

FY151Q 2Q 3Q 4Q

FY161Q 2Q 3Q

～6t

20t

10～15t

21～29t

30～39t

40t～

6～10t

5

GDP and Fixed Asset Investment Quarterly Demand for Hydraulic Excavators by Region (y-o-y)

*Foreign manufactures only *Estimates by HCM

GDP (Right axis)

(y-o-y)

Fixed Asset Investment (y-o-y) (Left axis)

Demand Trend for Hydraulic Excavators

Y-o-y comparison data is limited to foreign manufactures only *Estimates by HCM

＊National Bureau of Statistics of China

Demand Composition by Class for Mini Excavators and Hydraulic Excavators

＊Estimates by HCM Foreign manufactures

only

20t and below

20t over

Domestic

Foreign

(K units)

＊当社推定 ＊当社推定

◇ GDP growth from October to December 2016 remained flat at a rate of 6.8%, and fixed-asset investments continuously slowed at a rate of 8%.

◇ The demand recovered mainly due to increased public investment (increased 83% year-on-year).

7

0

5

10

15

4月 5月 6月 7月 8月 9月 10月11月12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月11月12月 1月 2月 3月 4月 5月 6月 7月 8月 9月 10月11月12月-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

《Supplementary Information》 Chinese Market

0

1

2

3

4

5

6

7

8

9

4月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月

FY2015 Actual

FY2014 Actual

6

y-o-y

-51%

FY2016 （Forecast）

-49% -39% +6% -15% +58% +83%

Demand Trend for Hydraulic Excavators (y-o-y)

*Estimates by HCM

(Foreign Manufactures only） (K units)

Monthly Demand Trend for Hydraulic Excavators （Foreign Manufactures Only) （Compared to the same month in the previous year）

*Estimates by HCM

(K units)

FY2014 FY2015 FY2016

Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

※ Actual result (From April to December)

【Chinese New Year】

Feb 19, 2015

Feb 8, 2016

Jan 28, 2017

8 《Topic》

“Artisan work fine award” CMIIC2016 in China

7

The Construction Machinery Industry Internet Competition 2016 (CMIIC2016) was held on

November 21, 2016, hosted by Hui Cong Construction Machinery Network. Our hybrid

hydraulic excavator ZH200-5A received the annual prize of “Artisan work fine award” after a

six-month process of internet voting, customer reviews, expert examination and other factors.

In China, there is increasing market demand for energy-saving products, including the hybrid

hydraulic excavator, and ZH200-5A is a fuel-efficient machine with improved energy

efficiency.

Going forward, we will strive to expand the product line-up to meet market needs and further

expand sales.

ZH200-5A CMIIC2016 Award Ceremony

9

0

1

2

3

4

5FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

0

2

4

6

8

10

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-150%

-100%

-50%

0%

50%

100%

150%

<Asia, Oceania, and India> 8

-10

-5

0

5

10

15

20

CY11/1Q

2Q

3Q

4Q

CY12/1Q

2Q

3Q

4Q

CY13/1Q

2Q

3Q

4Q

CY14/1Q

2Q

3Q

4Q

CY15/1Q

2Q

3Q

4Q

CY16/1Q

2Q

3Q

(％)

主要国GDP：済

インドSH需要：済

・油圧、ミニ、WL需要：済

Demand Trend for Hydraulic Excavators in Asia & Oceania

(K units) *Estimates by HCM

GDP Growth Rate in Major Countries (y-o-y)

*Source: IMF, etc

Malaysia Indonesia India

Singapore

Thailand

Demand Trend for Hydraulic Excavators in India

(K units) *Estimates by HCM

※ Calculation criteria for GDP growth rate in India was revised in CY2013 2Q

Thailand

Malaysia

Singapore

Australia

Indonesia

NZ

Others

◇ Demand has continuously increased in the entire Asia Pacific region, driven by increases in Indonesia and

Malaysia, etc. (increased by 11% year-on-year).

◇ In India, demand has continuously increased by 56% year-on-year, mainly for infrastructure investments, such

as railways and roads.

10

0.01

0.014

0.018

0.022

0.026

0.03

0.034

0.038

0

1

2

3

4

5

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

-100%

-50%

0%

50%

100%

0

5

10

15

20

30

55

80

105

130

<Russia and the Middle East>

(US$) (US$)

-100%

-50%

0%

50%

100%

0

1

2

3

4

5

FY11/1Q

2Q

3Q

4Q

FY12/1Q

2Q

3Q

4Q

FY13/1Q

2Q

3Q

4Q

FY14/1Q

2Q

3Q

4Q

FY15/1Q

2Q

3Q

4Q

FY16/1Q

2Q

3Q

9

FY11 FY12 FY13 FY14 FY15 FY16 FY17

FY11 FY12 FY13 FY14 FY15 FY16

原油・天然ガス実績値予測値：済

ルーブル為替推移：済

ロシア、中東SH需要：済

原油価格：下げ止まり

通貨：低調に推移

*Estimates by HCM *Ex-Works base

*Incl. Local manufacturing

Price Trend of Crude Oil and Natural Gas Demand Trend for Hydraulic Excavators in Russia (K units)

*Created by HCM , the source from IMF HP

Natural Gas (Right axis)

Crude Oil （Left axis）

<IMF forecast as of December>

Foreign Exchange Rate of the Ruble

*Estimates by HCM *Ex-Works base

Demand Trend for Hydraulic Excavators in the Middle East (K units)

*Data concerning Turkey is on a retail-sales basis, unlike the others.

UAE

Saudi Arabia

Turkey

Others Against

US$

Against

EUR€

*According to HCM’s research

【Russia】 Despite a sign of recovering crude oil prices, demand has been continuously sluggish.

【Middle East】 Demand for hydraulic excavators continued to decrease, mainly around the Gulf countries, by 51%

year-on-year.

11 <Mining Machinery>

0

500

1000

1500

2000

2500

3000

12上 12下 13上 13下 14上 14下 15上 15下 16上

10

0

100

200

300

400

500

12上 12下 13上 13下 14上 14下 15上 15下 16上

Demand proportion by region: Ultra-large Excavator (over 100t) *Estimates by HCM

(Units)

Demand proportion by region: Truck (over 55t)

*Estimates by HCM

(Units)

Africa and Middle East

Asia

China

Oceania

Europe,Russia,CIS

North America

Central and South America

Africa and Middle East

Asia

China

Oceania

Europe,Russia,CIS

North America

Central and South America

12/1H 12/2H 13/1H 13/2H 14/1H 14/2H 15/1H 15/2H 16/1H

12/1H 12/2H 13/1H 13/2H 14/1H 14/2H 15/1H 15/2H 16/1H

◇ Excavators: Demand increased in Europe, Russia and CIS, and some countries in Asia, while demand

decreased in Central and South America, etc.

◇ Trucks: Demand increased in the Russia CIS region and Africa, etc., while demand decreased

in the entire Americas and Oceania etc.

12 《Supplementary Information》 BB Ratio 11

BB Ratio (Ultra-large Hydraulic Excavator)

BB Ratio (Dump Truck)

※Book-to-Bill(BB)Ratio = Bookings (Orders received) / Billings (Value of shipment)

Non-consolidated basis (average of 6 months)

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

13 《Topic》

First order received from a copper mine

in the Republic of Chile

• 2 units of EX5600-6 will be delivered to a copper

mine in the Republic of Chile.

• This is our first mining machinery order received

from the Republic of Chile.

12

Full acquisition of H-E Parts in the

United States

We have acquired all the equity of H-E Parts (H-E Parts International LLC and H-E Parts

Australian Holdings LLC). H-E Parts provides service and solution business regarding mining,

quarry and construction machineries and equipment mainly in Australia and the U.S. It is also

engaged in the development, processing and sales of parts associated with these machineries.

Going forward, we will provide cost efficient and highly productive service that meets the local

needs of clients. Furthermore, we strive to strengthen our value chain and further improve our

earnings stability.

(Reference: the actual sales revenue of FY2015 was ¥23.5 billion.)

Reference photo: EX5600-6

14

© Hitachi Construction Machinery Co., Ltd. 2017. All rights reserved.

ＥＮＤ

[Cautionary Statement]

This material contains forward-looking statements that reflect management’s views and assumptions in the light of

information currently available with respect to certain future events, including expected financial position, operating

results, and business strategies. Actual results may differ materially from those projected, and the events and

results of such forward-looking assumptions cannot be assured.

Factors that may cause actual results to differ materially from those predicted by such forward-looking statements

include, but are not limited to, changes in the economic conditions in the Company’s principal markets; changes in

demand for the Company’s products, changes in exchange rates, and the impact of regulatory changes and

accounting principles and practices.

For further inquiries:

TEL : 03-5826-8152

FAX : 03-5826-8209

Public Relations Strategy office

Hitachi Construction Machinery Co., Ltd