While demand upturned in China in the first six-month of fiscal 2009, overall demand dropped sharply from the corresponding period a year ago. The Japanese yen also appreciated. Against this backdrop, consolidated net sales of construction, mining and utility equipment totaled JPY 569.6 billion (about U.S. $6.4 billion), down 45.8 percent from the first six months of 2008.

Earnings per share in the first six months period ended Sept. 30, were JPY 8.47 (U.S. $1.21) a steep decline from JPY 100.82 (U.S. $14.40) in the same period a year ago.

As demand remained sluggish, Komatsu continued to carry out substantial production adjustment in order to attain an appropriate level of inventories, including those of distributors. As a result, Komatsu achieved the proper inventory level for current demand by the end of the second quarter period under review. Other efforts extended to optimization of production and sales structures and further improvement of operational efficiency, including reorganization of plants, consolidation/elimination of production lines and reorganization of distributors in Japan and overseas.

North American demand dropped sharply from the corresponding period a year ago, as affected by sluggish housing starts and delaying recovery of the economy in the United States. In Latin America, demand for construction equipment for use in civil engineering declined reflecting sluggish economies, but demand for equipment for mining applications remained relatively firm.