It's been a little more than a year since Komatsu Mining Corp. (KMC) joined the Komatsu Group in April 2017.

Placing top priority on never lowering our service standards for customers, we, KMC and Komatsu, have converged our capital, intellectual and human resources, generating synergy effects. Two partners have also worked to maximize the value of solutions based on mining equipment under P&H, Joy, Montabert and KOMATSU brands.

Immediately after the acquisition in April 2017, KMC's top management built a new organization with KMC and Komatsu employees with a wealth of professional expertise in global mining business and manufacturing. After careful research and thorough discussions, we announced our integration plan in October 2017.

The plan calls for creation of energy in the three areas of expanding sales, reducing costs and curbing investment. As KMC's and Komatsu's products don't overlap, we have achieved an extensive line up of surface and underground mining equipment for customers. Specifically, we are allowing three years for the integration and we are working to add synergy effects of 10% in KMC's sales for FY2021.

Remanufacturing of components of mining equipment is undertaken at KMC's and Komatsu's facilities.

In FY2017, the first year of the integration process, we achieved more-than-planned for synergy effects of about JPY2.5 billion on a pretax profit basis. Synergy effects include cases in which a new order was received for KMC's rope shovel by capitalizing on Komatsu's relationship of trust with the customer as well as expanded sales by mutually using KMC's and Komatsu's supply chains and service bases.

With a tailwind of recovering market conditions of mining equipment, KMC's sales advanced by 20.8%^* from the previous fiscal year, to JPY317.8 billion for FY2017, ended March 31, 2018. Operating income, excluding temporary expenses associated with the acquisition, expanded by 163.4%^* to JPY35.3 billion, which translates into an operating income ratio of 11.1%.