Komatsu Receives the Grand Prix of the Corporate Value Improvement Award from Tokyo Stock Exchange

Jan. 28, 2020

Komatsu Ltd. (President: Hiroyuki Ogawa) (hereafter “Komatsu”) today announced that it was selected for the Grand Prix award of the 8th Corporate Value Improvement Award (FY2019) from all listed companies (about 3,650) sponsored by Tokyo Stock Exchange (TSE).

TSE created the Corporate Value Improvement Award program in FY2012, designed to annually award the companies which have achieved high corporate value by practicing management of improving corporate value through initiatives that consider capital cost and other investor concerns. On the 8th occasion, Komatsu received the award for the first time.

Komatsu was selected for the following reasons. To enhance its corporate value, Komatsu sets up a management target of ROE, which considers capital cost, and developed a framework to control management based on capital productivity over the year. Komatsu’s top management also recognizes the importance of direct engagement with investors and other stakeholders and aggressively practices them. Based on these engagement, Komatsu sets up and discloses specific quantitative and other targets related to ESG.

In its three-year mid-term management plan (FY2019-2021) entitled “DANTOTSU Value - FORWARD Together for Sustainable Growth”, Komatsu is working for sustainable growth centering on DANTOTSU Value (ESG solutions and improvement of earnings through customer value creation) by promoting growth strategies. Encouraged by receiving this award, Komatsu will work to not only achieve sustainable growth, but also promote constructive engagement with stakeholders and strengthen its corporate governance in order to maximize its corporate value, i.e., the total sum of trust from all stakeholders.

[Award]
The Grand Prix award of the 8th Corporate Value Improvement Award (FY2019)

[Reasons]

1. To improve corporate value, the company’s management objectives and targets are set with reference to capital cost, and are implemented continuously on a long-term basis.
   
   Taking into account the expected cost of shareholders' equity (around 8%), the company set an ROE target exceeding this (10% or higher), as well as disclosing the expected cost of capital and efforts to decrease it in an Integrated Report.
   
   
2. To improve corporate value, the company has built management structures around capital productivity.
   
   【Business portfolio management (new investments/divestments)】
   
   The company has measured NPV and EVA*1 on a continued basis since the beginning of the 2000s, and makes strategic investment choices based on capital cost with mind to industry, geography and risk. After investing, the company measures EVA continually to monitor how newly acquired businesses are contributing to the company.
   
   【Management of current businesses】
   
   The company has utilized ROIC for financial management targets for all group companies since FY2017.
   
   
3. The CEO personally recognizes the importance of engagement with shareholders and other stakeholders, and actively works to achieve this.
   
   The CEO personally takes the lead on communication with shareholders and other stakeholders. For the current medium-term management plan, the company has taken into account conversations with shareholders to set specific quantitative ESG targets, and discloses those targets.

*1　 EVA is a registered trademark of Stern Stewart & Co.

[Related links]
The Corporate Value Improvement Award program, Japan Exchange Group
> https://www.jpx.co.jp/english/equities/listed-co/award/01.html

No : 0078(2913)
Corporate Communications Department
Sustainability Promotion Division
Komatsu Ltd.
tel: +81-(0)3-5561-2616
mail: JP00mb_cc_department@global.komatsu

*The information described is at the time of presentation and may be subject to advance notice.