November 9, 2010

Kobelco Cranes’ Semiannual Financial Results for Fiscal 2010
(April 1, 2010 – September 30, 2010)

General Market Conditions

   Conditions in the overseas crane market continues to be severe, with demand remaining stagnant for the past two years with no sign of recovery since the global financial crisis in fall 2008. The U.S. and European markets, which used to be the centers of demand, have declined considerably, and the worldwide market continues to be weak. Furthermore, the rise in the value of the yen has created a highly competitive environment. However, there is steady demand in some areas, such as India, due to the market shift to emerging countries.
   In the domestic crane market, due to uncertainty about the future and fewer projects, demand has continued to be sluggish. As a result, demand for both new crawler cranes and wheel cranes have been low.

   Under these severe conditions, Kobelco Cranes has worked on maximizing sales and profits by completing backlog orders to bolster sales and steadily carrying out marketing activities. In addition, it reduced costs company-wide to improve profitability. The following are the main initiatives conducted in the first half of fiscal 2010:

1. Decided to begin manufacturing locally in China and India
2. Worked on completing backlog orders to increase sales and provided flexible
   customer support
3. Promoted the development of new models to further strengthen the product lineup
4. Implemented further cost reductions to increase profitability

   Due to the worldwide decline in demand, Kobelco Cranes sold approximately 240 new cranes (covering the entire crane lineup) in the first half of fiscal 2010 (April-September 2010), an 11% decrease over the 270 units sold in the same period last year. Through the above efforts, it was able to minimize the drop in profits.

   Under the new Medium-Term Management Plan “1111” (covering fiscal 2010-2012), which was launched in May, Kobelco Cranes is making further use of its technological capabilites and branding initiatives in its business organization. The company aims to play a more active role on the global stage.

   However, due to the economic environment, consolidated net sales decreased 18.0% in the first half of fiscal 2010, in comparison to the same period last year, and consolidated ordinary income decreased 86.1% in the same period.

Financial Results for Fiscal 2010 First Half

Domestic consolidated sales decreased 12.3%, in comparison to the same period last year, to 9 billion yen, and overseas sales went down 21.2% to 14.4 billion yen. Total sales decreased 18.0% to 23.4 billion yen.

First half of Fiscal Year 2010: Review by Sector

Overseas

   Given the severe conditions, including the worldwide decline in demand and the difficulties customers encounter in procuring funds due to the sharp appreciation of the yen, Kobelco Cranes has taken steps to build its operations for the future by establishing local manufacturing bases in India and China, in order to further strengthen its operations in emerging markets where demand is growing. The demand environment and initiatives taken by Kobelco Cranes for each region are as follows:

• [United States]: Public works investments were carried out as a part of the economic stimulus program, but did not bring substantial recovery in the crane market and demand remained low. Faced with the situation, Kobelco Cranes worked on further improving its dealer and service distribution networks, as well as strengthening the sales and service capabilities of its current distributors.
  
  

• [Europe/Africa]: Demand for new crawler cranes temporarily recovered, but has been declining further following Greece’s financial crisis. As a result, Kobelco Cranes had made efforts to sell new cranes not only in the EU, but also outside the EU, and to strengthen other business fields, such as parts, service, and engineering.
  
  

• [Middle East]: Large projects had been expected in certain areas, but demand for new cranes has remained sluggish, due to the excessive number of existing machines. In this environment, Kobelco Cranes improved its technological capabilities and held training sessions for dealers and users for this market.
  
  

• [Far East/Southeast Asia]: Many infrastructure construction projects and large government projects are expected to fuel demand. In this situation, Kobelco Cranes has made efforts to enhance the sales capabilitiues of local dealers as well as strengthen its parts and service systems.
  
  

• [China]: China is currently the biggest crawler crane market as a single nation. On September 25, Kobelco Cranes established a joint-venture production and sales company, Chengdu Kobelco Cranes Co., Ltd., with local construction equipment manufacturer Sichuan Chengdu Chenggong Construction Machinery Co., Ltd. Manufacturing is expected to commence in August 2012.
  

• [India]: Against a backdrop of aggressive infrastructure investment, India is expected to grow as the second largest market after China. In India, where Kobelco Cranes has secured the largest share of the market, Kobelco Cranes established Kobelco Cranes India Pvt. Ltd. in August by upgrading an existing representative office. Starting local manufacturing in October 2011, Kobelco aims to build a solid position in India.

Japan

   In the domestic market, the operating rates of users’ machines were generally low, affected by the drop in construction, and the new crane market remained sluggish as users refrained from buying and took a wait-and-see stance due to the uncertain outlook.

• [Crawler Crane Market]: Demand decreased around 31% over the same period last year. However, Kobelco Cranes managed to minimize the decrease by carrying out steady shipments of backlog orders and by conducting strong marketing activities to gain orders.
  

• [Rough Terrain Crane Market]: Demand increased around 24% over the same period last year, since demand declined steeply in the same period last year. Kobelco Cranes continued to put efforts into strengthening the wheel crane business centered on further market penetration of the city-conscious crane, the PANTHER-X series.

Alliance with Tadano

   For rough terrain cranes, Kobelco Cranes has maintained a productive relationship with Tadano, which supplies compact models on an OEM basis. Kobelco Cranes intends to continue its close, cooperative relationship with Tadano.

Key Issues and Outlook for Fiscal Year 2010

   Although there are both strong and weak regions, worldwide demand for cranes in fiscal 2010 is anticipated to remain low in both the domestic and overseas markets. It is possible that demand may decline more. In addition, the future is still highly uncertain due to the further appreciation of the yen and users’ financial anxiety brought about by foreign currency exchange rates.

   Under this harsh business environment, Kobelco Cranes will continue steady activities to gain orders and increase sales. Kobelco will further reduce costs in order to cut expenses and increase profitability. Also, along with the promotion of the New Medium-Term Management Plan “1111,” Kobelco Cranes will implement measures to make the next leap forward by addressing the following key issues:

Major Activities

• Maximize sales volume by focusing on regional strategies
• Establish manufacturing bases in India and China
• Focus on emerging overseas markets
• Promote the development of environmentally-friendly models
• Shorten production lead-time and improve cash flow by increasing the level of just-in-time production
• Improve efficiency in all business activities and promote cost reductions

Forecast for Fiscal Year 2010

* Exchange rate assumptions for the second half of Fiscal 2010: 1 US Dollar=85 Yen,

1 Euro=110 Yen
Note: The forecast above is based on information current at the time of this announcement. Actual results may differ significantly due to various factors in the future.