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Notice Regarding the Strengthening of the Relationship with CNH Industrial N.V.

2014-04-28

Sumitomo (S.H.I.) Construction Machinery Co., Ltd. (hereinafter referred to as "Sumitomo Construction Machinery") has entered into a basic agreement regarding the licensing of technologies, and other matters with CNH Industrial N.V. (hereinafter referred to as "CNHi") in order to strengthen and expand the current partnership between the two companies. Details of this agreement are outlined below:

1. Purpose and Reasons for the Technical Tie-Up

For over 20 years commencing in 1992, Sumitomo Construction Machinery has been supplying CNHi with CNHi's CASE branded hydraulic excavators in models ranging from 7 to 80 tons as an OEM manufacturer. With this new tie-up that is the subject of this press release, the two companies have reached a basic agreement to strengthen its partnership for hydraulic excavators sold by CNHi through its own distribution network.

More specifically, the new tie-up will result in Sumitomo Construction Machinery and CNHi extending its OEM contract. In addition, the new agreement will result in the finalization of new contracts relating to technology licensing and main component supply for hydraulic excavators between the two companies. The contract period has been set as seven years to ensure that there is time to strengthen the already formidable relationship between the two companies. As a consequence, CNHi will continue to receive a stable supply of OEM products from Sumitomo Construction Machinery, and at the same time, CNHi will be able to manufacture products in models ranging from 13 to 35 tons that utilize Sumitomo Construction Machinery technology at its own plant. Start of production of the new localized models is planned around mid-2016. These products can then be sold all across the globe through the distribution network of both companies.

Sumitomo Construction Machinery and CNHi's relationship will reach a new stage as both companies pursue synergies through this agreement. By maintaining and building-on the strong relationship between the two companies, they will aim to be the ones left standing in the ever intensifying battle for market share in the construction machinery field.

Now more than ever in the hydraulic excavator market, there is an increasing need for manufacturers to respond to stricter emission regulations as well as demand from customers for more innovation in the areas of performance and fuel efficiency of the machinery itself. Competition is also intensifying among manufacturers to be the first to develop new technologies including those that adapt to the new information age into the design of hydraulic excavators. Sumitomo Construction Machinery's competitive advantages in the field of product development and product features including such areas as fuel efficiency and operational performance, and the ability for each company to maximize the synergy effects arising from this, form the backdrop of this agreement. Through this, each company will aim to develop and grow their individual businesses.

2. Summary of Technical Tie-Up

  1. 1Contract Agreement Date: April 28, 2014
  2. 2Details of Technical Tie-Up
    • Extension of OEM supply period
    • Provision of key technologies relating to the manufacturing of hydraulic excavators (component specifications, manufacturing technology, etc.)
    • Provision of core parts (hydraulic parts, etc.)
  3. 3Summary of Subject Companies (as of March 31, 2014)
(1) Company Name Sumitomo (S.H.I.) Construction Machinery Co., Ltd. CNH Industrial N.V.
(2) Business Description Manufacturing, sales and after-sale servicing of construction machinery (hydraulic excavators, road machinery, etc.) Manufacturing, sale and after-sale servicing of agricultural and construction equipment, commercial vehicles, engines
(3) Date of Establishment October 1986 September 2013 (Merger between Fiat Industrial S.p.A. and CNH Global N.V.)
(4) Address 2-1-1 Osaki, Shinagawa-ku
Tokyo 141-6025
Japan
Cranes Farm Road
Basildon, Essex SS14 3AD
United Kingdom
(5) Representative Mikio Ide
President and CEO
Richard Tobin
CEO and Brand President of Case and New Holland Construction
(6) End of Fiscal Year March 31 December 31
(7) Major Shareholder(s) Sumitomo Heavy Industries, Ltd. - 100% Exor S.p.A - 27.2%
(8) Sales JPY117.4 billion (Sumitomo Construction Machinery Group as at the end of FY2012) 25,778 milliom Euro(FY2013)
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