Message from the President

I am pleased to have this opportunity to report on the activities of Kanamoto Co., Ltd. and the Kanamoto Group during the first half of the Business Period ending October 31, 2018 and discuss our policies for the future.

During the first half of Kanamoto's current fiscal year, Japan's economy showed positive employment and income trends and a gradual increase in capital expenditures against the backdrop of solid corporate earnings, and posted continuous, steady growth.

Nevertheless, when global trends are taken into consideration, including the worldwide economic uncertainty kindled by trade frictions originating in steps towards protectionism by the United States, the risk of a global recession is now conceivable as well. We therefore must pay sufficient attention to the impact on Japan's economy if such trends become more pronounced.

In the domestic construction industry that is the main customer for the Kanamoto Group's core business of construction equipment rentals, construction equipment rental demand remained brisk. In addition to public works, demand is being supported by the full-scale construction efforts now underway on large-scale private sector redevelopment projects, especially in the Tokyo metropolitan area, and by works related to the 2020 Tokyo Olympic and Paralympic Games. Large-scale transportation infrastructure construction and maintenance projects are moving forward as well, best exemplified by the Linear Chuo Shinkansen.

On the other hand, multiple issues such as the soaring cost of materials, chronic manpower shortages, and widening disparity between regions in volume of construction works have become more urgent, and strengthening our business structure to further improve our response capabilities will be critical for maintaining the Kanamoto Group's continuing growth phase.

Furthermore, "BULL55", the long-term vision we currently are executing, generally is progressing with results that exceed our initial projection, and we will continue to pursue our priority policy of ensuring the optimum quantities and models of rental equipment to meet both construction demand and customers’ needs, and resolutely maintain the construction equipment rental business fundamentals of always providing convenience for customers while seeking greater operating efficiency and further productivity improvements through the operation of new systems.

In the years ahead as well, we will move forward to achieve our long-term vision objective of being "an excellent and dynamic group that uses its solid earnings as a base to reward shareholders, customers and employees", and push to complete the final year of "BULL55" during the Business Period ending October 2019.

We look forward to continuing to receive the unwavering support of our shareholders
and investors and your encouragement for the Kanamoto Group in the future.

Tetsuo Kanamoto
President and Chief Executive Officer