IHI : CONSOLIDATED FINANCIAL REPORT FOR THE THREE MONTHS ENDED JUNE 30, 2017＜Japanese GAAP＞

Toyosu IHI Bldg. 1-1, Toyosu 3-chome, Koto-ku Tokyo 135-8710, Japan

IHI Corporation (IHI) is listed on the First Section of the Tokyo Stock Exchange, Nagoya Stock Exchange, Sapporo Securities Exchange and Fukuoka Stock Exchange with the securities code number 7013.

Representative: President and Chief Executive Officer, Tsugio Mitsuoka For further information contact: Director and Executive Officer, Takeshi Yamada,

Finance & Accounting Division Tel: +81-3-6204-7065

URL:http://www.ihi.co.jp

Submission of Quarterly Securities Report: August 10, 2017 (planned) Preparing supplementary material on quarterly financial results: Yes

Holding quarterly financial results presentation meeting: Yes (for institutional investors, analysts and the media)

This consolidated financial report has been prepared in accordance with Japanese accounting standards and Japanese law. Figures are in Japanese yen rounded to the nearest millions.

1. Consolidated Business Results

   (Millions of yen, except per share figures; percentages show the rate of increase or decrease from the previous corresponding period)

   Net Sales	Percentage Change	Operating Profit	Percentage Change	Ordinary Profit	Percentage Change
   Three months ended June 30, 2017	402,405	17.9%	25,463	139.2%	21,831	375.9%
   Three months ended June 30, 2016	341,403	0.2%	10,645	-	4,587	-

   Profit Attributable to Owners of Parent	Percentage Change	Basic Earnings per Share (Yen)	Diluted Earnings per Share (Yen)
   Three months ended June 30, 2017	11,718	-	7.59	7.58
   Three months ended June 30, 2016	846	-	0.55	0.55

   (Note)	Comprehensive income Three months ended June 30, 2017:	¥14,564 million -%
   Three months ended June 30, 2016:	¥(10,168) million -%

2. Consolidated Financial Position

(Millions of yen)

(Reference) Equity at the end of the period (consolidated) June 30, 2017: ¥331,159 million

March 31, 2017: ¥318,163 million

(Yen)

(Note) Revisions to the dividend forecasts most recently announced: No

IHI plans to conduct a consolidation of common shares on a 10 for 1 basis (ratio of 1 new share for every 10 old shares) with an effective date of October 1, 2017. Consequently, the impact of this consolidation of shares is factored into the forecast for year-end dividends per share for the fiscal year ending March 31, 2018, and a dash is presented for the annual dividends per share. The forecast for the year-end dividends per share for the fiscal year ending March 31, 2018 without the consolidation of shares factored in would be ¥3.00, and the annual dividends per share would be ¥6.00. For details, please see "Proper use of forecast of results, and other special matters" below.

3. CONSOLIDATED FORECASTS OF RESULTS FOR THE YEAR ENDING MARCH 31, 2018

(Note) Revisions to the forecasts of results most recently announced: No

IHI plans to conduct a consolidation of common shares on a 10 for 1 basis (ratio of 1 new share for every 10 old shares) with an effective date of October 1, 2017. Consequently, the impact of this consolidation of shares is factored into the full-year consolidated forecasts for basic earnings per share for the fiscal year ending March 31, 2018. For details, please see "Proper use of forecast of results, and other special matters" below.

1. Changes in significant subsidiaries during the three months under review (Changes in specified subsidiaries accompanying changes in scope of consolidation): Not applicable
2. Application of special accounting for preparing quarterly consolidated financial statements: Yes

   (Note) For details, please refer to "(2) APPLICATION OF SPECIAL ACCOUNTING FOR PREPARING QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS" of "2. MATTERS REGARDING SUMMARY INFORMATION

   (NOTES)" on page 6.

3. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements after error corrections

4. Changes in accounting policies due to revisions to accounting standards: Not applicable

5. Changes in accounting policies due to other reasons: Yes

6. Changes in accounting estimates: Yes

7. Restatement of prior period financial statements after error corrections: Not applicable

   (Note) From the first quarter under review, IHI and some of its consolidated subsidiaries in Japan have changed the depreciation method and residual value for property, plant and equipment. These changes of the depreciation method correspond to changes in accounting policies which are difficult to distinguish from changes in accounting estimates. For details, please refer to "(3) CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES, AND RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS AFTER ERROR CORRECTIONS" of "2. MATTERS REGARDING SUMMARY INFORMATION (NOTES)" on page 6.

8. Number of shares issued (Common stock):

9. Number of shares issued at the end of the period (including treasury shares) As of June 30, 2017 1,546,799,542 shares

   As of March 31, 2017 1,546,799,542 shares

10. Number of treasury shares owned at the end of the period

    As of June 30, 2017 2,545,182 shares

    As of March 31, 2017 2,562,679 shares

11. Average number of shares outstanding during the period (cumulative quarterly period) Three months ended June 30, 2017 1,544,245,955 shares

12. Three months ended June 30, 2016 1,544,071,403 shares

    • Quarterly financial reports are not required to be subjected to quarterly reviews.

    • Proper use of forecast of results, and other special matters

    Earnings estimates made in this report and other statements that are not historical facts are forward-looking statements about the future performance of the IHI Group. These statements are based on management's assumptions and beliefs in light of the information currently available to it and therefore readers should not place undue reliance on them. IHI cautions that a number of important factors such as political and general economic conditions and currency exchange rates could cause actual results to differ materially from those discussed in the forward-looking statements, etc. For preconditions for forecast of results, please refer to "(3) EXPLANATION REGARDING FUTURE PREDICTION INFORMATION SUCH AS CONSOLIDATED FORECASTS OF RESULTS" of "1.

    QUALITATIVE INFORMATION REGARDING CONSOLIDATED RESULTS" on page 5.

    (Dividends forecast and consolidated forecasts following the consolidation of shares)

    IHI obtained approval at the 200th Ordinary General Meeting of Shareholders held on June 23, 2017 to conduct a consolidation of shares with the effective date of October 1, 2017, and it plans to conduct a consolidation of shares on a 10 for 1 basis (ratio of 1 new share for every 10 old shares). Dividend forecasts and consolidated forecasts for the fiscal year ending March 31, 2018 calculated without factoring in the consolidation of shares are as follows:

13. Dividend forecasts for fiscal year ending March 31, 2018

    Dividends per share Record date of end of 2nd quarter: ¥3.00 Record date of year-end: ¥3.00 Annual: ¥6.00

14. Consolidated forecasts for fiscal year ending March 31, 2018 Basic earnings per share Full-year: ¥14.89

15. 1. QUALITATIVE INFORMATION REGARDING CONSOLIDATED RESULTS

    (1) EXPLANATION REGARDING BUSINESS RESULTS

    Summary of consolidated performance for the three months ended June 30, 2017

    During the three months under review, the Japanese economy was on a modest recovery track, as there were pick-ups in both capital investment and private consumption, among other factors. The global economy also continued to grow overall, particularly in the U.S. and Europe, despite rising uncertainties from the trend of U.S. policies and geopolitical risks such as those in East Asia.

    Under this business environment, orders received of the IHI Group during the three months increased 12.2% from the previous corresponding period to ¥290.3 billion. Net sales increased 17.9% from the previous corresponding period to ¥402.4 billion. In terms of profit, operating profit increased ¥14.8 billion to ¥25.4 billion due mainly to the increase in sales of each reportable segment and solving of the issue of the deterioration of profitability related to F-LNG Business in the previous corresponding period. Ordinary profit increased ¥17.2 billion to ¥21.8 billion due to the positive turn in foreign exchange gains/losses and other factors, despite the recording of expenses for delayed delivery.

    Profit attributable to owners of parent was ¥11.7 billion, an increase of ¥10.8 billion, as a result of the reduced increase in the profit caused by the impact of recording the settlement-related expenses related to boiler facilities in customer's commercial operation as extraordinary loss.

    This extraordinary loss was related to a lawsuit filed against IHI and consolidated subsidiaries in 2015, regarding liabilities for accidents involving damage to boiler facilities that IHI manufactured and delivered to Malaysia in the past and that were in customer's commercial operation. IHI determined that the path of reaching an early resolution and reducing legal risks was in IHI's best interest. This case is now expected to be settled by agreeing to bear a portion of the amount incurred by the accident. As a result, IHI recorded the expected settlement package and lawyer fees, etc. of ¥2,932 million as extraordinary losses.

    Also effective from the fiscal year under review, the closing date of the fiscal year of certain overseas consolidated subsidiaries has been changed from December 31 to March 31. As a result, those consolidated subsidiaries have a six-month accounting period. The impact of these changes was an increase of ¥57.9 billion in net sales and an increase of ¥1.4 billion in operating profit (an increase of ¥25.2 billion in net sales and an increase of ¥2.7 billion in operating profit in previous fiscal year).

    Results by reportable segment for the three months ended June 30, 2017 are as follows:

    (Billions of yen)

    Orders received		Change from the previous corresponding period (%)
    Change from the previous corre- sponding period (%)	Three months ended June 30, 2016			Three months ended June 30, 2017
    	Three months ended June 30, 2016	Three months ended June 30, 2017
    			Reportable segment
    			Sales	Operating profit (loss)	Sales	Operating profit (loss)	Sales	Operating profit (loss)
    Resources, Energy and Environment	86.7	73.5	(15.2)	96.3	(2.3)	135.8	(0.7)	41.1	-
    Social Infrastructure and Offshore Facility	27.0	32.7	21.0	33.8	(6.5)	29.9	3.3	(11.6)	-
    Industrial System and General- Purpose Machinery	109.4	130.6	19.3	101.5	3.2	121.1	4.4	19.3	38.2
    Aero Engine, Space and Defense	32.8	46.9	43.1	103.7	16.9	111.7	18.6	7.7	10.4
    Total Reportable Segment	256.1	283.8	10.8	335.4	11.2	398.6	25.6	18.8	128.8
    Others	14.4	18.4	27.7	14.6	(0.3)	12.9	(0.4)	(12.1)	-
    Adjustment	(11.6)	(12.0)	-	(8.7)	(0.1)	(9.1)	0.2	-	-
    Total	258.8	290.3	12.2	341.4	10.6	402.4	25.4	17.9	139.2