Chinese market hits Kobelco sales and profits

Kobelco’s sales of construction equipment fell -11.8% in the fiscal year ended March 31 to JPY 313 billion (US$ 3.33 billion). Its crane sales were down -5.2% to JPY 45.5 billion (US$ 484 million), while the value of excavators sold by its Kobelco Construction Machinery division dropped -12.8% to JPY 269 (US$ 2.85 billion).

Kobelco’s excavator business saw ordinary profits drop from JPY 22.9 billion (US$ 243 million) last fiscal year to JPY 6.9 billion (US$ 73 million) this year. Meanwhile last year’s JPY 161 million (US$1.7 million) turned to a JPY 2.25 billion (US$ 24 million) loss in the most recent 12 months.

Commenting on its excavator business, Kobelco said in a statement, “Domestic demand was strong owing to reconstruction work from the Great East Japan Earthquake and demand increased in Southeast Asia. However, unit sales fell considerably in China. Although the Chinese government implemented economic stimulus measures, amid slow economic growth, demand did not recover.”

As far as crane sales were concerned, the company noted higher demand in Japan – again linked to earthquake reconstruction work – along with a recovery in North America and Southeast Asia. However, it said revenues fell due to changes in the type of crane sold.

Looking ahead, Kobelco said it expected excavator sales to pick up over the next fiscal year, with a gradual recovery expected in China. It also highlighted that now it has dissolved its joint venture with CNH, it stands to benefit from increased demand in the US.

Similarly, the company expects a general improvement in revenues from crane sales over the next 12 months due to a broad market recovery.