Komatsu feeling bold
By Thomas Allen05 November 2018
Strong demand in North America and Asia have given Komatsu the confidence to raise its financial targets for the full year and revise its projected cash dividends upwards.
The company’s consolidated business results for the first half of Japan’s fiscal year, ended 30 September, showed a 13.7% rise in net sales, from JPY1,159 billion (€9 billion) in the first half of 2017 to JPY1,318 billion (€10.24 billion) in the first half of 2018.
Although demand for construction equipment declined in Japan, following the pre-buy demand in advance of new emissions regulations in September 2017, this was more than accounted for by growth in other global markets – primarily Norther America and Asia. As a result, sales of construction, mining and utility equipment increased by 12.8% on the first half of 2017, rising from JPY1,063 (€8.26 billion) billion to JPY1,200 billion (€9.32 billion).
Demand for construction and mining equipment is expected to remain strong – especially for mining equipment in North America – in the second six months of the fiscal year.
Komatsu’s operating income jumped by 80.2% to JPY200.3 billion (€1.56 billion), compared to the first six months of 2017. This was attributed to sales growth in many regions of the world and was also said to reflect the reduced temporary expenses associated with the acquisition of Komatsu Mining, which became a consolidated subsidiary in April 2017.
Profit for the company’s construction, mining and utility segment leapt up by 79.7%, from JPY102.3 billion (€794.48 million) in the first half of 2017 to JPY183.9 billion (€1.43 billion) in the same period this year.
In light of these positive developments, Komatsu has revised its projected business results and cash dividends for the full year.
The projection for net sales has been increased by 6.4%, from JPY2,503 billion (€19.44 billion) to JPY2,662 billion (€20.67 billion), while the forecast for operating income has been raised by 12.4%, from JPY339 billion (€2.63 billion) to JPY381 billion (€2.96 billion).
Net income before income taxes and equity in earnings of affiliated companies is also expected to be higher than previously forecast, with the projection pushed up by 13.1%, from JPY320 billion (€2.49 billion) to JPY362 billion (€2.81 billion).
As the Japanese yen is depreciating more than projected, Komatsu has reassessed its projected foreign exchange rates. Average exchange rates for the full year are estimated to be USD1=JPY107.4 and EUR1=JPY126.4, as opposed to the initial assumption of USD1= JPY100 and EUR1=JPY123.
With regard to projected cash dividends, Komatsu said it was building a sound financial position and flexible corporate strengths to increase its corporate value.
The company is planning to increase the interim cash dividend under its basic policy by JPY3 (€0.023) from the projection in April to JPY51 (€0.396) per share. Komatsu is also revising the projection for the year-end cash dividend, planning to increase it by JPY3 (€0.023) to JPY51 (€0.396). As a result, the company plans to pay annual cash dividends of JPY102 (€0.792) per share – an increase of JPY18 (€0.14) from the previous fiscal year.