Japan’s Yamashin-Filter Aims to Double Sales to Caterpillar

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Yamashin-Filter Corp. plans in three years to more than double sales to Caterpillar Inc. and is eager to accelerate expansion by gaining access to a manufacturing base through a takeover or alliance.

Caterpillar, the world’s biggest maker of mining and construction equipment, is the Japanese manufacturer’s largest customer after Tokyo-based Komatsu Ltd., making up for 25 percent of Yamashin’s sales.

“It makes sense to get our sales from Caterpillar to twice the size of our revenue from Komatsu” given the scale of their operations, Yamashin President Atsuhiko Yamazaki said. “Targeting Caterpillar is one way for us to expand.”

Yamashin’s shares in Tokyo rose as much as 10 yen, or 0.9 percent, as of 10:49 a.m., the biggest one-day gain since June 8. The Nikkei 225 Stock Average fell as much as 0.9 percent.

The filter maker, which sold shares to the public for the first time in October, derives 30 percent of its sales from Komatsu, which trails only Peoria, Illinois-based Caterpillar in the construction equipment market. Yamashin’s filters are used in Caterpillar’s excavators and parts used in power generators and ship engines.

Yamashin’s hydraulic filters have yet to be used in bulldozers and dump trucks built by the U.S. equipment manufacturer, Yamazaki said last week in an interview at the company’s Yokohama headquarters.

To develop a closer relationship with Caterpillar, Yamashin is considering buying or allying with a partner to begin production at an existing U.S. plant within three years, Yamazaki said. The move would add a second manufacturing base outside Japan for the company, which already has a plant in the Philippines.

In China, the biggest market for construction equipment, Yamashin is focusing on the market for after-sales services, Yamazaki said. Slower growth in Asia’s biggest economy has cooled demand for new vehicles, he added.

By tapping other manufacturing industries, the vision is to expand Yamashin 10-fold in 10 years with annual sales of 100 billion yen ($810 million), Yamazaki said.

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