Komatsu's Third-Quarter Profit Almost Unchanged as Sales Slideby
Nine-month profit drops 20% at mining equipment business
Residential construction helps lift North America sales
Komatsu Ltd., the word’s second-biggest maker of construction and mining equipment, said profit was almost unchanged in the third quarter as slowing economic growth in China and the collapse of commodity prices extended the slide in sales to mining companies and builders.
Net income was 38.6 billion yen ($320 million) for the three months ended Dec. 31, compared with 38.5 billion yen a year earlier, the Tokyo-based company said Friday in a regulatory statement. Sales fell 3.2 percent to 478 billion yen. Komatsu maintained its full-year profit forecast at 138 billion yen.
The current rout in energy and commodities is an ongoing threat to Komatsu and its peers. China’s slower growth has already depressed construction spending in the country and reduced its appetite to consume raw materials. Hitachi Construction Machinery Co. cut its full-year profit forecast by 27 percent on Thursday, the second revision in three months.
“Economic measures to underpin the economy, such as monetary easing, of the Chinese government fell short of bringing about clear outcomes from sluggish demand for construction equipment," Komatsu said.
Net income for the nine months ended Dec. 31 fell 11 percent to 103.7 billion yen, Komatsu reported.
China’s demand for excavators will remain stagnant this year after sales almost halved in 2015, Kobe Steel Ltd. President Hiroya Kawasaki said this month, adding that a recovery isn’t likely until 2017. The steelmaker owns a unit that makes construction equipment.
For Komatsu, nine-month sales at its construction, mining and utility equipment business fell 5.1 percent from a year earlier. Profit at the business dropped 20 percent to 136.9 billion yen for the period.
Nine-month sales of construction and mining equipment in China plunged almost 40 percent to 52.3 billion yen, while revenue slipped 5.8 percent in Japan, according to the company’s earnings statement.
North America sales at the unit saw a 31 percent gain, while Middle East sales also grew, posting a 9.6 percent advance.
“In North America, while demand for equipment remained slack in the mining and energy sector, it was steady in the U.S. residential construction and infrastructure development sectors, including highway construction,” the company said.
Caterpillar Inc., the world’s biggest producer of construction and mining equipment, earlier this week signaled that there’s no letup in the commodities collapse that begun more than four years ago, saying sales and earnings will drop further in 2016.
Peoria, Illinois-based Caterpillar reported on Wednesday that retail sales declined in all global regions last quarter as a demand slump in its energy-equipment business deepened.