TOKYO: Komatsu Ltd, the world’s No. 2 supplier of construction equipment, said industry-wide demand from miners fell 13% in the last quarter, signalling that the rebound in commodities prices is yet to feed through into better sales of the giant trucks and excavators used in extracting minerals.
The Tokyo-based company, which also supplies builders and produces industrial machinery, reported lower earnings yesterday for the third quarter through December, with net income down a fifth on the year to 30.8 billion yen (US$271mil) and revenue slipping 10% to 430.6 billion yen, according to a statement.
“We stick to our earlier view that the timing of a recovery will come” in the next fiscal year or after, Yasuhiro Inagaki, senior executive officer, said on a conference call, referring to the mining equipment market.
Still, Komatsu is maintaining its full-year forecasts. Stripping out the impact of a stronger yen, which makes Japanese exports less competitive, overall sales were steady, the company said.
It cited growth in markets such as China and Indonesia as outweighing sluggish demand in North America and the Middle East.
For mining equipment, yen-based sales fell 4% in the quarter; excluding currency, they rose 7%, chief financial officer Mikio Fujitsuka said on the call.
Komatsu follows industry leader Caterpillar Inc and smaller Japanese rival Hitachi Construction Machinery Co in reporting lacklustre demand from the mining industry, which saw a rebound in raw materials prices in 2016.
The Bloomberg Commodities Index rose for the first time in six years as China’s growth stabilised and the US economy improved, lifting shares in Komatsu, which derives almost 80% of revenue from overseas, by more than a third over the year.
Larger miners remained cautious on spending and a recovery may not be felt until the second half of the new fiscal year, Hitachi Construction’s chief financial officer said on Monday after its earnings.
The third quarter was “surprisingly weak” and the company’s comments suggested hitting its full-year targets would be difficult, Credit Suisse Group AG said in a note. — Bloomberg
Limited time offer:
Just RM5 per month.
