28.04.2016

Profits halved at Kobelco Cranes

Kobe Steel has reported is full year numbers which include the last accounts for Koebelco Cranes which has now been merged with the Construction equipment division.

Total revenues for the year were up 2.4 percent on the year to ¥72.7 billion ($668.2 million) but most of this increase was due to intercompany sales, unit deliveries were slightly lower than in the previous year. Pre-tax profits for the year were more than halved to ¥2.4 billion ($22 million) compared to ¥5.2 billion ($47.8 million) last year. Sales in Japan remained solid, but were offset by slower sales in South East Asia.

In the fourth quarter revenues declined more than 10 percent to ¥17.3 billion ($159 million), with a loss of ¥300million ($2.8 million) compared to a profit in the same period the previous year of ¥600 million ($ 5.5 million) due to investments in improving quality and reliability of the product, according to Kobelco.

The company is forecasting that this year will see strong sales in Japan with further declines in South East Asia. These results come from the Kobe Steel consolidated report, further information and discussion is usually provided at a later date when the separate Kobelco Cranes results are distributed.

Vertikal Comment

We do not have a great deal of information yet on the crane results, but overall these numbers are not at all bad given the market, and in spite of the lower profits. The Kobelco product is one of the best on the market when it comes to reliability, but clearly the company has been investing in further developments, some of which might have included the substantial investment required to design and test its new 1,250 tonne crawler crane, which will clearly have an impact on its 2016/17 results.

While the re-merger with the construction equipment division looks to be a retrograde step, it does seem to be combined with a more open and positive approach to stepping up the company’s marketing and distribution efforts outside of its home region and selected locations of strength, which is long overdue. The company is in fact doing exceptionally well in some markets, such as the UK where it now has a strong market leading – almost dominant – position.
While its market share with Dutch International rental companies had appeared to slip, substantial orders from Mammoet will have gone some way towards redressing this for now. Talk of finally tackling the German market have gone a little quiet since its big announcement last year, but that might change now that the merger has completed?

Kobelco is likely to have a reasonable year in 2016, and has plenty of opportunities for expansion within Europe and the Middle East. Hopefully the company will continue to publish crane related results under the new structure so that we can monitor its progress.