03.08.2016

Sales and profits slide at Tadano

Japanese crane maker Tadano has issued a first quarter earnings and revenue statement showing lower revenues and falling profits.

Total revenues for the first three months of its fiscal year - to the end of June - were 7.1 percent lower at ¥41.99 billion ($414 million) while operating profits plunged 15.2 percent to ¥5.79 billion ($57 million) translating to a net profit of ¥4 billion ($39.4 million).

The company blamed lower revenues on a standstill in the Japanese economy, with utilisation rates for cranes beginning to show patches of inconsistency and variation by region in spite of firm overall demand trends due to earthquake recovery and reconstruction, disaster preparedness and efforts to address an aging infrastructure. As a result Japanese sales dropped five percent to ¥19.8 billion ($195.3 million)

It also reported “stagnating exports” due to the appreciating yen and slowing growth in emerging markets. However demand increased in Europe but was offset by a fall in North America, Southeast Asia, and the Middle East. Overall export sales were 8.8 percent lower at ¥22.2 billion ($218.7 million). Sales of aerial work platforms improved, but this was offset by lower mobile and loader crane sales.

The company is now forecasting revenues for the full year will be 9.3 percent lower at ¥190 billion ($1.87 billion) with net profits down 31.2 percent to ¥13.5 billion ($133.1 million).

Vertikal Comment

It was inevitable that Tadano would eventually start to see some of the pain already experienced by the US-based crane manufacturers, given its market leading position in the US Rough Terrain market, which has been hit by the lower oil price. It is also strong in Australia and New Zealand which have also seen some crane market weakness. Some of the damage is also due to the stronger Yen, given that the weak yen had been helping the company in the past year or so.

In spite of this Tadano is in a good position and has a secure long-term strategy, thanks to family control and the Japanese way - which the publicly owned Manitowoc and Terex simply cannot replicate. The way the mobile crane market is going it looks as if the two closely held manufacturers - Liebherr and Tadano - will continue to increase market share at the expense of others. While both companies are first class in every way the market does need the three or four big players for a number of reasons from product choice, to pricing and pressure for constant technical development.

So in summary while this will not be a fantastic year for Tadano, it is almost certain to come out of the current period of slower growth better than when it went in.