07.11.2017

Further decline at Tadano

Japanese crane and aerial lift manufacturer Tadano has published its half year results showing a further decline in sales and profits.

Total revenue for the six months was nine percent lower at ¥82.9 billion ($725.9 million) due entirely to lower sales of mobile cranes, particularly in Japan and Europe. At the same time pre-tax profits fell 15.5 percent to ¥8.4 billion ($73.3 million).

Looking at the revenue detail, mobile crane sales fell 20.4 percent to ¥45.7 billion ($400 million) with Japanese sales dropping 19 percent to ¥22.3 billion ($196.3 million) and export sales falling 21.2 percent to ¥34.94 billion ($305.7 million). Of this European revenues dropped 36 percent to ¥7.7 billion ($67.3 million) while unit deliveries for the calendar year have almost halved compared to last year to 65 units. North American sales were three percent lower at ¥12.4 billion ($108.5 million) although calendar year unit shipments are marginally higher at 113 units. Shipments to South and Central America and the Caribbean were halved to ¥873 million ($7.6 million), while the Middle East was one of the few bright spots with sales jumping 24 percent to ¥6.1 billion ($53.3 million). Conversely Asia declined 27 percent to ¥5.7 billion ($49.8 million). Sales to other regions were flat at ¥2.65 billion ($23.2 million).

Moving on to six month sales for other products, equipment and services, loader crane shipments were 5.7 percent higher at ¥10.1 billion ($88.2 million), while aerial lift revenues increased 11.9 percent to ¥12.1 billion ($106 million), both of which are largely sold in the domestic market. ‘Other’ revenues - mostly parts, service and used equipment - was 13.9 percent higher at ¥15 billion ($131.3 million).

More positive second half

While first half sales have been poor, Tadano expects to catch up a little in the second half, and is now forecasting full year revenues to come in at ¥175 billion ($1.53 billion), just 2.6 percent lower than last year. This forecast is based on mobile crane sales ending the year 5.6 percent lower at ¥103.5 billion ($908.7 million), loader crane sales declining 4.2 percent to ¥18.8 billion ($164.5 million), and aerial lift sales slipping 2.2 percent to ¥22.7 billion ($194.3 million), partially compensated by a 10.2 percent increase in other revenues to ¥30 billion ($262.5 million). At the same time it is forecasting full year pre-tax profits 10.8 percent lower at ¥16.5 billion ($144.5 million).

Vertikal Comment

Tadano is clearly struggling in Europe with a substantial drop in unit shipments and revenues due to a slightly weaker market as well as a fall in market share. The company builds a first class product, but appears to be struggling with distribution, sales and marketing in the region, with only a few markets contributing a disproportionate percentage of its sales.
North America is a critical element in the company’s performance and while sales have fallen in the first half, it appears to be more down to product mix than anything else, and it is clearly confident that it will see a bounce back in the second half.

For the full year the company will be neck and neck with Manitowoc in terms of total revenues, but Tadano is clearly a good deal more profitable, and achieves similar revenues without a tower crane product line. However Tadano has almost $200 million in aerial lift revenues, making Manitowoc the larger crane company for 2017. Tadano has made some substantial changes to its European business which it will be hoping will start paying off by the time it hits 2018. However with both Manitowoc and Terex on the ascent and Liebherr not looking as though it will miss a beat it will not be easy. At least the company is starting any fight back with a sound product line and financial position.

Interesting times.