November 11, 2004
Kobelco Construction Machinery's Half-Year Financial Results for Fiscal 2004 (April 1, 2004 - September 30, 2004)
Kobelco Construction Machinery Co., Ltd. announces its financial
results for the first half of fiscal 2004, ended September
General Market Conditions
The domestic construction machinery market was strong in the
first-half period. Although public works projects declined,
sales of new machines rose as exports of used equipment reduced
the number of machines in Japan. Replacement sales and tougher
emission regulations also contributed to firm demand for new
machines. North America, Europe and Southeast Asia were on
an upward path, and demand was also strong in the Middle East
and Russia. Financial measures implemented by the Chinese
government dampened the booming economy, which had been escalating
sharply in recent years. While this slowed demand for construction
machinery considerably in China in the April-June quarter,
world demand continued to expand.
Under a new formation in April 2004, the Kobelco Construction
Machinery Group focused on increasing sales volume to meet
rising world demand for construction equipment and further
solidify its business foundation. Higher sales volume in Japan,
Southeast Asia and North America and increased sales in the
January-March quarter from China contributed considerably
to higher profits. In addition, Kobelco reduced factors that
affected profits by keeping down rising material costs and
swiftly decreasing production to meet changes in the Chinese
Kobelco's consolidated sales dipped 0.8% to 92.5 billion
yen in the first half of fiscal 2004, but operating income
rose 16.5% to 4 billion yen, pretax ordinary income increased
44.5% to 4.1 billion yen, and net income shot up 71.7% to
2.3 billion yen, in comparison to the same period last year.
Domestic consolidated sales reached 44.9 billion yen, down
6.8% year on year. Overseas sales were 47.6 billion yen, up
5.6% over the same period last year.
Consolidated Financial Results in First-Half FY2004
(* Ordinary income, also known as pretax
recurring profit, is pretax income before extraordinary gains
|(in millions of yen)
||FY2004 First Half
||FY2003 First Half
|Ordinary income *
First-Half FY2004 : Review by geographical area
With demand for new machines growing in Japan, the number
of hydraulic excavators and mini excavators sold steadily
rose. In May, a full model change of the Beetle series of
mini excavators was well received by users. Both sales volume
and market share went up.
Sales of environmental and recycling machines continued to
be strong. Examples include car dismantling machines and building
demolition machines built on excavator base machines.
To increase the profitability of its stock business, Kobelco
moved its Resale Center from Amagasaki to Kobe in May. It
also opened two training centers in Kumamoto and Amagasaki.
Overseas (excluding China)
Based on its global alliance with CNH, Kobelco worked to strengthen
the Asia-Pacific region and its ventures with CNH that cover
North America and Europe.
With a sharp increase in demand in Indonesia, Kobelco actively
expanded the sales volume of new machines and market share.
In Vietnam, Kobelco opened subsidiary Kobelco Construction
Machinery Vietnam Co., Ltd. near Ho Chi Minh City in July
to handle new and used construction machinery. In Australia,
the sales volume of hydraulic excavators and mini excavators
also increased steadily. For the North American and European
markets, product menus and sales volume increased through
the joint ventures with CNH.
Macro-economic controls by the Chinese government led to a
decrease in investments and construction. Kobelco aggressively
decreased production in China and reduced imports from Japan
to maintain appropriate inventory levels from the April-June
Construction of Kobelco's second excavator factory, which
started earlier this year at joint venture Hangzhou Kobelco
Construction Machinery Co., Ltd., is progressing smoothly.
To further meet customer needs, Kobelco will expand its service
centers. In January 2005, a remote monitoring system using
global positioning will be included as standard equipment
on new excavators in China.
Outlook for Fiscal 2004
World demand for construction machinery is forecast to continue
being strong in the second half of fiscal 2004. However, China's
economic measures are anticipated to continue and higher material
costs, mainly for steel, are factors that need close attention.
Kobelco will continue to improve its procurement capabilities
and further reduce costs, as well as increase prices to offset
higher material costs. It intends to expand sales of the new
Beetle mini excavator series and launch it overseas. For the
domestic market, Kobelco will develop specialized machines
for the environmental and recycling fields and strengthen
its marketing network. Kobelco plans to further improve its
risk management and overall management capabilities in production
and marketing with its Chinese joint venture partners.
Full-Year Forecast for FY2004
(Note: Fiscal 2003 figures include the
24.8-billion-yen crane business.)
|(in millions of yen)
|Ordinary income *