Bloomberg News

Komatsu Cuts Full-Year Profit Outlook 17% as China Sales Slump

July 31, 2012

Komatsu Ltd. (6301), the world’s second- biggest maker of construction equipment, cut its annual profit forecast after first-quarter earnings dropped 42 percent on lower sales in China and a slowdown in Indonesia demand.

Net income will probably be 157 billion yen ($2 billion) for the 12 months ending March 31, compared with a forecast of 190 billion yen made in April and 167 billion yen a year earlier, the Tokyo-based company said today in a statement. The cut came after the company said profit fell to 32.1 billion yen in the three months to June from 55.7 billion yen a year ago.

Japan’s rebuilding from last year’s earthquake and tsunami and higher sales from North America failed to cover declining revenue from China, where slowing economic growth and government property market curbs are sapping demand. Caterpillar Inc., Komatsu’s larger U.S. rival, last week raised its full-year profit outlook as increasing demand from North American builders and overseas mining companies bucks an economic slowdown.

Hitachi Construction Machinery Co., Japan’s second-largest producer, on July 25 cut its operating profit forecast 7.7 percent for the year through March, citing delays in an expected recovery in China. The company boosted its full-year net income outlook by 14 percent to 40 billion yen.

Sany Heavy Industry Co. (600031), China’s biggest maker of excavators, has lowered its sales forecast for the equipment. Excavator sales may increase 10 percent this year, slower than a previous target of 40 percent, Vice Chairman Xiang Wenbo said in a July 11 interview.

Komatsu rose 1.6 percent to 1,758 yen before release of the quarterly result and outlook. The stock has declined 2.3 percent since the beginning of January compared with a 2.8 percent gain for the Nikkei 225 stock average and Caterpillar’s 5 percent drop.

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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