Komatsu plans to double output on demand from Asia
Komatsu Ltd., the world's second- largest construction-equipment maker, plans to double production this financial year to meet demand from China and Indonesia.
Locally, Komatsu has operations in Rolling Meadows and Oak Brook.
About 85,000 building and mining machines will probably be manufactured in the year ending March 31, compared with 44,000 a year earlier, Executive Officer Masahiro Uegaki said in an interview at the company's Tokyo headquarters. That's 60 percent higher than its outlook released in April.
Komatsu, which raised its first-half profit forecast 41 percent this month, is relying on growth in Asia and the U.S. to combat Caterpillar Inc., its larger rival. China, Komatsu's largest market, yesterday reported the fastest drop in industrial-production growth since 2008.
"Komatsu faces the risk of a further slowdown in the Chinese economy, which would lead to a drop in its stock price," said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo. Komatsu will likely benefit from long- term expected growth in China, its largest market, he said.
Shares of Komatsu, which declined 11 percent this year, fell 2 percent to 1,731 yen at the close of trading in Tokyo. Caterpillar, the world's largest construction-machinery maker, dropped 0.3 percent yesterday to $66.51 in New York, paring its gain for the year to 17 percent.
Komatsu set up a buying department in China in April, sending more than 20 executives and managers from Japan to fend off competition from Caterpillar, Japan's Hitachi Construction Machinery Co. and China's Sany Heavy Industry Co. Komatsu is the largest overseas supplier of excavators, wheel loaders and other heavy machines to China.
Easing ExpansionChina's economic expansion eased to 10.3 percent in the second quarter. June industrial production growth was 13.7 percent, down from 16.5 percent in May. Analysts had expected growth of 15.1 percent. The nation remains the fastest growing large economy."China's strength is outstanding," Uegaki said yesterday before the China growth figures were released. "Indonesia is also strong, the markets for the country's mining, agriculture, forestry and construction sectors are all good."The company raised its estimate for global steel buying for this fiscal year to about 99,000 metric tons a month from 57,000 tons, Uegaki said. About 48,000 tons of steel will be consumed in Japan every month, he said.Local PurchasesKomatsu buys steel from local suppliers for use in the exterior and arms of excavators sold in China, Uegaki said. Japanese steel is used in high-pressure tubes and in large mining dump trucks sold worldwide, he said.Komatsu's suppliers include Nippon Steel Corp. and JFE Holdings Inc., Japan's two largest steelmakers, and Baosteel Group Corp., China's second-largest mill.Net income at Komatsu may climb to 52 billion yen ($594 million) in the six months to Sept. 30, compared with its April estimate of 37 billion yen, the company said July 13. Komatsu earned 8.2 billion yen a year earlier. Sales may reach 870 billion yen, beating its forecast by about 7 percent.China surpassed Japan as Komatsu's largest market last fiscal year, accounting for 19 percent of its sales, as the country's investment in roads, railway and buildings drove demand for construction, especially in the hinterland.Indonesia's economy may have expanded more than 5.7 percent in the second quarter bolstered by growth in investment and exports, Diffi A. Johansyah, a spokesman at the nation's central bank told reporters in Jakarta July 2.