03.02.2015

Profit spike at Kobelco Cranes

Kobe Steel, parent of Kobelco Cranes, has published its third quarter results, showing a sharp rise in profits within the crane business.

Total crane sales for the nine months to the end December were ¥51.7 billion ($440.6 million), an increase of 29.8 percent on the same period last year. Operating profit for the nine months leapt 75 percent to ¥4.5 billion ($38.3 million) with the rising trend continuing during the third and into the fourth quarter.

The company said: “The strong sales are due to higher shipments of crawler cranes in Japan due to continued strong demand from higher public investments and other factors. In overseas markets, sales increased in Asia, where demand continued to be strong, and in other regions.”

Kobelco Cranes expects the trend to continue and confirmed its full year forecasts of revenues of ¥71.6 billion ($610 million) - almost 27 percent higher than the previous year, while operating profits will be in the region of ¥5 billion ($42.6 million), 75 percent up on 2013/14.

Vertikal Comment

Kobelco is on a roll although a good deal of its success is driven by a strong domestic market which has some long term fragility. It is making progress in places like India where it has already produced over 100 crawler cranes at its new production facility, but also faces increasing competition from the emerging Chinese crane manufacturers whose crawler cranes are the best and most westernised product they build.

However Kobelco still has huge scope in markets such as the Americas and Europe, where its coverage is patchy. It does well in the USA and Benelux region, while sales are picking up significantly in the UK, but it falls behind the German crawler crane producers in a number of other countries in the region, in spite of a having a premium product with good product support. A good deal of this is down to distribution and marketing, rather than anything related to the product itself. Although the company is performing better overseas than most other Japanese crawler crane specialists.

All in all an excellent result.