28.07.2015

Profit slip at Kobelco Cranes

Kobe Steel has issued its first quarter results, showing a decline in profits at its Kobelco Cranes business on higher revenues.

Unit shipments of cranes are said to have been similar to last year’s levels, although revenues increased 6.7 percent to ¥18.1 billion ($145.6 million) thanks to strong demand in Japan, North America and parts of Asia. Pre-tax profit for the period fell 41.6 percent to ¥1 billion ($8 million), due to higher promotion costs.

As a result the company has tweaked its half year and full year forecasts, reducing first half profits from ¥2 to ¥1.5 billion, while maintaining its original revenue forecast. However for the full year it has reduced revenues from ¥81 to ¥80 billion ($647 million) while maintaining its original profit forecast at ¥5 billion ($40.5 million).

Kobe Steel as a whole saw revenues rise by 3.4 percent to ¥460 billion ($3.7 billion) while pre-tax profits edged up one percent to ¥21.8 billion ($176.4 million).

Vertikal Comment

An interesting set of numbers from Kobe, which seem to highlight the company’s plans to improve its marketing and distribution, investing in markets such as Germany, which it has shied away from in the past. Kobelco seems determined now to invest in longer term marketing and sales strategies.

The results also show that the Kobelco excavator business had a much tougher time in the first quarter, with revenues dropping over 13 percent, while profits plummeted more than 80 percent. This would seem to highlight the benefits of re-merging the cranes and excavator companies in order to benefit from differing cycles while sharing costs.