Komatsu Ltd. (6301), the world’s second- largest construction machinery maker, said Japan’s bid to rebuild the nation from its worst postwar disaster is spurring demand at home amid slumping sales in China, its biggest market.
Japanese orders increased more than 30 percent in April- June from a year earlier, Chief Executive Officer Kunio Noji said in an interview at the company’s Tokyo headquarters. Sales in China, which declined about 40 percent in the past two months, may not revive until the Lunar New Year in January, the beginning of the nation’s peak demand season, he said.
Sales of excavators and wheel loaders are likely to grow in the next three to five years as Japan spends an estimated 16.9 trillion yen ($209 billion) to reconstruct bridges, roads and buildings destroyed by the March 11 earthquake and tsunami. Orders in China, which overtook Japan as Komatsu’s largest market in 2009, slowed as the government tightened credit to cool the economy.
“There’ll be much rebuilding work, given the damage is more extensive than the Kobe earthquake,” Noji said in the June 30 interview, referring to the 1995 quake that affected a smaller area and didn’t induce a tsunami.
Komatsu gained 2.1 percent to 2,541 yen as of the 3 p.m. close in Tokyo. The shares have climbed 3.4 percent this year, compared with a 2.6 percent decline in the Nikkei 225 Stock Average index.
Rivals in China
Komatsu’s Japan sales are forecast to increase 1.4 percent to 255 billion yen this fiscal year, the company said on April 27, without accounting for post-earthquake demand. Chinese sales may reach 380 billion yen, Komatsu said at the time.
The Chinese government’s measures to tighten credit and the delay in approving some public works projects slowed demand for construction machinery, Nomura Securities Co. said in a May 27 report. Komatsu’s excavator sales in China fell 42 percent in May from the same month a year earlier after an 8 percent gain in April, Nomura said in a June 2 report.
Komatsu aims to defend its lead over local rivals in China, including Sany Heavy Industry Co., by offering customers value- added products such as hybrid machines that consume less fuel than conventional ones and come equipped with global-positioning systems, Noji said. Sany Heavy’s excavators are priced about 25 percent lower than Komatsu’s, he said.
About 5,000 of Komatsu’s heavy machines are being used in the three prefectures hit most by the quake, about a third more than the number before the disaster, according to the data collected by the GPS systems fitted in the machines, Komatsu said today in an e-mail.
Source:Bloomberg