By Masumi Suga and Takako Iwatani
May 31 (Bloomberg) -- Komatsu Ltd., the world’s second- largest maker of excavators, expects North American sales to expand about 30 percent in the fiscal second half as U.S. housing investment recovers, President Kunio Noji said.
There are “many positive signs” in the region, Noji said in a May 28 interview at the company’s Tokyo headquarters. “Previously, when housing demand recovered, machinery sales typically grew at a pace of 30 to 50 percent.”
Komatsu seeks to benefit from a construction rebound in the U.S. as housing prices recover from the mortgage-related collapse of Lehman Brothers Holding Inc. Since the financial crisis, China has become Komatsu’s largest market, with sales surging almost fourfold to 19 percent of total revenue in the past fiscal year, compared with 5.3 percent as of March 2006.
U.S. “consumer spending has recovered near the level before the Lehman shock,” Noji, 63, said. North America was Komatsu’s largest market until 2007.
China now accounts for half of global excavator sales, up from 27 percent in the year ended March 2009, according to rival Tokyo-based Hitachi Construction Machinery Co. China’s investment in roads, railways and buildings has driven demand for heavy machines, especially in the nation’s interior regions, Noji said. Komatsu’s excavator sales in China may almost double this quarter from a year earlier, he said.
Komatsu forecast in April profit will almost triple in the fiscal year ending March 31, 2011, to 90 billion yen ($985 million). The forecast is still less than half the 2007 peak of 209 billion yen. The company swung back to profitability in the last quarter of the year ended in March.
Komatsu shares have fallen 12 percent this year, compared with a 7.6 percent decline in the Nikkei 225 Stock Average. The stock fell 0.8 percent to 1,701 yen at the 11 a.m. break on the Tokyo Stock Exchange today.
‘Positive Signs’
Construction machinery sales in North America rose 4 percent in April from a year earlier, the first increase in three and half years, according to an April 24 report released by Nomura Securities Co. The gain reflected demand for equipment used to mine coal, while demand for machines for home buildings remained at “low levels.”
Caterpillar Inc., the world’s largest maker of bulldozers and excavators, said last month the U.S. economy may expand 3.5 percent, while developing countries may grow more than 6 percent in 2010.
California house prices rose 21 percent in April from a year earlier as distressed properties made up a smaller share of inventory on the market, the state Realtors group said May 24.
Hybrid Excavators
Komatsu, aiming to lead the industry in hybrid technology, may sell as many as 500 hybrid excavators in China this quarter, Noji said. The company set a target of 2,000 units in China and another 1,000 units elsewhere by March 2011.
The company will start selling hybrid excavators globally this year, adding North America, Europe, and several emerging Asian nations to its markets, Noji said.
A new model will be released this fiscal year, and will be priced lower than existing models, the CEO said, without elaborating. Komatsu introduced what it calls the world’s first hybrid excavator in 2008 for the Japanese market. The excavator is designed to consume 25 percent less fuel than standard models.
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