Higher US & Asian demand help Kobelco return to profit

Parent company Kobe Steel’s financial results for fiscal 2011, ending March 2012, showed that Kobelco Cranes achieved a pre-tax recurring profit of JP¥161m, an increase of over JP¥1.5bn from the JP¥1.36bn loss made during fiscal 2010.

Crane sales rose 17.2% from JP¥40.97bn in fiscal 2010, to JP¥48.01bn in fiscal 2011. Despite a JP¥1.5bn decrease from Q3 2011, Q4 2011 sales improved by 28.9% year-on-year, a JP¥3bn increase from JP¥10.4bn in Q4 2010.

Kobelco credited a large proportion of the performance increase to its overseas activities, and has made clear that it is reinvesting in this strategy with its two new factories in Chennai, India and Chengdu, China.

“Unit sales of cranes in fiscal 2011 increased year on year,” Kobelco said. “In addition to higher demand in overseas markets, mainly North America and Southeast Asia, domestic demand also increased owing to restoration work following the Great East Japan Earthquake.

“To solidify its position as one of the world’s leading crane companies, Kobelco Cranes Co., Ltd. has established manufacturing bases in India and China, which has over a 50% share of the world market for cranes.

“In fiscal 2011, Kobelco Cranes India Pvt. Ltd. began operations at its new plant in India. Chengdu Kobelco Cranes Co., Ltd. in China has begun production ahead of schedule. Kobelco Cranes plans to fully meet demand in the coming years.”

Considering its total business interests, parent company Kobe Steel said it was unable to provide a reliable forecast for 2012. It attributed this to the difficulty in forecasting iron and steel raw material prices, incomplete pricing negotiations for its steel product customers and general global economic uncertainty.

Despite accruing higher sales and profits in fiscal 2011 than forecast, due to greater than foreseen cost reductions, Kobe Steel made a net loss of JP¥14.25bn. However, this was nearly JP¥6bn less than initially projected.