Kobelco crane sales fall in first nine months of FY2016
6 February 2017 by Sotiris KanarisKobe Steel, Kobelco’s parent company, has reported sales of ¥1.22trn ($10.86bn) in the nine months to 31 December 2016, down ¥136.3bn compared to the same period in 2016.
Operating income dropped by ¥60.8bn year-on-year, to an operating loss of ¥4.2bn.
Over the same period, the construction machinery segment—which includes the crane business—reported an 11.3% decrease in sales to ¥228.7bn yen and an ordinary loss of ¥32.7bn.
The company attributed the loss to the additional posting of an allowance for retained receivables in the China business, as well as a drop in units sold and the strong yen value.
Kobe Steel said unit sales of crawler cranes declined year-on-year in the first nine months of its fiscal year due to a decrease mainly in Southeast Asia.
Chinese business restructuring
In the Construction Machinery segment’s China business, Kobe Steel judged that the uncertainty of receivables collection is increasingly growing.
“Looking at the actual situation that collection would be difficult and prolonged, a repayment plan with a high degree of certainty was not achieved for existing retained receivables,” the company said.
As a result, for retained receivables, Kobe Steel posted a provision of allowance for doubtful accounts and a provision for loss on debt guarantees for loan guarantees.
In the third quarter of fiscal 2016, Kobe Steel posted provision of allowance for doubtful accounts amounting to ¥27.6bn and provision for loss of debt guarantees amounting to ¥3.4bn.
Kobe Steel had been holding discussions with its Chinese investment partners in response to business issues including credit management.
As differences of opinion concerning the production systems and marketing systems became apparent, Kobe Steel agreed to dissolve the joint ventures with the Chinese partners. Japanese investors including Kobe Steel will acquire the minority interests held by Chinese investors in the excavator businesses.
The minority interests in the wheel loader business held by Japanese investors will be entirely transferred to Chinese investors.
“In this way, Kobe Steel will be able to lead the rebuilding of the China business and achieve higher profitability in the Construction Machinery business under its medium-term plan,” the company said.
