OEM deal and rising demand see Kobelco flourish

Manitowoc is to add four smaller crawler cranes to its range in the next couple of months. All four are made in Japan by Kobelco, supplied under an OEM agreement signed in April 2004, and all are under 110t capacity.

Kobelco Cranes announced the extension of the agreement when it reported its first ever annual results as an independent division of Kobe Steel. Until 1 April 2004, the start of the last fiscal year, Kobelco Cranes was part of Kobelco Construction Machinery Co Ltd.

Kobelco Cranes’ consolidated net sales for the fiscal year ending 31 March 2005 were ¥34.8bn ($326m), up 40% from ¥24.8bn ($232m) the previous year. Domestic sales were ¥16.9bn and exports ¥17.9bn. Operating income of ¥876m ($8.2m) was impacted by the rise in the cost of steel, which was only partly offset by raising crane prices. Net profit was ¥420m ($3.9m).

In total, Kobelco Cranes sold 370 cranes in the year to 31 March 2005, up 32% from the 280 units sold in the previous year.

Kobelco attributed its first year success to improving international markets, with demand rising in Europe, the USA, Southeast Asia, the Middle East, India and China.

Sales to North America were boosted by the OEM agreement with Manitowoc, to whom Kobelco said it shipped “more than twice the number of units originally anticipated”.

In March 2005 the two companies signed a further agreement for Kobelco Cranes to provide crawler cranes to Manitowoc on an OEM basis in the European market.

Even the sluggish home market of Japan saw an increase in demand for crawler cranes for the first time in three years, Kobelco said. This was partly due to tightening regulations relating to engine emissions. The total Japanese crawler crane market rose 12% in fiscal 2004 (year to 31 March 2005) to more than 200 units.

The rough terrain market in Japan rose for the first time in four years, with demand rising 20% to 1,200 units. Kobelco Cranes launched a new 12t RT and a 16t RT last year, resulting in higher sales volume.

Kobelco said that is expected world demand to remain firm in fiscal 2005. “However, a cause of concern is the stronger downward pressure on profits due to the higher cost of steel and other materials,” the company added.

Kobelco is forecasting its net sales to rise 3.4% in fiscal 2005 and profits to nearly double through productivity improvements, reducing procurement costs and the collaboration with Manitowoc. It expects that Japan will comprise 30% of its sales in the current financial year, North America 25%, Europe 20%, and 25% in China and elsewhere.