03.11.2012

Tadano up 24%

Japanese crane manufacturer Tadano has reported a 24 percent rise in first half revenues and a doubling of net profit.

Total revenues for the six months to the end of September were ¥62.5 billion ($776 million) with a net profit of ¥2.19 billion ($27.2 million) – 93.6 percent up on the same period last year.

Over the past six months domestic demand related to earthquake recovery and restoration efforts continued to improve crane rental utilisation and replacement of older units, while overseas, demand picked up significantly in North America, Asia and Australia.

Domestic revenues rose 21 percent to ¥31.6 billion ($392.9 million) while overseas sales moved up 27 percent to ¥30.8 billion ($382.9 million), accounting for 49.3 percent of total revenues. Looking purely at the second quarter total revenues were well up on the first at ¥34.3 billion ($426.5 million) while net profits were ¥1.56 billion ($19.4 million).

The company is maintaining its full year forecasts at ¥132.6 billion ($1.65billion) with a net profit of ¥4.7 billion ($58.4 million).

Tadano also took the opportunity in its statement to make a public apology to shareholders regarding the fraud case at its North American subsidiary, the statement said: “Tadano wishes to extend its heartfelt apologies to shareholders, investors, and other parties for the inconvenience and concerns associated with significant losses sustained in the case of malfeasance by a former vice-president at Tadano America Corporation, a U.S. consolidated subsidiary, a case previously announced on June 9th, 2012. Approaching this case with the utmost gravity, we intend to make every effort to regain trust and to prevent the recurrence of such incidents through various countermeasures, including efforts to strengthen checks and balances based on reviews of control systems at overseas affiliates and enhanced monitoring of Tadano's overseas affiliates.”

“Of damages projected to be up to $9 million, the $3.13 million incurred through fiscal 2011 have already been booked as costs. The remaining $5.87 million is reflected in accounts receivable booked for the first quarter and in provisions for doubtful accounts booked after considering the amount projected to be recoverable.”

Vertikal Comment

This is a good set of numbers from Tadano, especially given the flat economy in Japan and the high value of the yen, but while the company continues to do very well in North America and Australia – as well as in its ‘home’ region- progress in Europe remains slow.

The company’s wholly owned German operation – Tadano Faun – makes some of the best All Terrain cranes in the business and could sell substantially more of them if production capacity was improved and its sales, marketing and distribution efforts were stepped up.

The company appears to take an ultra conservative approach on this side of the Atlantic, which has in the past held it back, at least in some areas. Hopefully the recent experience in North America will not result in greater conservatism in its European business, at a time when it really needs to be more outgoing.