Higher sales lower profits for Tadano

Tadano has published its third quarter results with higher sales revenues, but a sharp fall in profit.

Total revenues for the nine months to the end of December were ¥125.3 billion ($1.13 billion) up 4.4 percent on the same period last year. Pre-tax profits however dropped more than 36 percent to ¥6.8 billion ($61.7 million) due the company says to higher production and other costs, the negative effect of currency exchange and lower pricing.

The revenues were made up as follows:
Mobile crane sales were 14.4 percent higher at ¥74.4 billion ($674 million), thanks to a 5.7 percent lift in Japan to ¥ 24.4 billion ($220.8 million) and a 19.1 percent lift in export sales to ¥50 billion ($452.7 million).

Loader crane sales improved 3.2 percent to 14.9 billion ($134.9 million), while sales of Aerial work platforms slumped 26.8 percent to ¥12.6 billion ($114,1 million) and other sales – mostly parts, service and used cranes were roughly flat at ¥23.3 billion ($211 million).

Geographically total sales in Japan were ¥63.4 billion ($574 million), with export slightly lower at ¥61.8 billion ($559.6 million).
Export sales were made up as follows: Europe ¥15 billion ($136.1 million), an increase of 17.8 percent on last year’s low base caused by challenges in shipping new products.
North American sales jumped 30.1 percent to ¥19 billion ($172.3 million), while South American revenues were ¥802 million ($7.3 million), up 19 percent on last year. Asian deliveries improved 4.6 percent ¥9.6 billion ($86.6 million), but sales in the Middle East plummeted almost 45 percent to ¥4.1 billion ($37 million). Finally revenues from other markets, including Australia, improved 57.6 percent to ¥7.5 billion ($68.3 million).

The company is forecasting total revenues for the full year of ¥185 billion ($1.67 billion) an increase of 6.5 percent, with Japanese sales up 7.4 percent higher at ¥94.7 billion ($856.9 million) while export revenues are expected to improve 18.6 percent to ¥90.3 billion ($817.1 million).

Vertikal Comment

This is a positive set of numbers in terms of sales, with a sharp rebound in Europe after problems last year, and an even steeper rise in North America, where the overall market has bee strong and Tadano continues to outperform the market with both Rough Terran and All Terrain crane sales. The Middle East slump follows strong uplifts of the past year or two, which was probably overly dependent on a small customer base. The company expects the regional breakdown for the full year, in terms of risers and fallers to remain similar to the third quarter.

The major issue though, which we cannot fully analyse at this stage, is the steep slump in profitability. On the surface it looks like a perfect storm with several factors coming together at the same time, but this is not likely to change drastically in the fourth quarter but could improve in the new financial year as pricing and costs are better matched.