08.11.2019

Strong first half for Tadano

Tadano has reported its first half results to the end of September, with strong improvements in revenues and profits.
The results are the first to include Demag which joined the group at the start of August.

Total revenues for the six months were ¥100.3 billion ($917.3 million), up 22 percent on the same period last year. Pre-tax profits for the period were ¥7.74 billion ($70.8 million) almost 37 percent up on last year.

The revenues were made up of:
Mobile crane sales of ¥64.2 billion ($587 million) up 32.3 percent,
Loader cranes ¥11.3 billion ($103 million) up 17.3 percent,
Aerial lifts ¥9.51 billion ($86.9 million) just 3.3 percent higher
while other revenues – largely parts, services and used equipment – increased 2.6 percent to ¥15.3 billion (140.2 million).

Looking at sales of new Mobile cranes which made up 64 percent of revenues, sales in Japan were ¥25 billion ($192.4 million) an increase of 39.5 percent on last year, while export sales improved 28.2 percent to ¥39.2 billion ($358.6 million).

Geographically the sales were split as follows:
Europe ¥8.6 billion ($78.9 million) down 10 percent on the same period last year, while North American sales increased 40 percent to ¥21 billion ($192.4 million) due in part to comparison with a weak first half last year. South American sales more than doubled to ¥1.3 billion ($12 million), Asian sales improved nine percent to ¥6.7 billion ($61.5 million), the Middle East was 20 percent up at ¥3.1 billion ($28 million) while other regions came in 33 percent higher at ¥5.4 billion ($49.2 million).

The company is now forecasting full year sales, to the end of March 2020, to come in 21 percent higher at ¥228 billion $2.1 billion) made up of Tadano sales of ¥201 billion ($1.83 billion) and Demag revenues of ¥27.3 billion ($250 million). The company is however expecting pre-tax profits before ‘exceptionals’ to drop 35 percent to ¥10 billion ($91.4 million).

Overall it expects sales of mobile crane to be 30 percent higher than last year, with loader crane sales up 1.6 percent, and aerial work platforms to fall by almost eight percent, in spite of the first half improvement. Other revenues are forecast to rise 16 percent.

Looking at forecasts for mobile crane sales for the full 12 months, Japanese deliveries are expected to be 14 percent higher than last year, at ¥48.4 billion ($442.6 million) – almost exclusively made up of Tadano cranes, while exports are expected to increase 39 percent, to ¥104.7 billion ($958 million), including ¥82.85 billion ($758 million) from Tadano and ¥21.8 billion ($200 million) from Demag.

Vertikal Comment

This is an interesting report, although it is too soon to see exactly what is happening with the Demag integration, which added two months of revenues to the company results at this point and, will add five months to the full year numbers to the end of March. However while sales of Demag cranes might down a little on last year, - although this is hard to really determine from the outside – that would hardly be surprising.

Tadano’s full year projections indicate that the integration of Demag will not be as bad as some had feared, perhaps because so far the company has adopted a sound market facing strategy, starting to cross-train product support staff in order to improve customer service for both marques, while also looking at any gains from sharing purchasing information and other ‘no brainers’.

The company held a large strategy meeting late last month to discuss the future plans, what eventually comes out of that will be critical to the mid to long term performance of the group as a whole.

If Tadano follows a steady approach to the merger and integration, focusing on the many potential benefits, such as extending the distribution coverage for each brand, by treating each market individually - rather than with a global dogma led policy. And it avoids the temptation to be led by accountants, pushing quick fix cost cutting measures that are likely to have a negative impact on customer experience, this deal could go well. There will certainly be challenges – some of them major - but if Tadano maintains its long term strategic view the Demag acquisition could be one of its best after all.

A lot of Ifs in that sentence though! Watch this space for developments.
It is very early days, but certainly a good start.