05.02.2020

Strong third quarter for Tadano

Tadano has reported total revenues for the nine months to the end of December of ¥149 billion ($1.36 billion), an increase of 18.8 percent on last year.

The revenues were made up as follows:
Mobile crane sales of ¥94.64 billion ($863 million) - an increase of 27 percent on last year - with ¥30.3 billion ($276 million) coming from Japan, a 24 percent improvement which all came from sales of Tadano cranes.

Overseas sales of mobile cranes were up almost 29 percent at ¥64.4 billion ($587 million), made up of ¥58.6 billion ($534 million) of Tadano cranes - an increase of almost 10 percent - and ¥5.8 billion ($53 million) of Demag shipments since August.

Aerial work platform sales were almost four percent lower at ¥12.1 billion ($110 million) with almost all deliveries going to the local Japanese market.

Loader crane shipments totalled ¥16.5 billion ($150.5 million), an increase of 11 percent on last year.

Other revenues, which include parts, services and used cranes etc, totalled ¥25.6 billion ($233.2 million) - up almost 10 percent - of which ¥2.2 billion ($19.6 million) came from
Demag and represented most of the increase.

Looking at the geographic breakdown of total revenues:
European sales were 5.7 percent higher at ¥15.89 billion ($145 million) of which Demag was ¥3.1 billion ($28.3 million)

North American revenues leapt 40.3 percent to ¥34.76 billion ($316.9 million), of which Demag represented ¥1.37 billion ($12 million).

Total Japanese revenues were ¥71 billion, ($647 million) an increase of 12 percent and all like for like with last year.

South American deliveries almost tripled - albeit from a low base - to ¥3.14 billion ($28.6 million) of which Demag represented more than 45 percent.

Asia posted growth of 5.3 percent with sales of 10.1 billion ($92.5 million), of which Demag was ¥266 million ($2.4 million)

The Middle East bounced back with a 30 percent jump to ¥5.3 billion ($48.4 million) most of which was due to the addition of Demag sales at ¥1.74 billion ($16 million).

Finally sales to other markets were 14.2 percent higher at ¥8.6 billion ($79 million) all but ¥34 million ($310,000) of it from Tadano cranes and parts.

Pre-tax profit for the nine months jumped 53 percent to ¥10.42 billion ($95 million). The company is now forecasting full year revenues of ¥228 billion ($2.1 billion), 21 percent up on the year, with the Demag business contributing ¥27.3 billion ($225 million), although it is predicting an operating loss from Demag of ¥3.7 billion ($34 million) which is slightly better than the forecast it made in October when it expected to lose ¥4.5 billon ($41 million) which is likely to reduce full year ordinary income by around 25 percent, also due to slightly lower profits from the Tadano business.

Vertikal Comment

So far this is a good result from Tadano given that the crane market is soft in places with buyers nervous about investing too heavily in an uncertain global economy, not to mention the integration challenges it faces.

It is still early days in the process of absorbing the Demag acquisition - just five months in fact - but so far Tadano appears to have made a first class job of it having, it seems, decided to run the two businesses and brands separately, while looking to gain integration benefits on the product support side.

It looks to be following the tried and tested Tadano acquisition and integration policy, rather than the classic quick integration at all costs approach, which would have been fraught with risk in this case. It is involving the entire workforce with changes and sensibly looking to gain sales and service benefits for both brands, while not being dogmatic about trying to merge cultures, two strong brands and product lines.

Although the process is likely to have an impact on short term profitability, it bodes well for the future... and may well deny the competition of the opportunities one can normally expect from a merger of major competitors.