Higher profits for Tadano

Japanese crane and aerial lift manufacturer Tadano has published its first quarter results, which show a fall in revenues, but a substantial improvement in profitability.

Total revenues for the three months to the end of March were ¥62.5 billion ($397.6 million) down 3.7 percent on the same quarter last year.

Pre-tax profit however, jumped 57 percent to ¥4.2 billion ($27.1 million) all due to a substantial reduction in the cost of sales. While Sales, General & Administration costs remained flat, other costs, such interest on debt, foreign exchange losses and a restructuring charge were significantly higher – showing a stronger improvement in profitability than the bottom line might suggest.

Focusing on the revenues:

Mobile cranes ¥43.6 billion ($277.4 million)4371 -1.8%
Loader cranes ¥4.4 billion ($27.8 million) +2%
Aerial work platforms ¥2.8 billon ($17.8 million) -36.4%
Other revenues ¥11.7 billion ($74.5 million) -1.1%
Total ¥62.5 billion ($397.6 million) - 3.7%

Geographic breakdown Mobile crane sales
Japan ¥10.1 billion ($64.6 million) -17.5%
Export ¥33.4 billion ($212.8 million) +4.3%
Total ¥43.6 billion – ($277.4 million)1.8%

Sales by region
Europe ¥7.4 million ($47.4 million) -16.3%
North America ¥23 billion ($146.6 million) +18.4%
Central/South America ¥600 million ($3.8 million) +19.1%
Asia ¥3.2 billion ($20.1 million) - 0.8%
Middle East ¥3.8 billion ($24 million) - 6.6%
Oceania ¥2.5 billion ($16.1 million) - 5.7%
Other markets ¥382 million ($2.4 million) + 45%
Japan ¥21.5 billion ($137.1 million) -16.7%
Total ¥62.5 billion ($ 397.6 million) + 3.7%

Full year Forecast
The company is forecasting revenues for the full 2024 calendar year to increase 12.4 percent to ¥315.5 billion ($2 billion) with a pre-tax profit in the region of ¥17 billion ($108 million)

Aerial lift expansion
Part of the increase in sales will come from 10 months contribution of the Nagano acquisition which was completed in February. Tadano chief executive Toshiaki Ujiie says that Nagano will support an imminent expansion of its aerial lift sales globally, starting with the introduction of its self-propelled models in North America.

Vertikal Comment

This is an interesting set of numbers, Tadano will be delighted to have turned the corner in terms of profitability, but clearly falling revenues are not so attractive, as revenues drive everything.

The lower cost of sales, may be due in part to production savings, particularly in Europe, but may also reflect a shift in product mix, with a higher volume of higher margin cranes – such as Rough Terrains, fewer low margin All Terrains and price increases.

As mentioned above the underlying improvement in profitability is far greater than the bottom line might suggest, Gross profit was almost 14 percent higher, while operating profits jumped almost 60 percent.

However, the imbalance between North American and European sales obviously needs fixing, but may even be widening? Sales in Asia might also reflect a growing dominance of Chinese manufacturers in the region, which might also be a problem for the future.

Having said all that improving profitability buys time and funds new product development and marketing strategies etc… and as such is encouraging and should be celebrated.