22.05.2008

Tadano confirms full year numbers

Tadano the world’s fourth largest mobile crane manufacturer has published its financial results for the 12 months to the end of March 2008.

Total revenues climbed 20.5 percent to ¥174 billion ($1.67 billion/£858 million) while profits jumped by almost 41 percent to ¥17.96 billion ($174/£88 million). A large gain on bad debt write backs boosted net income by 51 percent to ¥11.6 billion (/$112.4/£57 million).

Tadano says that after a slow start its domestic market due to delays in construction starts, strong replacement demand for its Rough Terrain cranes helped increase sales by 10.7 percent to ¥92.8 billion ($898 /£457 million).

Overseas it saw increases in demand in North America, Europe and the Middle East with export sales rising by almost 34 percent to ¥81,6 billion ($790/£401 million) This took export sales to a record 46.8 percent of total revenues.

The company continued operating under what it calls its Mid-Term Management Plan (2004-2007) and focused much of its efforts on expanding production of its mobile cranes, in spite of this it had to put orders on allocation due to ongoing component and material supply shortages

Sales by major product line

Mobile Cranes
In Japan the company saw strong increases in sales of its core 25 to 60 tonne Rough-Terrain cranes, driven by replacement demand, with sales up 24.7 percent to ¥42.4 billion ($410/£208 million). Export sales of mobile cranes grew by 41.8 percent to ¥62.6 billion ($606/£308 million).

As a result, sales of construction cranes surged 34.4% to 105,003 million yen compared with the previous fiscal year.

Loader Cranes

Demand for loader cranes, largely small straight telescopics, fell by 11.5 percent ¥15.2 billion ($147/£75 million) as the replacement cycle for trucks, driven by new diesel emission regulations came to an end.

Aerial work platforms

Tadano says that after a strong start demand from the telecommunications indsutry for its truck mounted lifts and digger derricks dropped off, as did orders from the rental industry, due it says to the impact of the revised Building Standard Law. In spite of the slow down, sales of aerial lifts increased by 15.4 percent to just under ¥15 billion ($145/£74 million).

Other

The balance of sales covers used equipment, replacement parts and services. Used equipment remained flat, but parts sales grew strongly resulting in an almost seven percent ¥33.5 billion ($324/£165 million) growth in this area.

Forecasts for 2008/.2009

Tadano is taking a very cautious view of its current year, predicting revenues to grow by just over three percent, to ¥180billion ($1.74 billion/£886 million), while it expects profits to fall by eight percent to ¥16.5 billion ($160/£81 million). This is based on its economic assumptions that construction in Japan will continue to grow, while North America will decline and growth in Europe will slow.

It believes that a strong underlying need to replace an aging mobile crane fleet will also help boost its domestic sales, while it hopes to win great market share in the USA and Europe. It does anticipate though that loader crane sales will fall while aerial work platforms will remain roughly at this years levels.

As the company enters its 60th year, it will launch its new Mid-Term Management Plan from March 2008 to March 2011, under the theme, “overcoming market fluctuations toward a new trajectory of growth.”

During the period it is targeting to increase revenues to ¥200 billion ($1.9 billion) with up to 58 percent of that coming from exports. In terms of profits it is targeting ¥20 billion ($193 million).

Vertikal Comment

Tadano has done well with its mobile crane business although it could have done so much better had it had the capacity. This is particularly true of its Tadano Faun All Terrain cranes where the company is building a strong reputation and product line.

Its projections for 2008/9 look particularly conservative, if not gloomy, given that there is an even stronger underlying replacement demand in North American than in Japan. Not to mention the fact that given the fact that it’s additional capacity in both Japan and Europe is coming on full stream at a time when lead times for many of the products it makes are still long.

If this was an American or European company, we would accuse it of ‘sandbagging’ its forecasts. Given that it is Tadano and Japanese, the likelihood is that the forecast will become a self fulfilling prophecy.