May 12, 2010
Demand in overseas crane markets has been faltering since the global financial crisis in fall 2008, and the situation became even more severe in the second half of 2009. As a whole, demand for cranes has been poor worldwide. Although there are indications of recovery in India and some other areas, market decline has been severe especially in regions that used to be centers of demand. In North America, demand has drastically dropped because of decreased intention to invest in equipment and bankruptcies of local banks. In Europe, demand has been sluggish due to deterioration of operating rates. In the Middle East, big projects have been postponed or cancelled one after another.
Also, in the domestic crane market, demand for new crawler cranes and wheel cranes drastically declined, as users took a wait-and-see attitude and refrained from buying after reviewing their equipment investment plans and considering the downturn of residential investment.
Under these severe circumstances, Kobelco Cranes made every effort to maximize sales and profits by steadily shipping backlog orders and undertaking marketing activities to gain orders. In addition, company-wide cost reductions and expense-cutting were carried out in order to secure earnings.
Reflecting the worldwide drop in demand, Kobelco Cranes sold about 520 new machines (total number over the entire crane line-up) during fiscal 2009, ended March 2010, showing a marked decrease of 43% over the 920 units sold in fiscal 2008. However, in terms of profit, the company managed to minimize the decrease by implementing the above-mentioned measures.
Consequently, Kobelco Cranes’ consolidated net sales decreased 37.7% in fiscal 2009, and consolidated ordinary income decreased 81.3% in comparison to fiscal 2008. Nevertheless, the entire Kobelco Cranes Group, which consists of Kobelco Cranes, four overseas companies, and two domestic companies, managed to turn a profit.
Furthermore, Kobelco Cranes formulated its New Medium-Term Management Plan to be started in fiscal 2010. For that plan, it has initiated a system reform focusing on becoming a globally successful company by setting its technology and brand power as the operating base.
|In millions of yen||Net Sales||Operating
Notes: Percentages show change as compared with the previous fiscal year.
Figures in parentheses show decreases.
Domestic consolidated sales dropped 37.5% over the previous fiscal year to 19.8 billion yen, and overseas sales decreased 37.9% to 33.3 billion yen. Total sales dropped 37.7% to 53.1 billion yen.
In overseas markets, under severe situations such as shrinking worldwide demand, customers’ difficulty in raising funds, and the strong yen, Kobelco Cranes put efforts not only into maximizing new machine sales but also into enhancing its business foundation for the future. The demand environment and approaches taken by Kobelco Cranes for each area are as follows:
The Japanese market for new cranes has declined considerably, as the operating rates of users decreased, affected by fewer construction projects. Users took a wait-and-see attitude and refrained from buying, considering the uncertainty of future trends.
To provide solid shipments of backlog orders for the Japanese and overseas markets, Kobelco Cranes has been working on forming a system to respond flexibly to changes in production volume by shortening production lead-time and improving efficiency under the just-in-time production system through the cooperation of its suppliers, in addition to making efforts to strengthen its capacity to respond to custom products.
Kobelco Cranes continues improving customer satisfaction by utilizing the Kobelco Cranes Remote Observation System (KCROSS). Moreover, it has worked on the task of reorganizing the customer service system. The Customer Support Division was established on April 1st this year.
For rough terrain cranes, Tadano supplies complete machines of small models on an OEM basis. Kobelco Cranes has maintained a favorable relationship with Tadano and looks forward to continuing its close collaborative relationship with Tadano.
Although there are both strong and weak regions, worldwide demand for cranes in fiscal 2010 continues to be low in both domestic and overseas markets, showing some possibility of further decline. In addition, the business environment is still uncertain due to unstable currency market conditions and the financial crisis in Europe.
Under this harsh business environment, in fiscal 2010, we will continue more steady activities to gain orders and sales. We will also reduce costs in order to secure earnings. Also, as the first year of the New Medium-Term Management Plan, we will implement measurements to leap forward by addressing the following key issues: