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(May 15, 2007)
| Sales | Operating Income | Net Income | |
|---|---|---|---|
| Fiscal year ended March 31, 2007 | 144,693 (19.7%) | 12,924 (61.2%) | 7,689 (37.3%) |
| Fiscal year ended March 31, 2006 | 120,872 (18.7%) | 8,017 (52.9%) | 5,601 (44.4%) |
Note: Listed values less than one million yen are rounded off.
Percentage indications of sales, operating income and net income show the ratio of increase or decrease respectively as compared with the previous fiscal year.
| Sales | Operating Income | Net Income | |
|---|---|---|---|
| Full-year term | 162,000 (12.0%) | 17,600 (36.2%) | 11,100 (44.4%) |
Note: Listed values less than one million yen are rounded off.
Forward-looking statements contained in this report are based on information available as of the date this report was prepared. A variety of factors may cause actual results to differ from projections.
The Japanese economy in fiscal 2006 continued a steady pace of growth driven by private-sector demand, which was in turn supported by expanded capital investment in the wake of recovery in personal consumption and favorable corporate revenues, despite little improvement in the income environment. Overseas, the U.S. economy remained firm while the European economy maintained its gradual recovery.
Given this background, signs emerged in our industry that the rebound in crane rental rates for domestic customers was spreading along with surging domestic demand for construction cranes on the back of replacement demand. In overseas markets, exports to the North American market grew substantially, while favorable conditions were maintained in the Middle East market.
In response to the recovery and expansion of demand for construction cranes in both domestic and overseas markets during the current fiscal year, the Group made every effort to boost production and sales and promote its Mid-term Management Plan. In marketing, we primarily focused on securing sales and also continued our effort to maintain or improve sales price in the face of the rising costs of primary materials, such as steel, that have continued unabated over the past few years. In procurement and production, we endeavored to cut costs while seeking a balanced expansion in production capacity amid a growing production burden, with due consideration for suppliers, associated factories and our own production capacity.
As one of our initiatives for reorganizing domestic plants, we completed transferring all the production of aerial work platforms from our Shido Factory to the Takamatsu Factory last September. In addition, we completed, in January, the construction of factory buildings for the Tadotsu Factory (Tadotsu, Kagawa Prefecture; total construction cost: approximately 2.4 billion yen), which will take on the production of truck loader cranes from the Takamatsu Factory, and preparations are underway to start full-scale operation this coming July. Furthermore, to reduce fundamental costs and achieve higher production efficiencies, we appointed specialists and launched the VE (Value Engineering) Project in April last year to bring down costs from the stage of development, followed by the inauguration of the Production Reform Project in June to boost production efficiency.
Bolstered by replacement demand for construction cranes, domestic sales rose 13.2% to 83,799million yen, while overseas sales increased 30.0% to 60,894million yen following a sharp increase in the sales of construction cranes in the Middle East and North America. As a result, total sales grew to 144,693 million yen, a 19.7% increase compared with the previous fiscal year. The ratio of overseas sales to total sales rose to 42.1%, breaking through the 40% mark for the first time.
Ordinary income rose 56.7% to 13,550million yen due to increased sales and an accompanying enhancement in production efficiency. Net income rose 37.3% to 7,689 million yen, as we came within sight of disposing of bad loans and posted gains on the reversal of allowance for bad debts of 536 million yen as extraordinary income, and as we posted disposal losses on fixed assets of 281 million yen as extraordinary loss.
In terms of non-consolidated results, we completed restructuring the business of our sales subsidiaries, posted 1 billion yen in special dividends from those subsidiaries as non-operating income and reversed 2,073 million yen in deferred tax assets related to allowances for investment losses and other losses. As a result, ordinary income was 11,227 million yen and net income 5,799 million yen.
Outline of Key Product Lines
Construction Cranes
In the domestic market, sales of all terrain cranes grew steadily in addition to deep-seated replacement demand centered on our mainstay 25-ton and 60-ton capacity rough terrain cranes. Consequently, sales of construction cranes rose substantially by 29.6% to 33,965 million yen compared with the previous fiscal year.
In overseas markets, sales increased considerably by 35.1% to 44,184 million yen compared with the previous fiscal year, mainly due to expanded sales in priority markets, including the Middle East and the North America, where demand surged on the back of active construction and capital investments, and Europe, where economic recovery is continuing.
As a result, despite limited production capacity, total sales of construction cranes were 78,150 million yen, a sizeable increase of 32.7% compared with the previous fiscal year.
Truck Loader Cranes
Sales grew steadily as we sought to expand our marketing efforts for truck loader craness during a period in which replacement demand for trucks that meet new diesel emission regulations slowed in the latter half of the year. As a result, sales of truck loader cranes rose to 17,235 million yen, up 4.9% compared with the previous fiscal year.
Aerial Work Platforms
Sales of aerial work platforms rose to 12,965 million yen, up 14.3% compared with the previous fiscal year, despite limited production capacity, as we concentrated our sales efforts on the rental market and telecommunications, where demand is surging against a backdrop of increased capital investment.
Others
Total sales for parts, repairs, used cranes and other items rose to 31,326 million yen, up 4.7% compared with the previous fiscal year, as a significant increase in overseas sales of used cranes more than offset the decline in domestic sales of used cranes due to inventory shortages.
While sustained recovery is expected to continue in the Japanese economy, with favorable conditions in the corporate sector spreading into the household sector, some causes for concern remain, specifically the North Korean issue and the direction of the U.S. economy along with fluctuating crude oil prices and foreign exchange rates.
Given this prevailing market environment, domestic sales are expected to continue rising due to the strength of ongoing replacement demand for construction cranes, while overseas sales of construction cranes are also expected to remain strong as we continue to focus on expanding sales in Europe as well as the Middle East and North America. In Japan, we expect demand for truck loader cranes, however, to decline with the end of the cycle of replacement purchases in response to domestic emission regulations.
Meanwhile, we are faced with formidable issues, including the reorganization of domestic plants, expansion in production capacity to shorten delivery periods that have become prolonged, improvement in product costs and sales price to bolster profitability, leveling out the concentration of sales towards the fiscal year-end, and further quality enhancement and fundamental cost reductions to prepare for future reversals in demand and supply.
Under these circumstances, with the start of full-scale production at the Tadotsu Factory this coming July, the Shido, Takamatsu and Tadotsu Factories will each focus on the production of construction cranes, aerial work platforms and truck loader cranes, respectively, and we will remain committed to expanding production facilities and increasing the production of construction cranes. We will also continue to pursue the VE (Value Engineering) Project and the Production Reform Project, launched last year, to achieve fundamental cost reductions and higher production efficiencies.