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(May 16, 2008)
| Sales | Operating income | Net Income | |
|---|---|---|---|
| Fiscal year ended March 31, 2008 | 174,360 (20.5%) | 17,960 (40.7%) | 11,619 (51.1%) |
| Fiscal year ended March 31, 2007 | 144,693 (19.7%) | 12,762 (59.2%) | 7,689 (37.3%) |
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 | 180,000 (3.2%) | 16,500 (-8.1%) | 10,100 (-13.1%) |
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.
Despite the impact of delayed construction starts due to the revised Building Standard Law and stagnant personal consumption, the Japanese economy in fiscal year 2007 remained robust backed by the growth of exports and capital investment until rising costs for primary materials began impacting corporate revenues and forced a decline in production, bringing growth to a standstill toward the end of the fiscal year. Overseas, a slowdown in the U.S. economy became more evident due to the increasing severity of the subprime loan crisis and other issues.
Under these circumstances, domestic demand for construction cranes in our industry rose due to replacement demand, while overseas the North American market continued to enjoy favorable demand and the European and Middle East markets demonstrated expanding demand for energy-related products.
In fiscal year 2007, we pursued our Mid-Term Management Plan (04-07) as a group through a focused effort to expand production and sales in response to growing demand for construction cranes in domestic and overseas markets. In sales, we paid due consideration to allocation by destination amid a continuing supply shortage and maintained our efforts to improve the sales price of our products in view of the recently rising costs of primary materials such as steel. In procurement and production, we endeavored to cut costs while seeking to expand production capacity by maintaining a balance between our suppliers, associated factories and our own factories amid a growing production burden and an unstable procurement environment.
The Tadotsu Plant (Tadotsu, Kagawa Prefecture; total construction cost: approximately 2.7 billion yen), which had been under construction as part of our initiative to reorganize domestic plants, became fully operational in July last year. This marked the start of a production system based on product lines, in which the Shido Plant, Takamatsu Plant and Tadotsu Plant are separately responsible for the production of construction cranes, aerial cranes and truck loader cranes, respectively.
Bolstered by replacement demand for construction cranes, domestic sales rose 10.7% to 92,802 million yen, while overseas sales increased 33.9% to 81,557 million yen following a sharp increase in sales of construction cranes in the European and North American markets. As a result, total sales grew 20.5% to 174,360 million yen. The ratio of overseas sales to total sales reached a record high of 46.8%.
Ordinary income rose 32.7% to 17,980 million yen due to increased sales. Net income jumped 51.1% to 11,619 million yen as we posted an extraordinary income of 591 million yen on the reversal of allowance for bad debts. Therefore, revenues and profit increased for the fifth consecutive year, and we extended record highs in sales and income, accomplishing the basic objectives and numerical targets laid out in our Mid-Term Management Plan (04-07).
Outline of Key Product Lines
Construction Cranes
In the domestic market, we sought to bolster sales of our mainstay 25-ton and 60-ton rough-terrain cranes in view of deep-seated replacement demand, and as a result sales increased substantially by 24.7% to 42,353 million yen compared with the previous fiscal year.
In overseas markets, sales increased considerably by 41.8% to 62,650 million yen compared with the previous fiscal year due to expanded sales in primary markets, as demand expanded in North America, continued to grow in Europe and remained high in the Middle East, on the back of active construction and capital investments.
As a result, sales of construction cranes surged 34.4% to 105,003 million yen compared with the previous fiscal year.
Truck Loader Cranes
As demand for trucks fell substantially with the end of the replacement demand cycle for trucks that meet new diesel emission regulations, we sought to expand sales of truck loader craness by launching new models with improved mileage and quality. Despite these efforts, sales of truck loader cranes fell 11.5% to 15,250 million yen compared with the previous fiscal year.
Aerial Work Platforms
Demand from the telecommunications market peaked in the first half of the fiscal year and demand from the rental industry also weakened in the latter half of the fiscal year due to the impact of the revised Building Standard Law. Sales of aerial work platforms nevertheless increased by 15.4% to 14,957 million yen due to our efforts to expand sales and production capacity.
Others
Although sales of used cranes remained flat during the fiscal year, our efforts, including expanding sales of parts, resulted in a rise of 6.9% to 33,478 million yen compared with the previous fiscal year for total sales of parts, repairs, used cranes and other items.
With respect to the economic outlook, while the Japanese economy is expected to avoid a slowdown due to the rebound effect from delayed construction starts and increased exports to newly emerging countries, numerous risk factors remain, including further increases in the prices of crude oil and primary materials, a rise in the value of the yen and declining stock prices. Overseas, the U.S. economy is most likely set to enter a recessionary period, while the European economy is also expected to decelerate.
As for the market environment, domestic sales of construction cranes are expected to increase due to deep-seated replacement demand, while overseas sales of construction cranes are also expected to fare well as we endeavor to expand sales in the Middle East and North America in addition to Europe. However, with respect to truck loader cranes and aerial work platforms, for which the main challenge is globalization, the sales of truck loader cranes are expected to fall while sales of aerial work platforms are expected to remain flat in the wake of declining domestic demand.
Meanwhile, for us, formidable challenges lie ahead, such as responding to the rising cost of primary materials and difficulties in procurement, expanding production capacity to shorten delivery periods that have become prolonged, improving product costs and sales prices to bolster profitability, leveling out the concentration of sales toward year-end, and further enhancing quality and services to prepare for future reversals in demand and supply.
Under these circumstances, we remain committed to expanding production facilities for construction cranes and will continue to pursue the VE (Value Engineering) Project and the Production Reform Project.
In fiscal year 2009, which marks our milestone 60th anniversary, we will launch Mid-Term Management Plan (08-10) under the theme, "overcoming market fluctuations toward a new trajectory of growth. We will make an all-out effort to accomplish our goals of 200,000 million yen in sales, a 58% overseas sales ratio to total sales and 20,000 million yen in ordinary income on a consolidated basis by the fiscal year ending March 31, 2011.