Japanese equipment manufacturer Komatsu fattened its retail finance portfolio in its fiscal 2024 as sales spiked, but tariffs have darkened its 2025 outlook.
Komatsu’s origination growth was mainly attributed to “the positive impact of the weaker yen,” yielding a higher interest income ratio, Chief Financial Officer Takeshi Horikoshi said during its April 28 earnings call.
The weaker yen also boosted sales margins, which offset increased production costs, Horikoshi said.
BY THE NUMBERS: Komatsu reported the following full-year results for its fiscal 2024, which ended March 31:
- Retail finance originations totaled 1.1 trillion yen ($7.3 billion), up 9.1% year over year;
- Retail finance revenue rose 19% YoY to $806.3 million;
- Retail finance’s managed assets rose 3.7% YoY to $9.2 billion;
- North American construction, mining and utility sales to outside customers increased 3.4% YoY to $6.7 billion and represented 27% of total sales, down 1 percentage point from fiscal 2023; and
- Total construction, mining and utility sales jumped 5.1% YoY to $24.9 billion.
FUTURE LOOK: Komatsu anticipates operating profit to drop roughly 27% in fiscal 2025 largely due to President Donald Trump’s tariffs and a stronger yen, which are expected to hinder sales as equipment costs rise in the U.S., Kiyoshi Hishinuma, general manager of the business coordination department, said during the call.
“About 50% of the products sold in the United States are manufactured outside of the United States and imported mainly as finished construction equipment and parts,” he said. “Construction equipment are mainly supplied to the U.S. and Canada, and mining equipment are supplied worldwide.”
The company projects the following for fiscal 2025:
- Retail finance originations to decline 17.3% YoY;
- Retail finance revenue to slide 12.7% YoY;
- North American construction, mining and utility sales to outside customers to fall 13.4% YoY; and
- Total construction, mining and utility sales to fall 9.4% YoY.
MARKET REACTION: Shares of Komatsu (OTCS: KMTUY) were up 1.6% to $29.19 as of market close April 28. Shares were down 0.5% to $29.05 as of market close today. It has a market capitalization of $27.2 billion.
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