On the heels of a 5.2% increase in revenues during its fiscal year 2015, Kubota Corp. says it plans to push ahead with further expansion into the large ag machinery market.
The company reported its fiscal 2015 year-end results May 12 and sur¬passed its revenue outlook for both total and overseas markets for the farm and industrial machinery seg¬ment. Total revenues for the year were up 5.2% year-over year to $13 billion, almost 3 percentage points higher than the company outlook from the same time in 2014, when it projected that revenues would rise 2.7% during its fiscal year ending March 31, 2015.
While domestic revenues for the company decreased 12.1% to $4.7 billion in fiscal 2015, overseas rev¬enues increased nearly 18% to $8.5 billion year-over-year. Kubota says the increase in revenues in overseas markets along with the effect of yen depreciation overcame the negative impact of lower domestic revenues. This resulted in a steady operating income year-over-year at up almost 1%.
For the fiscal year, revenues from farm equipment and industrial machinery accounted for 65.2% of total revenues, in line with fiscal 2014, while construction machinery contributed 11.4%, up from 9.9% during the same period last year. Of the 76.6% of revenues attributed to farm and industrial machinery, 60.4% was attributable to overseas markets. That’s up just over than 5% from fis¬cal year 2014.
Farm & Industrial Machinery
Revenues from Kubota’s Farm & Industrial Machinery segment, which is comprised of ag equipment, engines and construction machinery, increased 5.4% from the prior year to $10 billion.
Overseas revenues for the segment increased 16.7% to $7.9 billion from fiscal 2014, which is more than 10 percentage points higher than the company projected for fiscal 2015 at this time last year. Domestic revenues decreased 22.6% to just over $2 bil¬lion in this segment, and the company says this is due to an adverse reaction to special demand prior to Japan’s consumption tax hike in fiscal 2014 and the decline of rice prices.
This year, Kubota is changing its reporting from a fiscal to a calendar year and will now use Dec. 31, as its year end instead of March 31, 2016. The company forecasts consolidated revues will increase 9.2% in the 9-month period from April 1, 2015 to Dec. 31, 2015. A 10.5% increase in operating income is projected as a result of expected increases in both domestic and overseas markets.
Expanding Farm Machinery
Best known for its lower horsepower equipment, over the last 3 years, Kubota has taken steps to build a full line of broadacre equipment. In 2012, the manufacturer acquired the European-based implement manufacturer Kvernland. With that acquisition, the company said it was “taking its first major step toward becoming a comprehensive manufacturer of agricultural machinery.”
In its most recent earnings report, Kubota reiterated its plan to develop its business activities by “expanding its presence in the farm machinery market for upland farming as the core of its growth strategy. In the European and North American markets, the company has thus far pursued a number of measures to reach this objective. These have included the development of large-scale products that can take their place along with the products of the world’s leading manufacturers of farm equipment, expansion of its sales and service network and acquisition of an upland farming implement manufacturer.”
It added, “The company is launching large-scale, 170 horsepower tractors and will make a full-scale entry into the farm machinery market for upland farming.
“With this as the beginning, the company is further expanding its product lineup and taking initiatives to ensure product quality, cost and delivery that will surpass other companies in the field and thereby position it as one of the major players in the farm equipment business.”
— Ag Equipment Intelligence, July 2015