Kubota Corp. Full-Year Earnings Summary
(in Millions $*)

  9 Mos. Ended
Dec. 31, 2015
9 Mos. Ended
Dec. 31, 2015
% Change
Total Revenue $10,978.79 $10,058.37 9.2%
Farm & Industrial
Machinery Revenue
$8,998.76 $8,136.05 10.6%
  Farm Equipment & Engines $7,496.22 $6,802.15 10.2%
  Construction Machinery $1,312.27 $1,136.92 15.4%
  Equipped Machinery
$190.27 $196.97 –3.4%

*Converted from yen to U.S. dollar at exchange rates as of March 2
Source: Kubota Corp.

Diversity in its product range and in the markets it serves proved beneficial to Kubota Corp. last year as buoyant sales of compact tractors to homeowners in North America offset a decline in mid-size tractor sales to farmers and helped drive up revenues from outside Japan.

Export market revenues for Kubota’s Farm & Industrial Machinery division increased 11.4% over the year prior to the equivalent of $6.97 billion. In addition to compact tractors, stronger sales of light construction machinery in North America resulting from favorable housing market demand in a recovering economy also had a positive impact.

The Japanese manufacturer sees the Farm & Industrial Machinery business unit’s activities in North America as the key to successfully implementing its “Global Major Brand Kubota” project. This year, the product lineup is being expanded with new introductions for upland farming — notably the 130-175 horsepower tractors being built in northern France; skid steer loaders for agriculture and construction; and utility vehicles.

Kubota Manufacturing of America broke ground on a dedicated assembly plant for the RTV utility vehicles in Hall County, Ga., last September, giving it the scope to expand production by 60% over the next 5 years.

Last year, Kubota decided to move its U.S. sales company from California to north Texas to be closer to its farming customers and expand business functions and capabilities. “The company is strengthening its local production, product development and its human resources and business infrastructure,” says Masatoshi Kimata, Kubota Corp.’s CEO. “In this way, Kubota plans to substantially expand its business operations in North America.”

Worldwide 2015 revenues, reported for the 9 months from April to December as Kubota shifts its financial year-end, increased more than 9% over the equivalent period in the preceding year to $10.9 billion. The Farm & Industrial Machinery division, which contributed 82% of Kubota’s consolidated revenues, gained 10.6% to hit $8.95 billion for the 9-month period. Domestic revenues for this business unit gained 7.7% as sales of farm tractors in Japan recovered from the previous year’s market reaction to an increased consumption tax.

Operating income for the division increased more than 20% as the impact of increased domestic and overseas revenues and the positive effect of yen depreciation exceeded the negative impact of increased fixed costs and sales promotion expenses.

For 2016, Kubota Corp. forecasts flat demand in Japan for its farm and construction machinery activities thanks to a stagnant market for rice planters and combines, which the company is seeking to revive. But, in contrast to its major competitors, a further rise in revenues from North America, Europe and Asia is factored into forecasts for a 3.6% increase in consolidated revenues, and an increase in operating income of more than 5%, based on the expectation that revenue increases will outstrip the negative impact of yen appreciation.

Strategic moves to support growth in the long term include the establishment of new R&D centers in Japan and overseas, hiring of non-Japanese and better qualified personnel as part of an R&D recruitment program, and increased collaboration with outside parties.

“The company is aiming to review and structure its R&D activities to enable it to win out over major global competitors,” says Kimata.

Production activities are receiving similar attention. Managers say they are rolling out “Production Method Kubota” having established a basic policy last year that combines production methods of advanced companies with what they call Kubota’s unique approach and methods. By applying this policy in all the company’s plants, and encouraging partner plants to do the same, managers expect to see further improvement in the level of excellence in manufacturing for the group as a whole.

— Ag Equipment Intelligence, March 2016