For the three months ended March 31, 2020, revenue of Kubota Corporation and its subsidiaries decreased by ¥41.2 billion ($380 million) or 8.6% from the same period in the prior year to ¥439.5 billion ($4.1 billion).
Domestic revenue decreased by ¥5.9 billion ($55 million) or 3.8% from the same period in the prior year to ¥150 billion ($1.4 billion) because revenue in Farm & Industrial Machinery decreased mainly due to decreased sales of farm equipment. On the other hand, revenue in Water & Environment, whose businesses are mainly related to public works projects, increased slightly.
Overseas revenue decreased by ¥35.2 billion ($330 million) or 10.9% from the same period in the prior year to ¥289.5 billion ($2.7 billion) because of decreased sales of construction machinery, tractors and engines. In addition, revenue in Water & Environment also decreased. Operating profit decreased by ¥22.4 billion ($210 million) or 42.4% from the same period in the prior year to ¥30.5 billion ($280 million) because profitability of products, which were shipped in this fiscal year, in its manufacturing bases deteriorated due to a significant reduction in production in the fourth quarter of 2019.
In addition, there was a negative effect from decreased sales in the domestic and overseas markets. Profit before income taxes decreased by ¥23.1 billion ($220 million) or 42.7% from the same period in the prior year to ¥31 billion ($290 million) due to decreased operating profit. Share of profits of investments accounted for using the equity method was ¥0.3 billion ($2.8 million). Profit for the period decreased by ¥17.2 billion ($160 million) or 42.6% from the same period in the prior year to ¥23.2 billion ($220 million).
Farm & Industrial Machinery
Farm & Industrial Machinery is comprised of farm equipment, agricultural‐related products, engines, and construction machinery. Revenue in this segment decreased by 10.3% from the same period in the prior year to ¥346.9 billion ($3.2 billion), and accounted for 78.9% of consolidated revenue.
Domestic revenue decreased by 8% from the same period in the prior year to ¥66.3 billion ($620 million). Sales of farm equipment and agricultural‐related products decreased mainly due to adverse reaction from rushed demand before the consumption tax hike. Overseas revenue decreased by 10.8% from the same period in the prior year to ¥280.6 billion ($2.6 billion). In North America, sales of construction machinery significantly decreased because of adverse reaction from carryover of shipments of some products from the fiscal 2018 to the fiscal 2019 caused by typhoon, which had occurred in 2018.
In addition, sales of engines also decreased from the prior year mainly due to production adjustment by OEM clients and deterioration in oil and gas market. In Europe, sales of tractors significantly decreased mainly due to a negative effect from business suspension by dealers along with the infection spread of COVID‐19. In addition, sales of engines also decreased significantly due to business suspension and a reduction in production of OEM clients caused by the infection spread of COVID‐19. In Asia outside Japan, revenue decreased because sales of tractors in Thailand decreased due to a negative impact of water shortage which had continued since the prior year. In addition, sales of construction machinery in China decreased due to suspended construction work along with the infection spread of COVID‐19.
Operating profit in this segment decreased by 40.8% from the same period in the prior year to ¥30.5 billion ($280 million) due to some negative effects such as decreased revenue in the domestic and overseas markets and a deterioration in profitability of products, which were shipped in this fiscal year, in its manufacturing bases.
Outlook for 2020
The infection spread of COVID‐19 has impacted on its production and sales activities in each region, and the outlook for demand trends is unclear. At this time, there are many uncertain factors that may affect the results of operations, and it is difficult to calculate the rational forecasts. Accordingly, the Company decided to revise the forecasts of the results of operations for the six months ending June 30, 2020 and the year ending Dec. 31, 2020, which were announced on Feb. 14, 2020, to undetermined temporarily. Going forward, the Company will disclose them again when it becomes possible to calculate the rational forecasts.