Asia’s largest farm equipment maker, said first-half profit rose 33% on increased sales in the U.S., Europe and Asia outside Japan.
Net income rose to 25.7 billion yen ($319 million) from 19.3 billion yen a year earlier, the company said in a statement. Kubota left its full-year forecast unchanged at 52 billion yen.
“Although sales may be better in the second half, the strong yen may cause difficulties,” President Yasuo Masumoto said today at a briefing in Osaka, where the company is based. “We’ve got factories in China and Thailand, but like the automobile industry, our overseas production ratio is low.”
The company would have to “take more measures” if the yen strengthened to below 80 yen per dollar, Masumoto said. The Japanese currency, which has gained 14% against the U.S. dollar since Kubota’s fiscal year started April 1, traded at 80.60 as of 5 p.m. in Tokyo.
Kubota reported operating profit, or sales minus the cost of goods sold and administrative expenses, rose 30% to 43.2 billion yen in the first half, compared with the 42.9 billion yen average of four analyst estimates compiled by Bloomberg. Revenue jumped 1% to 449 billion yen, less than the 459.2 billion yen expected by the analysts.
The shares rose 0.3% to close at 719 yen as of 3 p.m. on the Tokyo Stock Exchange. The benchmark Nikkei 225 Stock Average added 0.1%.
Sales of farming and construction machinery rose 6.8% from a year earlier to 330.7 billion yen to comprise about 74% of Kubota’s first-half revenue.
“In terms of machinery makers, they’re an extremely rare growing company,” Tsutomu Kijima, an analyst at Barclays Plc in Tokyo who has an “overweight/neutral” rating on Kubota’s stock, said before the results were announced. “Demand for agricultural machinery in Asia will continue to grow in the short-to-medium term.”