Kubota Corp., the Japanese farm tractor maker seeking an overseas purchase of as much as $2 billion, said the weakening yen will push sales to a record in the next fiscal year and won’t curb its acquisition appetite.

The boost to exports from the yen’s slide, combined with more demand from North America and Southeast Asia, will probably lift revenue by about 20% to 1.4 trillion yen ($14.6 billion) in the fiscal year starting April 1, President Yasuo Masumoto said March 11 in an interview in Tokyo. His target is 13% higher than the mean of 19 analyst estimates compiled by Bloomberg.

“The yen’s depreciation is driving up our top line,” Masumoto said. “We have high expectations on the impact from gains in the currency in the coming year,” he said.

The 11% decline in the yen since Prime Minister Shinzo Abe took office December 26 is alleviating cost pressures at Japanese exporters ranging from Toyota Motor Corp. to JFE Holdings Inc. Mechanization in Thailand and more sales in the U.S. to consumers involved in gardening and renovation are also boosting demand for Kubota’s equipment, Masumoto said.

In the U.S., work began on 613,000 single-family homes at an annualized rate in January, the most since July 2008, according to a February 26 release from the Commerce Department in Washington.

Kubota fell 1.2% to 1,225 yen at the close in Tokyo yesterday, pairing its gain this year to 24%. Deere (DE) & Co., the world’s biggest maker of farm equipment, has risen 5.1% in the same period.

Yen Lows

The yen’s decline in the past three months will be fully reflected in the company’s earnings next quarter, according to Kubota. The yen traded at 95.75 yen to the U.S. dollar as of 3:37 p.m. in Tokyo yesterday after touching 96.71 the previous day, the weakest since August 2009.

As a negative, the weaker yen increases costs for Japanese companies when they invest in overseas assets, reducing their purchasing power. Kubota’s need to capitalize on growth in the global market for agricultural equipment means the lower yen won’t alter its ambitions for acquisitions, Masumoto said.

Kubota, which specializes in smaller tractors and combines for wet paddy fields, is seeking to add large tractors powerful enough to plow big fields that grow wheat and corn — a market dominated by Deere, CNH Global NV (CNH) and Agco Corp. (AGCO)

Masumoto has approached acquisition targets that own large tractors and aims to settle a deal by the end of the year, he said, without naming any companies.

Deere

The company last year completed its purchase of Kverneland ASA, a Norwegian maker of tractor plows and grass-processing products, as a step to speed overseas expansion.

Kubota has so far used its experience in selling agricultural equipment to expand in rice-growing regions in Southeast Asia and China, where economic growth has boosted incomes.

Masumoto wants Kubota to become the world’s top producer of farm equipment by overtaking Deere in the long term.

“Ten years from now, we want to be seen as a real threat to Deere,” the president said.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

Story Link: http://www.bloomberg.com/news/2013-03-13/kubota-expects-yen-to-push-sales-to-record-as-it-chases-deere.html