Komatsu to raise prices, cut costs on firmer yen next year -CEO (updated)

Komatsu

06/12/2023 08:55

(Adds outlook for Chinese and North American markets)
    By Kiyoshi Takenaka
       TOKYO, Dec 6 (Reuters) - Komatsu  6301.T , the world's
second-largest construction machinery maker after Caterpillar
Inc  CAT.N , plans to raise prices and slash costs as it expects
the yen to firm next year, its chief executive said on
Wednesday.
    "I'm not probably mistaken to say that the yen will be
swinging to the firming side next year," Komatsu CEO Hiroyuki
Ogawa said in an online interview with a group of reporters. 
    "There are only three things we ought to do to counter that,
with one of them being price improvement, or price hikes." 
    Cost cuts and investments in growth areas are the other two
steps, Ogawa said.
    In October, Komatsu, which also competes with China's Sany
Heavy Industry  600031.SS  and Tokyo-based Hitachi Construction
Machinery  6305.T , raised its net profit forecast for the year
to March 2024 by 14% due mainly to the yen's weakness.
    Critics blame the Bank of Japan's ultra-low interest rates
for fuelling the yen's fall, but more than 80% of economists in
a Reuters poll in November said the central bank will end its
negative interest rate policy next year.    
    Ogawa said China's demand for earth-moving equipment such as
excavators and bulldozers will likely remain sluggish next year.
    "I believe Chinese demand has already hit bottom, and that
the situation will remain little changed next year ... We need
to watch very carefully for signs of recovery," he said.
    Ogawa was quick to point out, however, that sales in China
account for only 2% of Komatsu's overall revenues, and said any
sharp change in the Chinese market will have little impact on
the company's overall performance. 
    Ogawa said he expected the North American market, which
represents a quarter of Komatsu's construction and mining
equipment sales, to remain largely robust in 2024.
    

 (Reporting by Kiyoshi Takenaka; Editing by Kim Coghill & Shri
Navaratnam)
 ((kiyoshi.takenaka@thomsonreuters.com; +81 3 4563 2788;))