Komatsu’s D155AX-8 crawler dozer introduced in December.With profit and sales declines in full effect for competitors Caterpillar, John Deere and CNH Industrial, Komatsu earnings reports been the lone bright spot among construction equipment manufacturers. Even Terex, which finished the year with a 27 percent profit increase, is expecting a more challenging 2015 with sales declines.
Komatsu sales increased 6.4 percent year-over-year in the third quarter which ended December 31, with profit up 5.5 percent. As the company noted in that 3Q report, a big reason for those increases was the depreciation of the Japanese yen. And according to a recent report from Bloomberg Business, the yen has fallen 20 percent against the dollar since the beginning of July.
Caterpillar and its dealer network have taken notice, the publication reports.
Caterpillar vice president of financial services Mike DeWalt told Bloomberg that the yen’s depreciation is allowing Komatsu to be much more competitive on pricing.
“What we are hearing from dealers is Komatsu is being aggressive,” he said, also noting that some Cat dealers believe, “maybe the Komatsu dealer is getting some help from the factory.”
With 63 percent of its assets in Japan, Komatsu is greatly benefitting from a lower-cost manufacturing base, Bloomberg reports.
However, Komatsu tells the publication that its policy is to “keep increasing average product prices every year regardless of currency movement.”
The timing of the currency shift is definitely fortunate for Komatsu, the no. 2 construction equipment manufacturer to Caterpillar. Both companies have been impacted by a severe slump in demand for mining equipment and Cat has seen further a reduction in sales due to falling oil prices impacting demand from the energy sector.
