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Kubota Corp, Japan
COMPANY PROFILE
Kubota Corp, Japan Profile
Japan’s Kubota Corp is a diversified manufacturer whose products are focused on food, water and the environment. The company has three reporting segments: Farm & Industrial Machinery, Water & Environment, and, Other. The first of these is its largest and encompasses the production of farm equipment, engines and construction machinery. The Water and Environment segment targets water infrastructure applications ranging from water intake and purification to water supply and wastewater treatment. Its products range from ductile iron pipes, plastic pipes, pumps, valves through to membranes and environmental plants. The Other segment includes the design, construction and servicing of various works, as well as the manufacture and sale of housing equipment. Analysis
Kutota Corp posted consolidated revenues for fiscal 2013 of ¥1167.6 billion, up 15.8% from the prior year. The sales figure represented a new record for the company, eclipsing the previous peak set in fiscal 2008 prior to the global financial crisis. The company’s overseas sales contributed a record 54% of the revenue total reflecting Kubota’s ongoing efforts to develop its overseas production bases and sales network. In the company’s Water & Environment segment, home to its water treatment and membrane operations, revenues increased 7.1% on the prior year to reach ¥282.1 billion and accounted for 24.1% of consolidated revenues. Domestic revenues in the segment increased 5.6% to ¥245.6 billion with sales of environment-related products rising significantly owing to higher sales of water and sewage treatment equipment and plants. In addition, revenues in pipe and social infrastructure-related products also increased. The segment’s international revenues rose 19.2% to ¥36.5 billion, primarily through higher sales in ductile iron pipes and valves. Kubota’s operating income rose 7.1% on the fiscal 2012 figure to reach ¥113.2 billion, reflecting the increase in revenues in both the Farm & Industrial Machinery and Water & Environment segments as well as a general decline in material costs. These gains exceeded the impact of increases in other areas, such as higher pension costs. In the Water & Environment segment, operating income was up 34.6% on the year earlier at ¥23.5 billion, with the associated margin rising from 6.6% to 8.3%. Consolidated net income attributable to Kubota was ¥73.7 billion, 19.7% higher than in the prior year.
COMMENT Kubota’s focus in fiscal 2014 is the targeting of some key markets in its major sectors and a continuing drive to expand its presence in international markets. In the water and environment field, Kubota aims to further expand its existing businesses in the public sector, such as equipment sales and plant construction, while creating new business opportunities in the private sector. Despite significant gains in overseas sales in recent years Kubota still believes its operations remain overly focused on its domestic market. Consequently, it is planning to further grow its international sales through restructuring and expansion efforts designed to better align itself with overseas markets. These plans include strengthening its marketing and R&D activities to enable it to produce products better tuned to local needs, while also facilitating a move to increased international production. It also plans to continue the expansion of its global sales network. The current targets are China, South East Asia and South Asia, where the company has already established a sales network, but it also plans to move into regions where it does not currently have a presence such as Africa, Russia and South America in the next five to ten years. ■
Key Figures (¥ billion) Kubota Corp Revenue Of Which: Water & Environment
Year ended 31.3 2011
2010
2009
1008.0
933.7
930.6
1107.5
2013
2012
1167.6 282.1
263.3
253.2
n/a
n/a
Cost of Revenue
848.1
735.8
678.8
n/a
n/a
Gross Margin
319.5
272.2
254.9
n/a
n/a
R&D Expenses
31.2
27.9
25.0
25.2
26.3
Operating Income Of Which: Water & Environment
113.2
105.7
86.1
69.7
102.8
23.5
17.5
15.6
n/a
n/a
Income before Income Taxes
120.5
100.9
91.3
73.5
83.3
73.7
61.6
54.8
42.3
48.1
Net Income Contact Details
Chair, President and CEO: Address:
88
Filtration Industry Analyst
Yasuo Masumoto 1-2-47 Shikitsu-higashi Naniwa-ku Osaka 556-8601 Japan
Tel: +81 6 6648 2937 Web: www.kubota-global.net
December 2013
Kubota Corp, Japan Profile
Japan’s Kubota Corp is a diversified manufacturer whose products are focused on food, water and the environment. The company has three reporting segments: Farm & Industrial Machinery, Water & Environment, and, Other. The first of these is its largest and encompasses the production of farm equipment, engines and construction machinery. The Water and Environment segment targets water infrastructure applications ranging from water intake and purification to water supply and wastewater treatment. Its products range from ductile iron pipes, plastic pipes, pumps, valves through to membranes and environmental plants. The Other segment includes the design, construction and servicing of various works, as well as the manufacture and sale of housing equipment. Analysis
Kutota Corp posted consolidated revenues for fiscal 2013 of ¥1167.6 billion, up 15.8% from the prior year. The sales figure represented a new record for the company, eclipsing the previous peak set in fiscal 2008 prior to the global financial crisis. The company’s overseas sales contributed a record 54% of the revenue total reflecting Kubota’s ongoing efforts to develop its overseas production bases and sales network. In the company’s Water & Environment segment, home to its water treatment and membrane operations, revenues increased 7.1% on the prior year to reach ¥282.1 billion and accounted for 24.1% of consolidated revenues. Domestic revenues in the segment increased 5.6% to ¥245.6 billion with sales of environment-related products rising significantly owing to higher sales of water and sewage treatment equipment and plants. In addition, revenues in pipe and social infrastructure-related products also increased. The segment’s international revenues rose 19.2% to ¥36.5 billion, primarily through higher sales in ductile iron pipes and valves. Kubota’s operating income rose 7.1% on the fiscal 2012 figure to reach ¥113.2 billion, reflecting the increase in revenues in both the Farm & Industrial Machinery and Water & Environment segments as well as a general decline in material costs. These gains exceeded the impact of increases in other areas, such as higher pension costs. In the Water & Environment segment, operating income was up 34.6% on the year earlier at ¥23.5 billion, with the associated margin rising from 6.6% to 8.3%. Consolidated net income attributable to Kubota was ¥73.7 billion, 19.7% higher than in the prior year.
COMMENT Kubota’s focus in fiscal 2014 is the targeting of some key markets in its major sectors and a continuing drive to expand its presence in international markets. In the water and environment field, Kubota aims to further expand its existing businesses in the public sector, such as equipment sales and plant construction, while creating new business opportunities in the private sector. Despite significant gains in overseas sales in recent years Kubota still believes its operations remain overly focused on its domestic market. Consequently, it is planning to further grow its international sales through restructuring and expansion efforts designed to better align itself with overseas markets. These plans include strengthening its marketing and R&D activities to enable it to produce products better tuned to local needs, while also facilitating a move to increased international production. It also plans to continue the expansion of its global sales network. The current targets are China, South East Asia and South Asia, where the company has already established a sales network, but it also plans to move into regions where it does not currently have a presence such as Africa, Russia and South America in the next five to ten years. ■
Key Figures (¥ billion) Kubota Corp Revenue Of Which: Water & Environment
Year ended 31.3 2011
2010
2009
1008.0
933.7
930.6
1107.5
2013
2012
1167.6 282.1
263.3
253.2
n/a
n/a
Cost of Revenue
848.1
735.8
678.8
n/a
n/a
Gross Margin
319.5
272.2
254.9
n/a
n/a
R&D Expenses
31.2
27.9
25.0
25.2
26.3
Operating Income Of Which: Water & Environment
113.2
105.7
86.1
69.7
102.8
23.5
17.5
15.6
n/a
n/a
Income before Income Taxes
120.5
100.9
91.3
73.5
83.3
73.7
61.6
54.8
42.3
48.1
Net Income Contact Details
Chair, President and CEO: Address:
88
Filtration Industry Analyst
Yasuo Masumoto 1-2-47 Shikitsu-higashi Naniwa-ku Osaka 556-8601 Japan
Tel: +81 6 6648 2937 Web: www.kubota-global.net
December 2013