Komatsu warns of tough 2016

Komatsu, the world’s second-biggest maker after Caterpillar of mining and construction equipment, said it faces another tough year ahead, reports Bloomberg

It is another sign of poor prospects for global aggregates and mining markets as falling commodity prices cool customers’ investment plans.

“Demand will probably be lower than the current year’s level,” said chief executive Tetsuji Ohashi speaking to reporters Tuesday at the company’s Tokyo headquarters. “We anticipate there will be fewer markets showing growth.”

Ohashi said that the bottom of the market for mining equipment is getting closer, without giving a time-frame for recovery. In October, following a 19% slump in Komatsu’s quarterly profit, his view was that a recovery is unlikely next year and uncertain in 2017.

Komatsu isn’t counting on the usual uptick in demand seen among buyers in China after the Chinese New Year, Ohashi said. The company’s exposure to China, once its largest market, has shrunk to 4% of sales as growth weakens in Asia’s largest economy.

Demand for mining equipment may enter a fifth year of decline in 2016, with the largest miners predicting another 25% cut in capital spending, according to November 30 report from Bloomberg Intelligence.
Komatsu’s Japanese rival, Hitachi Construction Machinery Co, said in October that China’s excavator market is set to contract to less than one seventh of its 2010 peak in the current year to March.

Ohashi said the majority of the company’s job losses are behind it, after cutting more than 3,500 positions worldwide since 2013.

Komatsu shares closed down 2.1 percent in Tokyo trading, taking its loss for the year to date to 26 percent.


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