CAT

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

Credit: REUTERS/IVAN ALVARADO

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;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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