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Japan Construction Machinery Demand To Decline 42%

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More bad news from Japan, this is YoY as well, the fall from peak must be huge :ph34r:


Japan Construction Machinery Demand to Decline 42% (Update1)

By Masumi Suga and Hiroshi Matsui

Aug. 20 (Bloomberg) -- Japan’s construction-machinery shipments will slump almost twice as fast as previously forecast as the recession reduces demand in developed countries, an industry group said.

Factory shipments of excavators, tractors, cranes and other machines used in construction and mining may fall 42 percent to 1.137 trillion yen ($12 billion) in the year to March 31, the Japan Construction Equipment Manufacturers Association said today in a statement. In February, the Tokyo-based group forecast a 22 percent drop in shipments to 1.65 trillion yen.

Komatsu Ltd., the world’s second-largest maker of excavators and wheel loaders, and the Tokyo-based company’s closest domestic rival Hitachi Construction Machinery Co. slashed output to shed excess inventories as the economic slump cut demand. The association forecast shipments next year may rise 17 percent, the first increase in three years, led by gains from China and other emerging Asian nations.

“Things will remain tough both at home and abroad,†Michijiro Kikawa, chairman of the association, said today at a press conference in Tokyo. “The market will stay at the bottom in the second half, and we expect a recovery from the first half of next fiscal year,†said Kikawa, also chief executive officer of Hitachi Construction Machinery.

Komatsu fell as much as 2.3 percent and traded 1.2 percent lower at 1,663 yen as of 2:18 p.m. on the Tokyo Stock Exchange. Hitachi Construction Machinery, half owned by electronics maker Hitachi Ltd., fell 0.2 percent to 1,866 yen after sliding as much as 2.1 percent.

U.S. Sales

The global recession cut construction machinery sales to the U.S. and Europe more than the industry had anticipated, Kikawa said.

Exports may fall 44 percent to 763.6 trillion yen this fiscal year and domestic shipments may drop 38 percent to 373.4 billion yen, the association said.

The group represented 74 companies as of the end of July, including the Tokyo-based unit of Peoria, Illinois-based Caterpillar Inc., Osaka-based Kubota Corp. and Kobelco Construction Machinery Co., a unit of Kobe Steel Ltd.

Komatsu last month reported a 92 percent plunge in profit for the April to June quarter and Hitachi Construction swung to a loss in the period.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Hiroshi Matsui in Tokyo at hmatsui2@bloomberg.net.

Last Updated: August 20, 2009 01:53 EDT

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