For the first 9 months of 2019 ended Sept. 30, Kubota Corp. reported revenues increased by $888.2 million (7.1%) from the same period in the prior year to $13.5 billion. Domestic revenue increased by $534.4 million (13.7%) from the same period in the prior year to $4.4 billion. The company attributed the increase largely to a significant rise in revenue in Farm & Industrial Machinery.

Overseas revenue increased by $353.8 million (4.1%) from the same period in the prior year to $9 billion because revenue in Farm & Industrial Machinery increased due to strong sales of tractors and construction machinery.

Operating profit increased by $163.1 million (12%) from the same period in the prior year to $1.5 billion. This  increase was mainly due to some positive effects from increased sales in the domestic and overseas markets, decreased sales promotion expenses resulting from lower interest rates in the U.S. and increased product prices. These positive effects compensated for some negative effects such as increased fixed costs and a rise in material prices. Profit before income taxes increased by $163.1 million (11.5%) from the same period in the prior year to $1.6 billion due to increased operating profit.

Farm & Industrial Machinery

Farm & Industrial Machinery is comprised of farm equipment, agricultural‐related products, engines and construction machinery. Revenue in this segment increased by 6.5% from the same period in the prior year to $11.2 billion and accounted for 83.1% of consolidated revenue.

Domestic revenue increased by 12.2% from the same period in the prior year to $2.4 billion because sales of farm equipment increased significantly. In addition, sales of construction machinery and engines also increased.

Overseas revenue increased by 5% from the same period in the prior year to $8.8 billion. In North America, sales of tractors and construction machinery increased significantly because the solid market continued. In addition, some shipments, which were delayed in the second half of the prior year, were realized in this year and the newly introduced model of construction machinery contributed to increased sales.

In Europe, revenue translated in yen decreased due to a negative effect from the yen appreciation against the Euro and the British pound sterling, in addition to stagnated sales of construction machinery in the United Kingdom along with a concern about economic downturn caused by Brexit. On the other hand, sales of tractors and construction machinery increased in France and Germany. In Asia outside Japan, revenue decreased mainly due to stagnant sales of combine harvesters and rice transplanters in China despite increased sales of farm equipment and construction machinery in Thailand. In Other areas, sales of tractors and construction machinery in Australia decreased due to drought and economic downturn.

Operating profit in this segment increased by 9.7% from the same period in the prior year to $1.6 billion due to some positive effects mainly from increased revenue in domestic and overseas markets, decreased sales promotion expenses resulting from lower interest rates in the U.S. and higher product prices, which compensated for some negative effects from increased fixed costs and a rise in material prices.

Outlook for 2019

Kubota revised its forecasts for revenue for the year ending Dec. 31, 2019, downward to $17.7 billion, a decrease of $460.7 million from the previous forecasts, which were announced in February 2019. This revision was made because overseas revenue is expected to decrease from the previous forecasts due to some negative impacts including stagnating demand in China and inclement weather in each region such as Southeast Asia.

“Operating profit is forecast to remain unchanged from the previous forecasts at $1.8 billion, in the light of decreased sales promotion expenses resulting from lower interest rates in the U.S. and declining material prices compared with our assumption despite decreased revenue. Profit before income taxes and profit attributable to owners of the parent are forecast to remain unchanged from the previous forecasts at $1.9 billion and $1.3 billion, respectively,” the company said.

These forecasts are based on the assumption of exchange rates of ¥109=USD1 and¥122=EUR1.