May 31, 2016
Kobelco Construction Machinery Co., Ltd.
The Kobelco Construction Machinery Group has formulated its Medium-Term Management Plan covering fiscal years 2016 to 2020.
During the previous medium-term plan from fiscal years 2013 to 2015, the Group re-entered the European and American markets and strove to maximize Kobelco’s brand value throughout the world. At the same time, the Group aimed at maximizing profits by implementing profit-oriented strategies for regions where it already had a certain share and addressed business challenges under a basic policy to undergo a transformation into a strong enterprise capable of accommodating any changes in the business environment.
Specifically in terms of development and production, the Group promoted the reduction of development lead time and succeeded in cutting the development time for both heavy and mini excavators by about half. It also significantly reduced the total production lead time. At the Numata Factory in Hiroshima, the Group put effort into improving its competitiveness as a parts plant as well as into shifting to in-house production of a high value-added product menu.
In terms of sales and marketing, the Group has been building a foundation in both Europe and the U.S. by steadily establishing distributor networks. Additionally, the start-up of its U.S. manufacturing facility has been pushed forward by one year, and operations are to begin soon.
The crane business experienced a consolidated term-end deficit three times in a row until fiscal year 2012. To achieve a surplus for fiscal year 2013, the Group addressed business challenges under two basic policies to 1) establish a business foundation to ensure stable earnings and 2) build a foundation for business expansion and development.
As a result of these efforts and generally stable market conditions, the Group achieved higher earnings and posted a surplus on an ordinary income basis in fiscal 2013, with increasing earnings thereafter. From the standpoint of business selection and focus, the Group identified unprofitable products while making a decision to re-enter the large-sized LBCC market.
The new medium-term management plan is the first medium-term plan for Kobelco Construction Machinery that combines both the excavator and crane businesses. The Group will benefit from the advantages of the consolidation as well as leverage the synergy from both companies’ strengths.
With radical changes in each market, the Group will carry out region-specific manufacturing and sales strategies tailored for each market including <span style="text-decoration:underline;">reconstruction of the business in China</span>, <span style="text-decoration:underline;">ICT promotion</span>, and <span style="text-decoration:underline;">re-entry into the large-sized crawler crane business</span>. At the same time, the Group will strive for continuous growth in the global market by building, improving and extending the Group’s internal systems and frameworks that have been continuing from the previous medium-term plan and by establishing a more solid business foundation.
The medium-term management policy is as follows.
The Kobelco Construction Machinery Group will:
Concretely, the Group will operate its business based on the following basic strategies.
1. Increase presence in Europe, the U.S. and upcoming growth areas and establish a solid presence as a global excavator manufacturer.
|Defensive marketing||Japan, Southeast Asia, and China|
|Proactive marketing||North America, Europe, and India|
|Market development||The Middle East and Africa|
2. Provide differentiated products and services that competitors cannot match, provide solutions utilizing IT, and become a company that will be chosen by customers and distributors.
3. Make a transformation into a strong enterprise capable of accommodating any changes in the business environment and ensuring stable earnings.
4. Improve operational quality in order to ensure stable earnings
5. Establish a foundation for business growth.
6. Strengthen the cultivation of global human resources and improve global development capabilities through familiarization with the Group’s spirit.
Medium-term Management Plan: Image of Business Objectives (Consolidated)
(in billions of yen)
(Two companies together)
|Net Sales||344.6||3,35.0||400.0 or higher|
|Ordinary Income||-12.1||8.0||30.0 or higher|
*The information contained herein is as of the date this announcement was made and it may be changed without a prior notice.