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Hitachi to double excavator sales in China

By Masumi Suga and Hiroshi Matsui (China Daily)
Updated: 2010-03-03 10:08
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TOKYO - Hitachi Construction Machinery Co, Asia's second-largest excavator maker, may double sales in China this quarter, beating its forecast as the nation's spending on railroads and mining fuels demand.

The Tokyo-based company's excavator sales in China, the world's largest and fastest growing market, may surpass 3,500 units during the three months ending March 31, compared with 1,774 a year earlier, Chief Executive Officer Michijiro Kikawa said. That would exceed the 3,000 units the company projected for the period on Jan 27.

Demand for excavators in China may climb 20 percent in the year starting April 1 from a record this fiscal year, Kikawa said. Heavy machinery sales in China are being driven by the nation's efforts to develop inland regions and increase coal production to meet rising demand for electricity. Hitachi Construction's 17 percent share of China's excavator market is the third largest after Komatsu Ltd and Doosan Infracore Co.

"I expect China's strength will carry over into next fiscal year," Kikawa said.

"There's no sign of a slowdown despite adjustments to monetary policy."

China's economic growth accelerated in the fourth quarter to 10.7 percent, the fastest pace since 2007, because of stimulus spending, subsidies for consumer purchases and a record 9.59 trillion yuan ($1,40 trillion) of bank lending last year.

The nation's economy may expand 9 percent in 2010, according to the World Bank, and is expected to overtake Japan as the world's second-largest economy.

Hitachi Construction and its rivals, including Caterpillar Inc in Peoria, Illinois, have relied on growth in China as sales in the United States, Europe and Japan plummeted.

Hitachi Construction sold 556 excavators in China in January, exceeding its estimate of 530 units, and February sales of 679 units more than doubled the forecast of 300. Sales this month may reach 2,300, 100 more than the company's forecast, Kikawa said.

In China, about 40 percent of annual sales of excavators are typically sold in the first three months after the Spring Festival holiday, according to Shirou Ishii, a spokesman for Hitachi Construction. The festival fell in the second half of February this year.

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Hitachi Construction, 50 percent owned by Hitachi Ltd, which makes nuclear reactors, home appliances and hard disk drives, rose 3.2 percent to 1,910 yen ($21.40) on the Tokyo Stock Exchange on Monday. The shares have fallen about 21 percent this year.

Hitachi Construction has lagged Komatsu, the world's second-largest maker of excavators, in achieving an earnings recovery. The company had operating profit of 900 million yen in the three months ended Dec 31, less than one-sixth of its target.

The company left its full-year operating profit forecast unchanged at 24 billion yen, 51 percent below the year-earlier level, in its Jan 27 earnings statement.

Bloomberg News