Hitachi slips to loss

Hitachi Construction Machinery reported a second quarter pre-tax loss of - JPY 7.2 billion (- US$ 84 million) set against a pre-tax profit of JPY 22.2 billion (US$ 256 million) for the same period last year.

Second quarter sales dropped -40% to JPY 272 billion (US$ 3.1 billion), down from JPY 454 billion (US$ 5.2 billion).

A statement said, "Demand fell continuously, especially in advanced nations such as Japan, the US and Europe. In emerging countries, such as China, Indonesia and India demand has started to show a more favourable trend however."

In every market, sales in the second quarter were down with Russia, the CIS, Africa and the Middle East leading the way with a -82% decline in sales to JPY 12 billion (US$ 139 million). Sales in Japan fell -27% to JPY 80 billion (US$ 923 million), while in the US sales dropped -57% to JPY 19.7 billion (US$ 228 million).

China showed the smallest decline with sales of JPY 62 billion (US$ 719 million), down -11% on the same quarter last year.

A Hitachi spokesperson said, "During the quarter we focussed on reducing the inventories by remodelling the machinery to meet customers' demands for flexibility in a sluggish market.

"Also, preparing for a recovery in production in the second half or later, we have tried to improve production efficiency through self-manufacturing or advancing the delivery date of parts. We have also tried to reduce cost through joint-procurement throughout the Group."

With exchange rates and material costs for the remainder of the year still unclear, Hitachi Construction Machinery has left its March 2010 earnings forecast as stated in July 2009, with expected sales of JPY 5.9 trillion (US$ 68 billion) and a full-year pre-tax profit of JPY 50 billion (US$ 578 million).