For the six months ended June 30, 2022, revenue of Kubota Corporation and its subsidiaries increased by ¥159.1 billion [14.4%] (~ USD 1.2 billion) from the same period in the prior year to ¥1,260.5 billion (~USD 9.5 billion). The farm and industrial machinery division attributed with 87 per cent to the revenues of Kubota.
(USD equivalent based on exchange rate of August 10, 2022)
Domestic revenue decreased by ¥3.5 billion (USD 26 million) [1.1%] from the same period in the prior year to ¥299.1 billion (USD 2.25 billion) because of decreased revenue in Farm & Industrial Machinery, despite increased revenue in Water & Environment.
Overseas revenue increased by ¥162.5 billion (USD 1.2 billion) [20.3%] from the same period in the prior year to ¥961.4 billion (USD 7,23 billion) because of increased revenue in Farm & Industrial Machinery and Water & Environment.
Operating profit decreased by ¥26.5 billion [18.0%] (USD 199.2 million) from the same period in the prior year to ¥121.0 billion (USD 910 million) mainly due to some negative effects from a rise in material prices and logistics expenses, despite some positive effects from sales price increase and favorable impact of foreign exchange rates. Profit before income taxes decreased by ¥17.8 billion [11.9%] (USD 134 million) from the same period in the prior year to ¥131.6 billion (USD 990 million) due to decreased operating profit. Income tax expenses were ¥30.9 billion (USD 232 million). Share of profits of investments accounted for using the equity method was ¥1.2 billion (USD 9.03 million). Profit for the period decreased by ¥11.2 billion [9.9%] (USD 84.3 million) from the same period in the prior year to ¥102.0 billion (USD 768 million).
Profit attributable to owners of the parent decreased by ¥11.7 billion [11.4%] (USD 88 million) from the same period in the prior year to ¥91.2 billion (USD 688 million).
Revenue from external customers and operating profit by each reportable segment were as follows:
1) Farm & Industrial Machinery
Farm & Industrial Machinery is composed of farm equipment, agricultural-related products, engines, and construction machinery.
Revenue in this segment increased by 16.5% from the same period in the prior year to ¥1,096.2 billion (USD 1.3 billion) and accounted for 87.0% of consolidated revenue.
Domestic revenue decreased by 3.0% from the same period in the prior year to ¥155.6 billion (1.18 billion). Sales of agricultural related products decreased due to a decline in rice price and termination of subsidies for business continuation of farmers.
Overseas revenue increased by 20.5% from the same period in the prior year to ¥940.6 billion (USD 7.1 billion. In North America, shipment of tractors made progress to resolve back orders and replenish dealer inventories, and sales of construction machinery were solid due to demand for infrastructure construction. In Europe, sales mainly of construction machinery and engines increased due to the stable market. In Asia outside Japan, sales of farm equipment, mainly tractors, in Thailand increased due to progress in developing dryland farming, while sales of farm equipment for rice farming were slow due to stagnated rice price. In China, sales of construction machinery and rice transplanters decreased by missing sales opportunities due to lockdown. Sales in India increased due to consolidation of Escorts Limited (currently, Escorts Kubota Limited; hereinafter, “EKL”).
Operating profit in this segment decreased by 18.5% from the same period in the prior year to ¥117.3 billion (USD 887 million) due to some negative effects from a rise in material prices and logistics expenses, while there were some positive effects from sales price increase and favorable impact of foreign exchange rates.
2) Water & Environment
Water & Environment is composed of pipe system-related products (ductile iron pipes, plastic pipes, and other products), materials and urban infrastructure-related products (reformer and cracking tubes, spiral-welded steel pipes, air-conditioning equipment, and other products), and environment-related products (environmental control plants, pumps, and other products).
Revenue in this segment increased by 4.2% from the same period in the prior year to ¥152.7 billion and accounted for 12.1% of consolidated revenue.
Domestic revenue increased by 2.6% from the same period in the prior year to ¥131.9 billion due to an increase in sales of plastic pipes for construction equipment.
Overseas revenue increased by 15.6% from the same period in the prior year to ¥20.8 billion due to increased sales of reformer and cracking tubes and pumps.
Operating profit in this segment decreased by 26.6% from the same period in the prior year to ¥9.7 billion due to a negative effect from a rise in material prices, despite a positive effect from sales price increase.
3) Other
Other is mainly composed of a variety of other services. Revenue in this segment decreased by 14.7% from the same period in the prior year to ¥11.6 billion and accounted for 0.9% of consolidated revenue.
Operating profit in this segment increased by 7.0% from the same period in the prior year to ¥1.7 billion.
Forecasts for the year ending December 31, 2022
The Company revised its forecasts for revenue for the year ending December 31, 2022 upward to ¥2,640.0 billion, an increase of ¥190.0 billion from the previous forecasts, which were announced on February 14, 2022. This revision was made because overseas revenue is expected to increase in consideration of the current trend of exchange rate fluctuations, consolidation of EKL, and an increase in sales of farm equipment in Thailand.
Operating profit was revised to ¥260.0 billion, an increase of ¥10.0 billion from the previous forecasts considering the revised revenue forecast and current trend of exchange rate fluctuations and inflation. Profit before income taxes was revised to ¥273.0 billion, an increase of ¥20.0 billion from the previous forecasts and profit attributable to owners of the parent was revised to ¥185.0 billion, an increase of ¥7.0 billion from the previous forecasts.
The infection of new variants of COVID-19 is spreading around the world. If the situation with COVID-19 gets worse, there is a possibility that the Company’s results of operations will be affected. However, the impact is not included in these forecasts because it is difficult to make assumptions at this point.
These forecasts are based on the assumption of exchange rates of ¥127=US$1 and ¥135=€1.
