Hitachi construction eyes 40% op profit jump in FY12

TOKYO (Nikkei) -- Hitachi Construction Machinery Co. (6305) is expected to log a consolidated operating profit of around 80 billion yen for the current fiscal year through March 2013, up about 40% from the estimated figure for last year.

Sales are seen growing about 10% to roughly 880 billion yen. Sales and operating profit are both expected to trail only the all-time highs marked in fiscal 2007.

Active resource development will likely drive the earnings of mining machinery operations. Sales of ultralarge dump trucks and excavators for coal mining in Indonesia and Australia will likely climb. This segment's sales, including parts, are forecast to rise more than 20% to 180 billion yen.

Sales of replacement parts for construction and mining equipment are expected to fare well, as are repairs and other services. This segment's sales are seen climbing 12% to roughly 180 billion yen. The operating profit margin for this business is high at around 25%.

Sales of construction machinery are expected to grow by more than 10% in North America and Japan in volume terms. In North America, rental firms are boosting inventories on the back of economic recovery, while demand for equipment for building shale gas pipelines is on the rise. In Japan, sales of excavators for clearing debris and other tasks has continued to climb since the Great East Japan Earthquake.

Construction machinery sales in China plunged more than 40% last fiscal year due to monetary tightening there, but will likely rebound to show 4% growth this fiscal year.

For the fiscal year ended March 31, sales apparently rose 3% to roughly 800 billion yen and operating profit likely climbed 35% to about 56 billion yen. The figures are short of earlier forecasts by 10 billion yen and 4 billion yen, respectively, on weak sales in China during the January-March quarter.