Komatsu President and CEO
Takuya Imayoshi, the company’s CEO, told Reuters that due to the tariffs imposed by U.S. President Trump, Komatsu had previously forecast a 27% decline in profits for this fiscal year but has not yet indicated whether it will formally revise this forecast.
Imayoshi noted that Komatsu manufactures equipment in the U.S. using Chinese steel, and the 90-day suspension of U.S. tariffs on Chinese imports could mitigate the impact on the company. He said, “Retaliatory tariffs from various countries have not been as severe as we initially feared, so the negative impact on our performance appears limited.”
However, Komatsu will still bear some of the pressure from high U.S. tariffs, as about half of the products it sells in the U.S. are manufactured overseas in Japan, Brazil, Thailand, and other countries before being imported into the U.S. Imayoshi emphasized that since U.S. steel prices are more than double those in China, the tariffs will never make U.S. manufacturing cost-competitive, thereby encouraging Komatsu to increase production in the U.S.
Construction equipment made in China gaining market share
He also mentioned that competition with Chinese original equipment manufacturers is becoming as intense as with major rival Caterpillar. Managing Director Chris Slater told Reuters that Pavement construction machinery made in China such as Sany Heavy Industry, XCMG, Shantui, and Liugong are capturing market share from Komatsu and other established players in emerging markets with lower prices and excess capacity.
Imayoshi admitted, “We still lead in durability and reliability, but Chinese manufacturers can now largely offer good performance at lower costs—and in electrification, they are even ahead.”
Potential future M&A to strengthen technology
Since its $2.9 billion acquisition of U.S. Heavy excavator for mining operations manufacturer Joy Global in 2017, Komatsu has not made any major acquisitions. However, Imayoshi hinted that the company might pursue mergers and acquisitions to enhance technologies such as electrification, software-defined vehicles, and autonomous solutions.
In its mid-term business plan announced last month, Komatsu set a target of generating ¥1 trillion in free cash flow over the next three years. “We plan to balance investment and shareholder returns, while also keeping this fund available for M&A if the right opportunity arises,” Imayoshi said. “From a financial structure perspective, we have considerable room to maneuver.”
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