Transportation Machinery Division Strategies and Initiatives
Industry Environment and Fiscal 2010 Results
Entry into New Fields and Earnings Base Enhancement
In fiscal 2010, global sales volume of automobiles hit record levels, surpassing the 71.4 million units sold in 2007 prior to the global financial crisis. Along with greater-than-expected automobile sales in China and India, this outcome was brought by temporary growth in certain Western Europe and Japan stimulated by incentive measures for new car purchases. Similarly, the construction machinery market improved markedly, with growth led mainly by the emerging economies of China, ASEAN countries, and India and the mining markets of resource-producing countries. Growth was also assisted by modest recoveries in the U.S. and European markets.
We expanded our revenue base in the automobile, construction machinery and agro machinery sectors by lowering the break-even point of existing subsidiaries since last year. We also entered the after-market business which is relatively resistant to economic volatility, and enhanced components business and services as a dealer. The result was notable improvement in the earnings bases at operating companies. This trend was most evident in the United States, Asia and other regions where market recovery is gaining ground. Markets where recovery has been slow, such as Mexico and the construction machinery market in Russia, also saw a gradual rebound from the second half of fiscal 2010, and should see earnings stabilize in fiscal 2011.
In the aerospace and defense systems fields, our participation in the aircraft operating lease business enabled the division to offer a wider range of services. In the ship field, the acquisition of the LNG ship ownership allowed our division to take the first step to expand LNG and other energy transportation businesses.
As a result, the division's consolidated gross trading profit was ¥42.9 billion, and net income was ¥10.7 billion in fiscal 2010.
Initiatives in Fiscal 2011
More Firm Functions for Customers
The division's focus in fiscal 2011 will be to reinforce more firm functions for customers, as well as to strengthen value chains with existing businesses and switch to a business portfolio offering stable high earnings. We will also raise the division’s value of the industry in both quantitative and qualitative terms by taking stronger initiatives in priority sectors in each business segment.
In the automobile, construction machinery, and agro machinery sectors, we will expand sales while maintaining the break-even points lowered in fiscal 2009. We will also focus on the retail financing and aftermarket businesses, which are resistant to economic volatility, to build a stable earnings base. In the aerospace and defense systems fields, we will concentrate on the lease and aftermarket sectors with the aim of delivering even higher added value to customers. In ships, in addition to LNG transport, we will promote business expansion in LNG FPSO(*1) / FSRU(*2) and other peripheral fields. At the same time, we are determined to improve customer service levels by strengthening our value chain covering new shipbuilding, chartering, secondhand ships, and ship materials.
*1 FPSO: Floating Production, Storage and Offloading system
*2 FSRU: Floating Storage and Regasification Unit
