By Naomi Tajitsu
TOKYO, July 28 (Reuters) – Komatsu Ltd said first-quarter profit surged on a ‘dynamic’ expansion of sales in China, where a housing boom beach cheats android and Beijing’s push to create a modern Silk Road trading route is driving robust demand for makers of earth-moving equipment.
It said, however, that the pace of growth in Chinese demand for construction and mining machinery this business year was set to moderate sharply, to around 5-10 percent, after 55 percent growth last year.
“We’ll be watching to see how strongly this recovery continues,” Senior Executive Officer Yasuhiro Inagaki told a conference call.
He added that it was difficult to make forecasts as economic policies could change depending on the deliberations of the Communist Party’s congress later this year.
April-June operating profit for the Japanese maker of excavators and dump trucks jumped 76 percent to 52.4 billion yen ($472 million) from the same period a year earlier, its biggest profit increase in more than six years.
Sales of earth-moving equipment in China, its fastest growing market, doubled during the quarter. Although sales were lifted in part by the acquisition of U.S mining equipment firm Joy Global earlier this year, even when that impact was excluded sales were still up 84 percent.
Komatsu joins Caterpillar Inc and domestic rival Hitachi Construction Machinery Co in reporting upbeat earnings this week on robust Chinese demand.
Caterpillar beat estimates and raised its full-year forecast for the second time, the clearest indication yet that it is turning a corner after weak commodity prices and global economic uncertainty hurt orders for earth-moving equipment over the past few years.
Hitachi Construction reported a near seven-fold surge in its quarterly operating profit.
Komatsu maintained its forecast for a 10.4 percent fall in annual operating profit to 156 billion yen ($1.4 billion) due to costs related to the acquisition of Joy Global.
Its stock has risen around 10 percent so far this year on hopes of a global recovery in demand.($1 = 111.2000 yen) (Reporting by Naomi Tajitsu; Editing by Edwina Gibbs)