MOTORCYCLE – Kawasaki 1Q Sales Up, Income Down

Kawasaki Heavy Industries (KHI), a supplier of railcars, ships, construction machinery and powersports vehicles, reported net income of 1.62 billion yen ($14.64 million) for its first quarter ended June 30, 2005. These results are down from net income of 2.72 billion yen ($24.58 million) for the same period last year. (110.63 Yen = $1, the foreign exchange rate on June 30, 2005)
First quarter net sales were 264 billion yen, up from 261 billion yen ($2.39 billion) for the same three months of 2004; gross profit was 31.92 billion yen ($288.52 million), down from 32.17 billion yen ($290.78 million) for the previous year's first quarter.
The company posted 84.28 billion yen ($761.81 million) in net sales of consumer products and machinery, up from sales of 81.53 billion yen ($736.96 million) in the first quarter of 2004. Consumer products include powersports vehicles. Operating income from consumer products and machinery was 3.20 billion yen ($28.92 million), up from 978 million yen ($8.84 million) in 2004.
For the full year ending March 31, 2005, Kawasaki's consumer products and machinery sales were 338.5 billion yen ($3.06 billion), up 20.1 billion yen ($181.68 million) or 6.3% from the prior year.
Full year worldwide sales of Kawasaki motorcycles, ATVs, utility vehicles and personal watercraft amounted to 541,000 units, up 73,000 units or 15.6% from powersports vehicle sales during the prior year. Of those total worldwide powersport vehicle sales, sales in North America totaled 217,000 units, up 26,000 units or 13.6% from North American sales last year.
“Fiscal 2005, ended March 31, 2005, brought some signs of improvement in the operating environment,” KHI Chairman Masamoto Tazaki said in a year-end report released last month. “However, the operating environment continued to be challenging, as the yen appreciated further against the U.S. dollar and prices of raw materials-including steel, in particular-climbed to new highs.”
Tazaki says he believes difficult operating conditions will continue through fiscal 2006, ending March 31, 2006, and said issues requiring attention will include increases in raw materials prices and trends in the value of the yen against the U.S. dollar and other currencies.
As part of its medium-term management plan, Kawasaki plans to change its business structure to more easily adapt to its operating environment and create a stronger earnings base, with the objective of attaining sustained growth.
“As part of these activities, we are allocating our corporate resources selectively and focusing on our areas of greatest strength,” Tazaki said. “We are focusing our resources especially on the Aerospace and Consumer Products & Machinery businesses, which we have positioned as our 'core businesses', as well as on our Rolling Stock and Gas Turbine & Machinery businesses, which we have positioned as 'developing businesses'.”
Kawasaki forecasts net sales of 1.2 trillion yen ($10.846 billion) and net income of 14 billion yen ($126.54 million) for the year ending March 31, 2006.

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