Komatsu Ltd. last week revised the projections for consolidated and non-consolidated results for the fiscal year ending March 31, which the company announced on Oct. 29. The company revised consolidated net sales downward 14.7 percent from 2.38 billion yen (U.S. $26.7 million) to 2.03 billion yen (U.S. $22.8 million). Non-consolidated net sales were revised downward 14 percent from 930,000 yen (U.S. $10,452) to 800,000 yen (U.S. $8,991).
In the construction, mining and utility equipment business, while demand remained sluggish in Japan, North America and Europe, it continued to expand in emerging economies against the background of brisk infrastructure investment and resource development until the end of the first-half period of the current fiscal year. However, the financial turmoil, which originated in the United States last fall, has adversely affected emerging economies, suddenly changing Komatsu's business environment. With a quick and drastic drop in demand around the world, Komatsu expects to face a similar challenging environment in the fourth quarter of the current fiscal year.
In addition to demand sliding worldwide, Komatsu has been making a sizable adjustment of production in order to ensure an appropriate level of distributors' inventories as soon as possible. Currencies of resource-rich countries, such as Australia, Russia, South Africa and Brazil have remained depreciated against the Japanese yen. In light of these factors, Komatsu anticipates that full-year sales will be lower than the figure projected earlier.
In the industrial machinery and others business, Komatsu also anticipates that full-year sales will be lower than the figure projected earlier, as adversely affected by rapidly curtailed capital investment in automobile manufacturing and other industries since last fall. Mainly as a result of projected declines in sales of these two segments, Komatsu also anticipates that profits for the current fiscal year will be lower than the figures projected earlier.
Komatsu's basic policy for redistribution of profits is described below, and it has not been changed. The company says it is building a sound financial position and flexible and agile corporate strengths to increase its corporate value. Concerning cash dividends to shareholders, the company maintains the policy of redistributing profits by considering consolidated business results and continuing stable dividends.
Specifically, the company has set the goal of a consolidated payout ratio of 20 percent or higher, and maintains the policy of not decreasing dividends, as long as a consolidated payout ratio will not surpass 40 percent.