Kobe Steel has reduced its profit target by 58 percent for its construction machinery unit Kobelco Construction Machinery in response to the slowing of China’s economy, the Japanese steelmaker said. The slowdown in China is adversely affecting Japanese companies, especially those with construction-related activity.
Kobelco contributed 21 percent to Kobe Steel’s profit in the fiscal year ended March 2015, as well as 17 percent of its total revenues. Excavator sales have decreased in China for Kobelco, making it difficult for the equipment manufacturer to meet its sales and profits targets. Kobelco president Jun Fujioka, who is also chairman of Japan Construction Equipment Manufacturers’ Association, said that sales of excavators by foreign companies would decline by 40 percent this year and that the association’s survey show the drop will continue in 2016.
Kobelco has slashed its China operations by reducing production levels to avoid excess inventories.
