October 2, 2007 -- Komatsu Ltd. (6301) is fortifying its construction machinery leasing and financing business in Japan and abroad, seeking to turn the segment into a stable source of income. Leased equipment can also be sold as used machinery, usually for a high price, after lease contracts expire. Komatsu has lagged behind U.S. rival Caterpillar Inc. in expanding leasing businesses, but will now strengthen the segment.
To this end, Komatsu recently formed a wholly owned leasing subsidiary in Shanghai to take advantage of China's construction boom. The unit caters to small local firms unable to buy equipment upfront. Revenue from leasing of hydraulic excavators and other machinery at the unit are targeted at 45 billion yen through fiscal 2009.
Komatsu has set up a group for overseeing global leasing operations at its management planning office in Japan. By creating a single entity supervising leasing businesses around the world, the firm aims to improve efficiency.
Construction machinery assets in Komatsu's leasing and financing operations totaled around 400 billion yen at the end of March, more than double the March 2003 level. That amount is expected to increase 15% to 460 billion yen by the end of March 2008 and may climb to 500 billion yen by March 2010.
Source: Nikkei Report
