Birtley-based Komatsu returns to profit following lift in demand

Excavator maker Komatsu is back in the black with operating profit of £4.4m

An employee of ALS Europe makes final checks of Komatsu UK machines before they are transported around the world for delivery.
An employee of ALS Europe makes final checks of Komatsu UK machines before they are transported around the world for delivery.

Birtley-based excavator manufacturer Komatsu UK has returned to profit after a stronger year in the construction sector lifted rise in demand.

The firm, which employs 388 people, suffered heavy losses in the year ended March 2013, when a depressed European market following the financial collapse of 2008 knocked demand for construction equipment, leading to an operating loss of £14.1m. Turnover during that period also dropped by 20% to £140.6m.

Despite enduring very difficult trading conditions the firm said that confidence was slowly returning to the market.

Latest accounts posted at Companies House confirm the rising positivity within construction, with the business posting operating profit of £4.4m. Sales also grew by 8.8% to £153.1m.

And while demand from European customers dropped, the firm was boosted by some significant orders from further afield. A strategic report accompanying the accounts filed at Companies House said demand in the European market has been subdued since the financial crisis of 2008 but that there are signs of a recovery in demand.

It noted a drop in European sales but said there was an increase in sales to other territories, including some ‘one-off’ sales to the USA. Among the lucrative deals was an order worth more than £25m for its US counterpart, for 190 hydraulic excavators to sister company Komatsu America.

Stuart Reid, director of finance, said: “European trading conditions remained difficult in the year to March 2014, but the business benefited from additional, one-off sales to America. There will be no repeat of the American business in 2014, though there are initial signs of improving demand in some European markets. The extent of such recovery in the European markets, however, remains uncertain.”

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