Komatsu UK hit hard by economic downturn: Slump puts digger maker £13m in red

Lack of demand for construction equipment led it to report £13.3m losses for the year for Birtley firm Komatsu UK

Excavator maker Komatsu UK went into the red in its latest accounts as lack of demand for construction equipment led it to report £13.3m losses for the year.

The Birtley firm, a wholly owned subsidiary of Japan’s Komatsu Ltd, last year posted a bouyant boost in profits of £5m and healthy turnover of £176m.

The financial crisis plunged the sector into depression, leading the company to record a fall in turnover to £140.6m for the year ending March 31, 2013, while average headcount went from 395 to 389.

Komatsu makes and sells hydraulic excavators, predominantly for the European market, and the company says competition has been strong.

Its annual accounts said: “Demand for construction equipment in the European market has been depressed since the financial collapse of 2008 and competition for market share between the major competitors within the market has been intense.

“This has made trading very difficult, which is reflected in the results. Demand within the European market should recover as confidence returns and economic activity recovers, but the extent and pace of such recovery remains uncertain.”

Losses were influenced by low sales and the impact of the strong yen on the cost of excavator components imported from Japan.

To mitigate risk, the company tightly controlled overheads and diversified the product range.

In the past financial year, the department hit hardest by job losses was production, with 13 jobs cut, but seven new employees were hired under the heading of “administration and other staff”. The emoluments of the highest paid director were �393,000, compared with �329,000 the previous year. The report said: “The current economic conditions create an element of uncertainty over demand for the company’s products and services.

“The company’s forecasts and projections, taking account of reasonably possible change in trading performance, show that the company is expected to have a sufficient level of financial resources available through current facilities and therefore the directors believe that the company is well placed to manage its business risks, despite the economic uncertainty.”

No one from Komatsu UK was available for comment.

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