Komatsu reported sales of ¥1,892 billion (US$12.4 billion) in the first half of its 2025 financial year, the original equipment manufacturer (OEM) reported today.

Revenue for the Japanese company's mining, construction and utility equipment division, its largest segment, fell 4.8% to ¥1,742 billion ($11.4 billion) and profits fell 13% to ¥242 billion ($1.6 billion) in the half-year.

The OEM giant saw shares fall 4% by the afternoon's trading on the Tokyo bourse.

Its largest division struggled with lower sales volume, higher costs and the yen's appreciation to blame, "despite efforts to improve the selling prices."

Foreign exchange effects took ¥73 billion ($479 million) out of the equipment business's sales, and reduced sales volume by ¥51 billion ($335 million). This was somewhat offset by ¥36 billion ($236 million) in increased prices. 

Profits for the division took a hit from a ¥13 billion ($85 million) rise in production costs and a ¥10 billion ($66 million) rise in fixed costs.

Komatsu's interest-bearing debt rose by 22% to ¥931 billion ($6.1 billion) compared to the first half of 2024.

Region view

North American sales of mining, construction, and utilities equipment fell 8% to ¥460 billion ($3 billion). Komatsu flagged that the effect of US tariffs was "not clearly observed" and that demand for rentals "shows signs of reversal."

Full-year demand in the region was expected to sit between 0% and -5%.

Other declines were reported in Oceania, down 6% to ¥221 billion ($1.45 billion); Asia, down 21% to ¥172 billion ($1.1 billion); China, down 11% to ¥37 billion ($243 million); the CIS, down 13% to ¥27 billion ($177 million); and Japan, down 7% to 142 billion ($932 million).

However, equipment sales rose in Latin America, up 2% to ¥340 billion ($2.2 billion); Europe, up 9% to ¥160 billion ($1 billion); Africa, up 8% to ¥116 billion ($762 million); and the Middle East, up 11% to ¥63 billion ($414 million).

European demand for its equipment was steady, "supported by improved economic sentiment resulting from the European Central Bank's rate cuts."

For mining equipment only, the biggest half-year declines were reported in Asia (33%) and North America (17%).

Projections

Komatsu's revenue expectations for the whole year were ¥3,888 billion ($25.5 billion), down 5% from 2024, but up by ¥143 billion ($939 million) from its April estimates.

Annual sales for Komatsu's mining, construction and utilities division were expected to fall by 6% to ¥3,560 billion ($23 billion, down 1% when currency effects were taken into account).

Profit before tax for the entire year is projected to be ¥464 billion ($3 billion), a 23% decrease from the previous year.

Dividends for the year remain unchanged, however, at ¥190 per share.

Komatsu reported a 13% fall in demand for mining equipment in its second quarter of 2025, driven by falling Indonesian coal prices. A 40% annual fall in sales to Indonesia (in its Asia region) was expected due to "sluggish" coal prices, which were "not expected to recover for the time being".

For the whole year, it expects orders from the mining industry to fall between 10% and 15% compared to 2024, as demand in the rest of the world "remains steady." 

Komatsu projected that sales to the mining sector will decrease by 7.5%, driven by a 48% drop in sales to Asia (primarily due to Indonesian coal troubles) and a 12% drop in sales to North America. Latin American demand projections looked strong, projected to rise by 10%.

Tariff chat

Komatsu improved its forecast of the net effect of tariffs on its profit and loss for the 2025 financial year from its April estimations of ¥68.5 billion ($450 million) to ¥55 billion ($361 million) at the end of September.

While the effect of steel and aluminium tariffs rose by ¥30 billion ($197 million), this would be offset by a reduction in other tariff costs by ¥50 billion ($328 million).

Thus far, the actual effect of tariffs on its profits and losses was ¥7.7 billion ($51 million), inclusive of the cost reduction measures taken to offset the effects of US President Donald Trump's tariffs. 

However, Komatsu noted that "the impact is expected to increase progressively towards the end of the fiscal year."