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PROFIT STILL A DIRTY WORD AT KAWASAKI

Despite growing bike sales, the motorcycle division of Kawasaki Heavy Industries has perennial profit issues, according to results for the nine months of its current fiscal year to date. BDN financial editor Roger Willis reports.

Overall three-quarterly divisional revenue increased by 5.3% to £1.589bn. Turnover from wholesale motorcycle shipments for developed countries, mainly in Europe, was also 5.3% up to £554m — based on 4.2% volume growth to 100,000 units. The number of bikes shipped into emerging markets was 11% higher at 253,000. But repatriated revenue from these rose by only 6.2% to £422m.

Combined utility vehicle, ATV and personal watercraft volume, predominantly destined for North America, improved by 9.3% to 47,000. Associated revenue was 5.9% up to £376m. General-purpose petrol engine sales delivered a 2.4% hike to £237m.

Given Kawasaki’s peculiar progressive income attribution slanted towards the latter half of each fiscal year, the division should have been out of red ink by its third quarter. But this was not the case. A very minor loss of about £200,000 replaced a nine-monthly operating profit of £22m at the same stage of the previous year.

The division said profitability had deteriorated due to a temporary increase in selling, general, administrative and promotional expenses. Higher costs for steel and other materials had also been a factor, as well as weak foreign currency translation from emerging markets. In response, it has reduced the full-year operating profit forecast by about 6% to £105m, on annual revenue predicted to advance by 4% to £2.424bn.    
 

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