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TEAM GREEN TURNS RED

Despite a token dose of coronavirus spin, 2019/2020 full-year results to 31 March for Kawasaki Heavy Industries’ motorcycle division showed loss-inducing grief began long before the pandemic arrived. BDN financial editor Roger Willis reports.

Total yearly divisional revenue was 5.3% down to £2.57bn — and 2.1% lower than a turnover forecast made in February. The company partially blamed the decrease on “impact of Covid-19” but admitted that it only became a factor from mid-March onwards.

The division’s profit curve told a different story. An accumulated operating loss of £34m at the end of Q3 — before Covid-19 reared its ugly head — versus a nine-monthly break-even position 12 months earlier, translated into a £15m full-year loss. A marginal operating profit from bikes of about £2m had been predicted. 

In fact, Kawasaki’s failure to successfully hedge against appreciation of the Japanese yen against the euro, and its parallel depreciation against the Thai baht, played a much more important role than coronavirus. European countries form the brand’s most potentially profitable overseas bike market and Thailand is its major overseas manufacturing hub.

Kawasaki motorcycle sales volume in developed regions, primarily Europe and North America, fell by 1.8% to 162,000 units. Associated revenue was 6.6% down to £934m. Emerging markets bike volume dropped by 12.5% to 337,000 units with revenue 14.6% lower at £598m. Sales volume of utility vehicles, quadbikes and personal watercraft remained static on 70,000 units, but revenue was 4.6% up to £643m. Turnover from general-purpose proprietary petrol engines slid slightly to £390m.  

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