As geopolitical pressures mount in emerging markets, Japanese motorcycle manufacturers can no longer rely on a high-volume and low-margin game plan to underwrite their progress in more demanding fields. Half-year results from the recently remonikered Kawasaki powersports division are showing the strain. BDN financial editor Roger Willis reports.
For the first six months of its 2023/24 fiscal year, revenue was only 0.7% up to £1.439bn. Operating profit fell sharply by 17.6% to £124.6m. Operating margin declined from 10.6% to 8.7%. Increased upfront investment, primarily accelerating R&D spend on its electrification programme, plus sales promotion and marketing expenses took the blame.
Turnover generated from motorcycles aimed at the developed world grew by 3.8% to £502.9m. But associated wholesale shipment volume was 9.4% down to 87,000 units. European sales rose by 20% to 30,000 and domestic numbers put on 7.1% to 15,000. But the USA retreated by 26.7% to 33,000, Canada was 33.3% down to 4000 and Australia dropped by 40% to 3000.
Emerging markets motorcycle turnover experienced a 22.7% decline to £230.7m, with wholesale shipments plunging by 38% to 98,000. Most notably in South East Asia, sales in the Philippines sank by 39.8% to 62,000 and Indonesia was 52.2% down to 11,000. Taken together, Thailand, China, Brazil and others were 20.7% lower at 23,000.
Revenue from utility vehicles, ATVs and personal watercraft, mostly destined for North America, improved by 19.5% to £466.6m. And shipment volume was 5.1% higher at 41,000 units. But general-purpose petrol engine revenue dropped by 6.2% to £238.5m.
Kawasaki’s full-year forecasts to 31 March 2024 are decidedly noncommittal. Wholesale motorcycle shipments into developed markets should reach 215,000 units, while emerging countries will be on the receiving end of 240,000. Utility vehicles, ATVs and personal watercraft will add up to 95,000. However, revenue and operating profit are likely to flatline.
Yen-sterling currency translation at forex rates applicable on 8 November Â