For the year ended Dec. 31, 2019, Kubota has reported revenue increased by $628.1 million (3.8%) from the prior year to $17.3 billion. Domestic revenue increased by $432.5 million (8.3%) from the prior year to $5.6 billion, because revenue in Water & Environment, whose businesses are mainly related to public works projects, increased mainly due to significantly increased sales of environment‐related products and strong sales of ductile iron pipes. In addition, revenue in Farm & Industrial Machinery also increased mainly due to solid sales of farm equipment and engines.

Overseas revenue increased by $195.5 million (1.7%) from the prior year to $11.7 billion mainly due to strong sales of tractors and construction machinery along with gradual economic expansion in the U.S., while there were some negative impacts mainly of the yen appreciation and inclement weather. As a result, overseas revenue accounted for 67.4% of consolidated revenue, which decreased by 1.4 percentage points from the prior year.

Operating profit increased by $110.8 million (6.5%) from the prior year to $1.8 billion. This increase was mainly due to some positive effects from increased sales in the domestic and overseas markets, raised product prices and decreased sales promotion expenses resulting from declined interest rates in the U.S. These positive effects compensated for some negative effects such as increased fixed costs and the yen appreciation. Profit before income taxes increased by $106.3 million (6%) from the prior year to $1.9 billion, because operating profit increased.

Farm & Industrial Machinery

Farm & Industrial Machinery is comprised of farm equipment, agricultural‐related products, engines and construction machinery. Revenue in this segment increased by 2.9% from the prior year to $14.2 billion and accounted for 81.9% of consolidated revenue.

Domestic revenue increased by 3.8% from the prior year to $2.9 billion, because sales of farm equipment and engines increased. In addition, sales of construction machinery, whose production and shipment had been delayed due to typhoon, also increased from the prior year.

Overseas revenue increased by 2.7% from the prior year to $11.3 billion. In North America, sales of construction machinery and tractors increased significantly, because the solid market condition continued. In addition, there were some positive effects mainly from the realization in shipments of some products, which had been delayed due to typhoon in the prior year, in this year and newly introduced model of construction machinery.

In Europe, revenue decreased due to a negative effect from the yen appreciation against the Euro and the British pound sterling. Revenue on a local currency basis was almost at the same level as the prior year due to strong sales of tractors and construction machinery in France and Germany, while there were some negative impacts of adverse reaction from rushed demand for engines caused by tightening of emission regulations in the prior year and stagnated demand for construction machinery in the United Kingdom along with a concern about economic downturn caused by Brexit. In Asia outside Japan, revenue decreased from the prior year mainly due to stagnant sales of combine harvesters and construction machinery in China, while sales of farm equipment and construction machinery increased in Thailand. In Other areas, sales of construction machinery and tractors in Australia decreased because of drought and economic downturn.

Operating profit in this segment increased by 1.8% from the prior year to $1.8 billion due to some positive effects mainly from increased sales in the domestic and overseas markets, raised product prices and decreased sales promotion expenses resulting from declined interest rates in the U.S., which compensated for some negative effects from increased fixed costs and the yen appreciation.

Outlook for 2020

Consolidated revenue for the year ending Dec. 31, 2020 is forecast to increase by $270 million from the prior year to $17.6 billion. Domestic revenue is expected to grow because of an increase in revenue in Farm & Industrial Machinery. On the other hand, revenue in Water & Environment is expected to decrease due to lower sales of environment‐related products. Overseas revenue is expected to grow due to an increase in revenue in Farm & Industrial Machinery in North America and Asia outside Japan and an increase in revenue in Water & Environment.

Operating profit is forecast to decrease by $15.3 million from the prior year to $1.8 billion due to some negative effects such as the yen appreciation and deterioration in profitability in manufacturing bases resulting from a reduction in production along with the Typhoon No.19, while there is expected to be a positive effect from an increase in sales in the domestic and overseas markets. Profit before income taxes is forecast to decrease by $18 million from the prior year to $1.9 billion.

The negative impact of the spread of the novel coronavirus is not included in these forecasts because it is difficult to estimate any impact on Kubota’s operating results.

These forecasts are based on the assumption of exchange rates of ¥108 = US$1 and ¥120 = €1.

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