Kawasaki Heavy Looking to Spend Several Billion Yen on U.S. M&A
Kawasaki Heavy Industries Ltd., the Japanese maker of New York City subway trains, is seeking to buy a train maintenance company in the U.S. to help increase its services line-up and boost profit margins.
“The costs for maintenance are largely fixed,” Yoshinori Kanehana, president of the company said in an interview Tuesday. “By bringing that in-house, we can cut costs and increase profit.”
Kawasaki Heavy, which gets a quarter of its sales from the U.S., its biggest market outside Japan, is considering spending “several billion yen” on the acquisition of a U.S. company, he said. The Kobe, western Japan-based firm is competing with other Asian train makers such as Hitachi Ltd. and CRRC Corp. in North America, as well as Bombardier Inc.
Kawasaki Heavy, which also supplies bullet trains to Japan and Taiwan, is targeting a 36 percent increase in rolling stock sales to 200 billion yen ($1.9 billion) by the year starting April 2018, from 147 billion yen in the 12 months through March, it said in May. It is also aiming for a 52 percent jump in operating profit to 14 billion yen in the period, it said.
Rolling stock accounted for 9.3 percent of the company’s operating profit of 96 billion yen and 9.5 percent of sales in the year ended March, according to data provided by Kawasaki Heavy.
Kawasaki Heavy shares rose 2.9 percent to 285 yen as of 9:30 a.m. in Tokyo trading Wednesday. They have dropped 36 percent this year, compared with a 14 percent slide in the Nikkei 225 Stock Average.
Follow us on social media: