Japanese machinery makers see brighter Chinese outlook

Date : 2016-11-28  | From : nikkei.com

Japanese industrial machinery builders think the heaviest headwinds from China's economic slowdown may be fading as signs of recovery emerge in applications related to smartphones and automobiles.

Fanuc's operating profit for the April-September half totaled 78.4 billion yen ($747 million), the company said Monday. Though the figure was down 38% on the year, it also exceeded projections by 3.4 billion yen.

Chairman Yoshiharu Inaba said makers of smartphones and other products have put the brakes on excessive investment, and outlays now better reflect real demand.

"Orders may soon bottom out thanks to inventory adjustments of machine tools in China," Inaba said.

Machine tool orders for smartphone production decreased on the year as demand linked to Apple handsets ran its course. But Fanuc secured large orders for numerical control units from Chinese machine tool builders serving smartphone makers.

Demand growth for industrial robots also buoyed results. "Investment by automotive companies is robust," Inaba said. Demand is strong in China and the U.S.

Fanuc upgraded its net profit forecast by 800 million yen for the year ending in March to 104.1 billion yen, a 35% drop on the year. This marks the Japanese company's second upgrade this fiscal year.

Growing demand has spurred the company to increase monthly robot production capacity in April 2017 by about 20% to 6,000 units. Fanuc also is considering a full-blown robot plant near an existing facility in Ibaraki Prefecture, Inaba said.

Machine tool orders can signal economic trends. Machine tool production volume increased on the year in July and August, the National Bureau of Statistics of China said. Production of industrial robots also rose 35-65%.

China's gross domestic product grew 6.7% on the year in the July-September period. The economy still lacks momentum, and steel and coal companies are whittling production capacities. But government policies to promote environmentally friendly vehicles and factory automation are underpinning machine tool and industrial robot makers.

"China is still lackluster, but I hope [orders] have bottomed out," Okuma President Yoshimaro Hanaki, head of the Japan Machine Tool Builders' Association, told reporters Oct. 20.

Makino Milling Machine downgraded its fiscal 2017 earnings projection Monday. But the Japanese company has a steady flow of large orders throughout the year from Chinese smartphone-related businesses such as internal-parts suppliers and those that build dies to shape glass surfaces.

Mitsubishi Electric saw signs of a recovery in factory automation equipment orders around August, a month or two earlier than expected.

The outlook for China's economy remains uncertain, with machine tool order trends varying by company and product. Though pessimism has been tamed, companies cannot yet feel comfortable.

Read More:

220KV Power Transformer

110KV power transformer