Surprise! robots and trucks have distinct cycles

Not all machines are made equal.

Komatsu Ltd. and Hitachi Construction Machinery Co.’s earnings reports this week gave investors reason to breathe a sigh of relief. Meanwhile factory-automation giant Fanuc Corp. offered more reason for worry, after the company cut its operating-income outlook for the year by 36 percent on Thursday.

We’ve made the case for the divergence among equipment manufacturers before: Ultimately robots and excavators aren’t dependent on the same business cycles. This is now playing out.

Hitachi’s boost came from new mining excavators and dump trucks, sales of which rose 15 percent in the three months ended December. Regionally, sales climbed across the board, led by Japan, where industrial output rose by the most since 2013 over the same period. While sales in China for the first three quarters increased from a year earlier, the company expects the full-year figures to be lower. The machine maker raised its overall operating-income forecast for the year.

All manufacturers have peaks and troughs — just at different times

The picture also looks good at Komatsu, where operating income rose almost 30 percent in the quarter. Construction and mining equipment did well in Asia and Japan thanks to higher prices, and the company’s industrial-machinery segment climbed on the back of its laser-related business. While sales in China fell, the company didn’t change its overall outlook for the year.

Fanuc’s picture was far dimmer: Operating income dropped 20 percent in the quarter. Factory automation and China were particularly painful. Still, robot sales rose in Europe and Japan.

Here’s the reality: The likes of Komatsu and Hitachi Machinery will eventually run out of luck with the mining cycle and construction-activity boosts in various economies. Fanuc’s robots are still humming along and investment in factory automation will pick up when the global outlook eventually brightens.

If there’s a silver lining to all the gloom and doom from China, it’s that the bad news isn’t spreading globally — yet. There are regional pockets where business is still relatively healthy, and that may even last for a few quarters. China’s infrastructure stimulus may well buoy some machinery makers, but not by a lot and not for long, as we’ve written, and domestic players will take precedence.

All manufacturers have peaks and troughs — just at different times.

(By Anjani Trivedi)