Komatsu cuts profit outlook on weak demand for mining equipment

Reuters

TOKYO, Oct 28 (Reuters) - Komatsu Ltd, the world'sNo. 2 maker of excavators, dump trucks and earth movers, cut itsfull-year operating profit forecast by more than 30 percent onMonday, citing a worse-than-expected drop in demand for miningequipment.

Komatsu said it expects an operating profit for the year tonext March of 210 billion yen ($2.16 billion), down from itsprior forecast of 305 billion yen. The revised forecast was alsobelow the average estimate of 288 billion yen from 25 analystssurveyed by Thomson Reuters I/B/E/S.

"The tough mining market prompted us to cut our outlook,"Komatsu Chief Financial Officer Mikio Fujitsuka said in a mediabriefing in Tokyo.

U.S. rival Caterpillar Inc last Wednesday reported alower-than-expected quarterly profit and trimmed its full-yearforecast, citing weak demand for its mining equipment.

Komatsu said, however, that it expected demand for itsequipment in China to accelerate.

The pace of China's economic growth quickened to 7.8 percentin the July-September quarter, the fastest pace this year. Thatspurt in activity follows a roll-out by the Chinese governmentin July of fresh investment in urban infrastructure and publicservices.

Komatsu's shares ended 2.6 percent higher on Monday beforethe company released its second-quarter earnings results andfull-year forecasts, compared with a 2.2 percent rise in Tokyo'sbenchmark Nikkei average. Komatsu's shares are up 8percent since the start of the year, compared with a nearly 40percent gain for the Nikkei.

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