Bad Weather and Lower Dealer Incentives Weighed on Kubota’s 3Q Sales; Raising FVE to JPY 1,900
Although narrow-moat Kubota’s third-quarter sales and operating income missed our forecast and consensus by 5% and 20%, respectively, due to the company’s incentive cut in North America and heavy rain in Thailand, this doesn’t affect our long-term outlook and investment thesis about this name. We think Kubota’s sales will gain traction in the fourth quarter, when the company again starts investing in its North American dealers, and the negative raw material price impact will be mitigated from th...Kubota and subsidiaries are engaged in the manufacture of a comprehensive range of machinery and other industrial and consumer products, including farm equipment, engines, construction machinery, pipe-related products, environment-related products, and industrial castings. Farm equipment, construction machinery, ductile iron pipe, and certain other products are sold both in Japan and in overseas markets which consist mainly of North America, Europe, and Asia. Co. also provides water and sewage treatment plants, submerged membrane systems and biogas production systems for water treatment, as well as pulverizing facilities for solid waste treatment.
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