Kubota – Outlook remains positive and QMG data supportive

North America construction remains a key catalyst, with solid demand for construction equipment on the back of positive momentum in the US housing market...Agricultural equipment remains under pressure based on the most recent QMG data, however volume trends are encouraging...Kubota’s Ag sales have not slowed in line with their peers. This may be partly due to the combination of a weaker yen and a strong presence in engines, however the fact remains that 7 billion people are consuming more calories and need to be fed – QMG data is turning more positive...Low energy prices have tempered equipment demand for the sector, however margins have benefited as material and input costs decline... QMG RESULTS CONTEXT...Kubota reported 2Q15 revenue of ¥412.1b (+14.2% yoy) and operating income of ¥60.1b (+14.6%)...Domestic revenue increased by ¥5.5b (+5%) to ¥116.9b due to increased revenues in Farm & Industrial Machinery...Overseas revenues rose by ¥45.8b (+18.4%) to ¥295.2b – a significant increase thanks largely to yen depreciation and growing sales in China... FY forecasts remain unchanged..... Full report here for subscribers (VIEW LINK)

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