Komatsu rescues loss-making Japanese rental subsidiary
By Murray Pollok28 April 2011
Komatsu Ltd in Japan is to buy-out its majority-owned Japanese rental subsidiary, Komatsu Rental, take on its debts and create a new, debt-free rental business.
Under the merger agreement, Komatsu Ltd will acquire the 21% stake in Komatsu Rental owned by its president, Chikashi Shike, and waive debts valued at Yen 23 billion (€190 million).
A new wholly owned rental subsidiary will be formed, which IRN understands will have the same fleet and the same rental depots as the current Komatsu Rentals. The only difference is that its parent company, Komatsu Ltd, will own the Komatsu -manufactured equipment in the fleet as well as some office locations.
In a press statement, Komatsu Ltd said Komatsu Rentals' debts were "excessive" and "too large for Komatsu Rental to resolve before the merger". The rental business reported net losses of Yen 7.8 billion (€65 million) on revenues of Yen 34.4 billion (€284 million) for the year to 31 March 2011.
Komatsu said the new rental company, the name of which has yet to be published, "will take over and engage exclusively in the [important] rental operation for customers in Japan in order to further improve and streamline customer services."
It is not clear from the Komatsu press release whether the restructuring of the Japanese rental business is a reflection simply of its high debts, or whether it signals a wider change in strategy towards rental. Neither is it clear if there are implications for Komatsu's rental strategy outside Japan.
IRN has requested clarification from Komatsu in Japan and will update this story when more information is made available.
Komatsu Rental was created in October 2006 and has grown into a sizeable rental business, ranked 29th in last year's IRN-100 list of the largest rental companies in the world.
It was already a large rental business before the acquisition in 2008 of competitor rental company BigRental Co Ltd, of which Chikashi Shike was a major shareholder.