The company states it is necessary to build a robust business base to achieve sustainable growth and become a strong, resilient company able to withstand drastic changes to the external environment.
As such the Kito Group is increasing cash flow generating capabilities through initiatives such as expanding its product portfolio and concentrating on high-margin business, and making investments that will lead to the next stage of our growth. For example, its user base is expanding from heavy industry related to infrastructure to entertainment and clean energy.
The total amount of capital investment in fiscal 2020 was ¥2,500m, including ¥1,080m invested in Japan, which was invested primarily on increasing the production capacity at its head office and factory and updating the environmentally friendly features of equipment.
Regarding the allocation of resources going forward, in addition to this kind of investment in production, it plans to continuously invest in growth aimed at IT investment and enhancing future profits while keeping its financial foundation balanced and stable.
It aims to further reduce environmental impact by renovating its manufacturing to enable cleaner, more energy-efficient operations. At the Yamanashi Head Office and factory, its top priority is to maintain a safe workplace for all by paying careful attention to fire and other work-related risks, and harmful elements such as noise and odours, as well as advancing efforts to reduce energy consumption, CO2 emissions, and other environmental impacts.
Kito’s current market share is 60% in Japan and 40% in the US.
“Europe is the world’s largest market for hoists and cranes, but because we were late to enter there, our share is only a few percent. That said, with cooperation from our four local subsidiaries we are making steady progress with Kito brand penetration in Europe,” the company said on its shareholder Q&A.
Regarding its Q2 FY2021 results announced on November 4, the company said it saw strong demand in North America and Europe, though the recovery trend has been slow in Japan and Asia.
“In response to the growing demand globally, we have continued to increase production. There continue to be concerns about rising material cost and shipping charges, we have reviewed the selling prices for each market and worked to secure profits. As a result, net sales up to Q2 were at all-time highs for the period, and earnings also rose to reach a record high level,” it said.
The recent financial crisis of the Evergrande Group in China is a major concern for the world economy.
“About 80% Kito's China operations are related to the production and sale of wire-rope hoists. These products are generally needed for equipment investment in plants, rather than on temporary worksites related to construction or civil engineering, and this market is not affected directly by the trend of Evergrande real-estate development. That said, some impact on the Chinese economy as a whole may be inevitable, and we are keeping an eye on the situation.”
In regards to the future Kito has specified Green Procurement Guidelines based on its environmental policies and going forward, strives to lower environmental impacts with the cooperation of its business partners.
“Based on joint industry guide- lines such as the European Union’s Restriction of Hazardous Substances (RoHS) standards, we have independently identified and are preventing the use of 19 selected hazardous substances (Kito’s “banned 19”). Currently, all our standard manual and electric chain hoists comply with RoHS standards. For other products, we are actively working to switch to products that meet RoHS standards and do not use the “banned 19.”,” it added.