Komatsu s Retail Finance Business

Transcription

1 Komatsu s Retail Finance Business August 11, 2011 Yasushi Sakano Executive Officer President, Global Retail Finance Business Division Komatsu Ltd. 0 0

2 1 Contents 1. Outline of Our Operation P Reasons of Our Retail Finance Business P Our basic policies P Present State of Our Retail Finance Business (1) Operating Bases P. 5 (2) Assets and Earnings P Risks of Our Retail Finance Business and Countermeasures P. 7

3 1. Outline of Our Operation Customers purchase means Flow of merchandise Financing need is becoming larger among customers of construction equipment and in emerging countries. Sale Payment Distributors Distributors Sale Payment Customers Financing from finance companies Installment payment to distributors Flow of funds Bank loans Funds on hand Collection of funds Customers revenues and cumulative amount of payments Purchase price of Komatsu s products Cumulative amount of customers revenue Customers secure the source of their payments for the equipment they have purchased as they use them for a long period of time. Thus, we handle many cases of long-term installment payments. Cumulative amount of installment payments (payments for the purchase and interest payments) Financing period (3 to 5 years) 2

4 2. Reasons of Our Finance Business Customers need for funds By taking effective advantage of our strengths as manufacture, we realize: Speeding up the screening process, and Presenting competitive financing terms. As a result, we are promoting sales of our products and strengthen customer relations. Our strengths as manufacturer: Advantages over regular finance companies We have more information concerning small and medium-scale customers through our sales operation. We have means to lower risks. Use of KOMTRAX (checks on the location and operating conditions of equipment, implementation of locking the engines of equipment, etc.) Sustaining and improving the value of equipment through the Repair & Maintenance contracts We have a global resale network in our rental and used equipment business. 3

5 4 3. Our Basic Policies We We position position the the retail retail finance finance business as as a a sales sales tool tool for for our our products (Not (Not as as a a profit profit center ) center ) We We take take advantage of of our our strengths as as manufacturer. We We emphasize the the soundness of of business in in terms terms of of both both compliance and and financial position. Prepositions of establishing finance companies 1) Need from our sales operation (to compete with other manufacturers, etc.) 2) Good knowledge held by our sales operation about end-customers 3) Able to obtain credit information about end-customers 4) Easy to safekeep (repossess)/having a resale route 5) Well established legal infrastructure of retail finance 6) Able to fund locally 7) Available volume of financings in light of costs/able to secure earnings

6 4. Present State of Our Retail Finance Business: 1) Operating Bases KFLP (U.S.A and Canada) KFE (France, Germany, Italy and Spain) KBL (Thailand) KFLC (China) Started: November, 1982 July, 2005 October, 2005 July, 2007 April, 2005 Line of business Main customers % of customers using finance programs No. of employees as of March 31, 2011 Installment finance and leasing Construction and mining equipment users and distributors KBS (Japan) Leasing Installment finance Leasing Installment finance and leasing Construction equipment users Construction equipment users Construction equipment users Construction equipment users About 60% About 30% About 65% About 35% About 10% (Market share: 30%) KFLP KFE KFLC KBS KBL KAF KCCA KACF KCCA (Chile) KAF (Indonesia) KACF (Australia) Started: September, 2003 May, 2005 April, 1995 Line of business Leasing, installment finance and rental Leasing Installment finance and leasing Notes: 1. Blue box: Mainly construction equipment 2. Green box: Mainly mining equipment 3. Credit forms: Collateral loans (installment finance, leasing) 4. Credit period: 3 to 5 years (most common) Main customers % of customers using finance programs No. of employees as of March 31, 2011 Mining and construction equipment users Mining equipment users About 30% About 30% About 35% Mining and construction equipment users 5 5

7 Billions of yen North America North America (securitized) Europe Japan China Thailand Indonesia Australia Chile FY05 FY06 FY07 FY08 FY09 FY Present State of Our Retail Finance Business: 2) Assets and Earnings (Left scale) Total assets: Including securitized assets (off balance-sheets). Gross assets before excluding internal transactions of retail finance companies. (Right scale) Pretax profit: After extraordinary factors (proceeds from the sale of assets resulting from securitization and appraisal profit/loss of interest rate swaps) Total assets 15% Strategic Markets 58% Pretax profit (billions of yen) Traditional Markets (Off balance) Amount of securitized assets Started our retail finance business in China Foreign exchange rate at the end of FY Percentage share of credit owed by customers of mining equipment USD EUR Renminbi % 22.3% 22.2% 25.4% 30.6% 28.9% 6

8 5. Risks of Our Retail Finance Business and Countermeasures Risks Credit management Countermeasures 1) Construction equipment: Dispersion of portfolios and management of overdues Mining equipment: Monitoring business conditions of large borrowers and sharing risks with other financial institutions 2) Effective uses of KOMTRAX 3) Utilization of our network of distributors Supporting their operations of repossession to resale of equipment Sharing credit risks Funding 1) Diversification of funding Doing more business with Japanese and foreign local banks Using the commitment line and long-term borrowings 2) Utilization of Komatsu Cash Management System Japan, North America, Europe, Chile and Australia Interest rate fluctuations 1) Matching lending interest rates (floating/fixed) with funding interest rates (floating/fixed). 2) Using interest rate swap transactions Foreign exchange rate fluctuations Matching lending currencies with funding currencies 7