KUBOTA CORPORATION

Business Details

Manufactures and sells Agricultural Machinery and Related Products (tractors, combine harvesters, rice transplanters, mowers, etc.), Engines (for agricultural, construction, industrial, and power generation use), and Construction Machinery (mini backhoes, wheel loaders, etc.). The segment operates globally through domestic and overseas consolidated subsidiaries, with North America, Europe, and Asia as its main markets. It also has a retail finance function, providing Sales Financing Services through Kubota Credit and others. Net sales to external customers for the first quarter of FY2026 (ending December 2026) were ¥700,817 million, accounting for 86.5% of total consolidated net sales.

Recent Overview

Segment profit for Q1 recovered significantly, up 45.0% year on year, driven by improved foreign exchange rates and increased sales/price revisions in North America

Net sales of the Machinery segment for the first quarter of FY2026 (ending December 2026) were ¥700,817 million (up 14.9% year on year), and segment profit was ¥79,680 million (up 45.0%). Although there were factors reducing profit such as increased costs from U.S. tariffs and higher expenses, these were outweighed by improved foreign exchange rates and increased sales volume and price revisions, mainly in North America. Construction Machinery performed particularly well, with overseas sales up 30.7%, supported by solid housing, public, and private construction demand in North America. In India, growth in the agricultural market continued, supported by government support measures for rural areas and favorable crop conditions. On the other hand, in Thailand, sales declined as the rice and upland crop markets shrank due to weak crop prices and rising fuel and fertilizer prices.

Key Products

Growth Drivers

• Solid trend in the North American construction machinery market: supported by stable housing investment as well as public investment and private construction demand, overseas construction machinery sales expanded 30.7% year on year to ¥157,994 million
• Boost to profit from improved foreign exchange rates: a shift toward yen depreciation was the main driver of increased segment profit, improving the profit margin from 9.0% in the same period of the prior year to 11.4%
• Continued effect of price revisions: price revisions mainly in North America contributed to higher profit, offsetting increased U.S. tariff costs to a certain extent
• Continued growth in the Indian market: growth in the agricultural market continued, supported by government support measures for rural areas and favorable crop conditions, leading to increased sales
• Expansion of domestic agricultural machinery demand: domestic sales increased significantly by 19.1% year on year to ¥90,409 million due to increased sales of agricultural machinery and engines
• Recovery of the European construction machinery market: demand recovery continued as policies in various countries became more concrete

Risks

• Impact of U.S. tariff policy: increased tariff costs continued to be a factor reducing profit in the current first quarter, and the full-year earnings forecast also anticipates effects on demand and costs from geopolitical risks and changes in tariff policy
• Adjustment in the North American tractor market: an adjustment phase has been observed in utility vehicles (UVs) affected by economic sentiment, with the timing of recovery uncertain
• Contraction of the Thai market: both the rice and upland crop markets contracted due to weak crop prices and rising fuel and fertilizer prices, leading to lower sales
• Foreign exchange risk: with overseas sales accounting for a high 87.1% (¥610,408 million) of the segment, the impact on earnings is significant if the yen appreciates (assumed exchange rates for the earnings forecast: US$1 = ¥145, €1 = ¥165)
• Continued weakness in the European agricultural machinery market: the tractor market continues to be affected by trends in agricultural commodity prices, and although support is progressing mainly in the low-horsepower range, the overall market remains only at the same level as the prior year
• Increase in various expenses: an increase in selling, general and administrative expenses and other costs continued to be a factor reducing profit, making cost control a challenge