KATO WORKS CO.,LTD.
6390・Prime Market・Machinery
Business
Kato Works Co., Ltd. is a construction machinery manufacturer founded in 1935 and listed on the Tokyo Stock Exchange Prime Market. The company manufactures and sells Construction Cranes (rough terrain cranes, all terrain cranes, truck cranes, etc.), hydraulic excavators, crawler carriers, and other equipment. Domestically, it operates multiple plants in Ibaraki, Gunma, and Bando, and in Europe it has subsidiaries in Italy and the Netherlands. The Japan segment accounts for approximately 90% of net sales, with the domestic construction and infrastructure market as its main customer base. Consolidated net sales for FY2026 (ending March 2026) totaled ¥56,335 million.
Business Model
Most core products are manufactured under a make-to-stock production system. Domestically, sales are made to construction companies, leasing companies, and others through a nationwide network of branches and sales offices. In Europe, Italian and Dutch subsidiaries handle local manufacturing and sales, while operations in other regions—such as Thailand and the U.S.—serve as supplementary bases. In addition to sales of products and spare parts, the structure aims to improve profitability through price optimization measures.
Company Strengths
Since its founding in 1935, the company has expanded its product range, introducing mobile cranes (1939), hydraulic truck cranes (1959), rough terrain cranes (1981), and all-terrain cranes (1986). In FY2026 (ending March 2026), it successively launched new RV series and all-terrain cranes, as well as auxiliary cranes for transmission tower construction, among others. This long-accumulated technological foundation underpins the company's product competitiveness.
Domestically, the company operates branches and sales offices nationwide from Hokkaido to Okinawa, while in Europe it holds manufacturing and sales subsidiaries in Italy (KATO Construction Machinery Europe S.p.A.) and the Netherlands (KATO EUROPE B.V.). It also has bases in Thailand and the United States, and in March 2026, it signed an agreement to establish a joint venture, ACE KATO Pvt. Ltd., with ACE in India, thereby building the foundation for multi-regional expansion.
R&D expenses for FY2026 (ending March 2026) amounted to ¥1,996 million. The company is concurrently advancing efforts in emissions regulation compliance (domestic and European Stage V), electrification, and remote/autonomous operation. It plans to launch, in the following fiscal year, a new series of medium and large excavators compliant with new emissions regulations as well as electrified mini excavator models, continuing product development that balances regulatory compliance with technological innovation.
ENVALITH's Perspective
Performance Trend
Revenue increased 6.4% year on year, from ¥52,932 million in FY2025 (ended March 2025) to ¥56,335 million in FY2026 (ending March 2026), driven by the resumption of sales of large rough-terrain cranes (domestic crane sales at 119.9% of the prior period). Meanwhile, operating income deteriorated from ¥903 million to an operating loss of ¥2,320 million. Gross margin fell sharply due to a combination of factors, including lower factory utilization associated with inventory adjustments, rising material prices and logistics costs, and valuation losses on spare parts. The company recorded an ordinary loss of ¥1,841 million. However, thanks to a special gain of ¥7,224 million from the transfer of its equity interest in a Chinese subsidiary, profit attributable to owners of parent turned positive at ¥4,526 million. Looking at the five-year trend, after a substantial loss in FY2022, the company recovered in FY2023 and FY2024, fell back into a net loss in FY2025 due to losses from its withdrawal from China, and in FY2026 returned to profitability but only through reliance on a special gain—an unstable pattern that continues. External factors weighing on performance included flat domestic demand for construction machinery amid soaring costs for construction materials and labor, sluggish growth in overseas hydraulic excavator sales due to the impact of US tariffs, and declining demand in Europe.
Growth Strategy
New medium-term management plan "Leap Forward, and Into the Next Era," built on three pillars: new domestic models, new Indian market entry, and profitability improvement
Launch the new hydraulic excavator series, which has been under development, into the domestic market to expand sales and improve product competitiveness amid an increasingly competitive environment. This is a key initiative already factored into the FY2027 (ending March 2027) earnings forecast (net sales of ¥61,000 million).
Progressing preparations for the establishment and commencement of operations of the Indian joint venture. Aiming to establish it as a new profit pillar and put it on a stable track early. The Indian market is positioned as a way to capture emerging-market demand and as an alternative source of overseas growth following the withdrawal from China, and is expected to be a factor boosting sales in FY2027 (ending March 2027).
Continuing to prioritize the optimization of inventory assets carried over from the previous fiscal year as the top priority. In FY2026 (ended March 2026), the balance of merchandise and finished goods was reduced from ¥29,182 million to ¥24,626 million. Pursuing both improvement of the cost of sales ratio through normalization of factory utilization rates and securing profitability through optimization of product and parts pricing.
Completed the transfer of equity in the Chinese subsidiary in FY2026 (ended March 2026), streamlining unprofitable operations. Strengthened the European production and sales base through a capital injection into the Italian subsidiary. The Europe segment remained in the red in FY2026 (ended March 2026), with net sales of ¥4,374 million and a segment loss of ¥239 million, and returning to profitability as demand recovers remains a challenge.
The three-year medium-term management plan, with FY2026 (ended March 2026) as its first year, targets net sales of ¥79,000 million and an operating margin of 4.5%. The FY2027 (ending March 2027) forecast of net sales of ¥61,000 million and operating profit of ¥600 million falls short of the medium-term plan's target level, requiring a substantial improvement in profitability toward FY2028 (ending March 2028).
Last updated: July 19, 2026