Kubota Corp. said Tuesday it suffered a 12 percent drop in third-quarter profit because of rising steel costs and slowing demand in North America and Japan, its largest markets.
Net income fell to ¥16.9 billion in the three months ended Dec. 31 from ¥19.2 billion a year earlier. Sales rose 3 percent to ¥277.6 billion. The numbers were derived from nine-month earnings released by the Osaka-based company, the biggest maker of compact tractors in the United States.
The worst U.S. housing recession in 27 years curbed demand for Kubota tractors used in small civil-engineering projects and do-it-yourself home renovations. Kubota, founded in 1890, also paid more for raw material for making pipes that supply water and drain sewage.
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 1.4 percent to ¥31.3 billion in the past quarter.
Kubota is forecasting a full-year profit of ¥77.5 billion and sales of ¥1.14 trillion, unchanged from its November estimate. The company used an average exchange rate of ¥118 against the dollar this fiscal year, the same as its November estimate.
Kubota, also Japan's biggest maker of farm equipment, saw its shares fall by 0.1 percent to ¥758 at the close of trading Tuesday on the Tokyo Stock Exchange. The price has dropped 39 percent in the past 12 months, compared with a 19 percent gain in the machinery group of the Topix index.
The earnings were announced after the market closed.
U.S. housing starts slid 25 percent to 1.354 million units in 2007, the biggest drop since 1980, the U.S. said Jan. 17.