Japan machine tools: tone of overseas orders improves

by SR on October 10, 2012

Japan machine tool overseas orders in billion yen

Not getting any worse

Orders for machine tools in September 2012 fell by 3% year-on-year and rose 11.4% month-on-month to 107.2 billion yen, according to the Japan Machine Tool Builders Association, which released data after 3pm on 10 October. I took a quick look and didn’t see anything obviously frightening but nothing too heartening, other than a small improvement in overseas orders relative to the previous trend (see chart above). About the best you could say about the overall orders is that the situation in machine tools is not getting any worse and maybe that indicates that industrial companies have stopped chipping away at capex. After all, you need machine tools to make machines.

Last month in this 11 September post on the JMTBA orders I suggested that Komatsu is beginning to look interesting as a long and noted that Keyence had held up better than other factory automation plays and could be a short. Since then, Komatsu has unhelpfully fallen by 5.7% (the Topix index has fallen 2.1%) making it one of the worst performers of the past month, along with perennial loser NTN. I take some comfort from Keyence, which has also fallen 5.5%. At the other end of the scale Makita and MHI have performed particularly well. That’s a second month of outperformance for Makita.

Japan machinery stock performance since previous month order announcement

The figures in brief

For September 2012, domestic orders fell 13.2% YoY to 30.8 billion yen (+4.6% MoM) while overseas orders fared better, rising 1.8% YoY to 76.4bn. This is all the detail we get in the preliminary data; more granular breakdowns by industry and by region of order come in a few weeks. Overseas orders were actually fairly good, increasing a solid 14.3% compared to August, when the median month-on-month change for the month of September is +6.1%.

From January to September 2012 total (cumulative) orders have reached 945.6bn yen, down 5.2% over the same 9-month period of 2011 (see the chart below). Cumulative overseas orders are down 4.0% YoY January to September to 653.3 billion yen. As the chart at the top of this page shows, the gap between this year and last year’s cumulative orders has closed ever so slightly. The difference in cumulative overseas orders was -6.3% YoY in June, -6.2% YoY in July and -4.7% YoY in August, so there’s been some improvement.

Japan machine tool cumulative total orders in billion yen

Domestic orders are going in the other direction to overseas orders, having fallen by 7.7% for January to September relative to the same period in 2011. The gap is visibly widening in the chart below.

Japan machine tool cumulative domestic orders in billion yen

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