Makita is a publicly-traded company, and as such, they are required to disclose a lot financial information.
While we don’t exactly how many tools Makita has sold last year, there is a lot that we do know, such as their revenue, profit, regional sales breakdown, and how they are performing year over year.
Makita’s fiscal year is from April thru March. Unless noted otherwise, the following 2021 figures are for the period from April 1, 2021 to March 31, 2022.
USD figures are calculated using 7/18/2022 valuation of 1 Japanese Yen to 0.007242 US dollar, or ~138 JPY to 1 USD. Numbers are rounded to 3 significant figures.
Makita Financial Summary
2021 Revenue: ¥739 billion ($5.35 billion USD)
2020 Revenue: ¥608 billion ($4.40 billion USD)
2021 Cost of Sales: ¥511 billion ($3.70 billion USD), 69.1%
2021 Gross Profit: ¥228 billion ($1.65 billion USD), 30.9%
2021 Operating Profit: ¥91.7 billion ($664 million USD), 12.4%
2020 Operating Profit: ¥88.5 billion ($641 million), 14.5%
Here’s what Makita say about sales figures in North America:
In North America, sales of power tools accompanied by strong housing demand and sales of cordless outdoor power equipment were strong, resulting in an increase in sales of 23.4% year on year to 112,248 million yen.
Revenue by Business Segment/Region
The following reflect revenue from external customers, and excluding inter-segment figures.
Japan: ¥141 billion ($1.02 billion)
Europe: ¥355 billion ($2.57 billion)
North America: ¥115 billion ($830 million)
Asia: ¥30.8 billion ($223 million)
Other Areas: ¥98.0 billion ($710 million)
Consolidated Total Revenue: ¥739 billion ($5.35 billion USD)
Makita North America Revenue Percentage: 15.5%
Please note that Makita reports revenue figures for their different regional business segments, and these numbers do not perfectly correspond with their revenue by geographic region, also included below.
Operating Profit by Business Segment/Region
Japan: ¥31.1 billion ($225 million)
Europe: ¥39.4 billion ($285 million)
North America: ¥803 million ($5.82 million)
Asia: ¥19.4 billion ($141 million)
Other Areas: ¥9.88 billion ($71.6 million)
Eliminations: ¥8.89 billion ($64.4 million)
Consolidated (Total) Operating Profit: ¥91.7 billion ($664 million)
North America Operating Profit Percentage (Before Eliminations): 0.798%
Revenue by Geographic Region
Japan: ¥118 billion ($855 million)
Europe: ¥352 billion ($2.55 billion)
North America: ¥112 billion ($813 million)
Asia: ¥49.2 billion ($356 million)
Central & South America: ¥41.8 billion ($302 million)
Oceania: ¥51.6 billion ($374 million)
Middle East & Africa: ¥14.0 billion ($101 million)
Consolidated Total Revenue: ¥739 billion ($5.35 billion)
North America Geographic Revenue Percentage: 15.2%
Breakdown by Product Category
Finish Goods: ¥612 billion ($4.43 billion), 82.7%
Parts, Repairs, Accessories: ¥128 billion ($924 million), 17.3%
Makita 2021 Focus
our group focused its development efforts on expanding its lineup of rechargeable finished goods, including power tools and outdoor power equipment, in the “40Vmax Lithium-ion Battery” series, which offers high power, long life and high durability.
Makita 2022 Outlook (for Fiscal Year Ending March 31, 2023)
Strengthen its R&D and product development capabilities, mainly for the technologies of motors and technologies for discharge/charge of batteries, to take the initiative in cordless products market;
Positioning cordless outdoor power equipment as the next pillar of our future business after power tools, we will contribute to the realization of a decarbonized society by promoting deep cultivation and development of the market.
We will strengthen the development and sales expansion of new finished goods in new fields such as cleaning, outdoor activities, and disaster prevention, and work to evolve into a supplier of a comprehensive range of cordless products.
Implement measures to strengthen and improve the efficiency of production, procurement and distribution, while further upgrading global production bases;
Strive to raise its brand power by promoting the establishment of a sales and after-sales service network to offer community-based and fine-tuned response to needs of customers around the world.
With respect to challenges:
The environment surrounding our group is expected to remain uncertain due to shortages of goods and logistics disruptions in the supply chain, rising prices, and the growing international tension surrounding the Ukraine issue.
Our group’s business performance is also expected to be affected by the continued rise in transportation and materials costs.
I last examined Makita’s financial disclosures in 2019, and now seemed like a good time for an updated look.
Makita’s sales performance and revenue breakdowns are straightforward, until we get to 2021 revenue.
I double and triple-checked the numbers and made every attempt to be accurate in my conversions and calculations. Please let me know if you find an error!
Makita’s North America business segment, which I presume includes Makita USA, Canada, and Mexico, reported approximately $830 million (converted from JPY) in revenue for the year ending March 31, 2021, but only $5.82 million (converted from JPY) in operating profit. When measured against the total (before eliminations as Makita does not provide a breakdown by segment), this reflects less than a 0.8% contribution towards the total operating profit.
In 2020, Makita’s North America segment reported ¥92.8 billion ($672 million) in revenue, and ¥3.68 billion ($26.7 million) in operating profit, resulting in 15.3% and 4.10% contributions towards their overall revenue and profits that year, respectively.
North America contributing approximately 15% to Makita’s overall sales revenue is in alignment with their performance in recent years.
But, a nearly 0.8% contribution towards operating profit is definitely unusual, especially compared to 2020’s figure of 4.10%.
Revenue increased across the board for Makita, with all regions reporting increases of at least 20%, except for Japan.
Makita’s revenue increased 21.5% in 2021 compared to 2020, but their operating profit only increased by 3.7% for this same period. Their operating profit ratio was 12.4% in 2021, compared to 14.5% in 2020.
Revenue minus the cost of sales results in gross profit, with “selling, general, administrative, and other” costs further deducted to determine the operating profit.
It is clear that costs are higher across the board, leading to a smaller year-over-year increase in operating profit compared to the increase in sales revenue.
Makita still reported a 3.7% increase in operating profit from 2020 to 2021.
However, their North America segment reported an approximately 78.2% decrease in profit, despite a 23.5% increase in revenue. Note that these calculations are made using Makita’s segment information, as they do not include corresponding profit figures for their breakdown by geographic region.
This warranted a closer look at Makita North America’s profit history.
Makita North America Revenue & Profit History
The revenue figures represent revenue from external customers.
- Revenue: ¥115B ($830M)
- Operating Profit: ¥803M ($5.82M)
- Revenue: ¥92.8B ($672M)
- Operating Profit: ¥3.68B ($26.7M)
- Revenue: ¥74.1B ($537M)
- Operating Loss: ¥201M ($1.46M)
- Revenue: ¥74.9B ($542M)
- Operating Profit: ¥267M ($1.93M)
- Revenue: ¥76.3B ($553M)
- Operating Profit: ¥2.26B ($16.4M)
- Revenue: ¥68.1B ($493M)
- Operating Profit: ¥1.59B ($11.5M)
- Revenue: ¥69.8B ($505M)
- Operating Income: ¥1.03B ($7.45M)
- Revenue: ¥59.0B ($427M)
- Operating Income: ¥1.59B ($11.5M)
Makita North America has seen a year-over-year increase almost every year, with an overall upwards trend. Their operating profit seems to fluctuate, mostly in alignment with Makita’s other regional business segments and overall, but not ever year, such as 2021.
A Makita USA dealer announced that prices increases went into effect April 1st this year, and we have also seen Makita USA updating more 18V and 18V X2 cordless power tool kits with lower capacity batteries.
It seems that they are trying to manage costs the best they can, whilst still striving to remain competitive.
What I find curious is that it seems more difficult for Makita to do this in North America than in other regions. For instance, Makita’s Europe segment saw a 24.7% increase in revenue and more than 32% increase in profit from 2020 to 2021.
Is it because of different transportation needs and costs that North America saw a 23.5% increase in revenue and 78.2% decrease in profit for the same period?
Or are there other factors contributing to higher costs of doing business in North America?