Hitachi Construction Machinery Earnings: The Shift to Value Chain Business Begins to Pay off

We maintain our fair value estimate for narrow-moat Hitachi Construction Machinery at JPY 5,450. HCM reported quarterly revenue of JPY 325 billion, down 5% year over year, largely in line with our previous forecast of a 7.5% decline. Sales in North America and Europe declined 17% and 16% year over year, respectively, as new machine (truck and excavator) sales remain low due to ongoing high interest rates, which dampened investment enthusiasm.