April 11, 2018 / 10:56 PM / in 6 months

CRU/CESCO-Komatsu sales growth to slow as miners avoid new equipment buys

SANTIAGO, April 11 (Reuters) - Japanese machine maker Komatsu Ltd expects revenue growth from mining to slow as a surge in demand for equipment maintenance fades while miners remain wary of large new investments, an executive at the company said on Wednesday.

Miners were forced to curb spending by a collapse in commodities prices in 2015-16, but a partial price recovery since then has eased the pressure.

Pent-up demand for parts and servicing helped Komatsu’s mining-related revenue rise by around 15 percent year on year by the fourth quarter of 2017, said Doug Blom, Komatsu’s chief marketing officer.

“There was a quick recovery of the service business to get the equipment up and running. That is probably not sustainable,” he told Reuters on the sidelines of the CRU/CESCO copper conference in Santiago.

“The new equipment cycle is the piece that I think will be under tight discipline by the miners. They will make sure they get full utilisation out of their current fleets before they go in and buy replacement equipment or expansion.”

Spending on new equipment was expanding, but slowly, Blom said, which will push Komatsu’s revenue growth lower.

“It’ll still be positive growth, but at a slower rate as the catch up cycle will be behind us,” he said.

Reporting by Peter Hobson; Editing by Richard Chang

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