Makita announced their latest financial reporting, which gives us an indication as to how Makita USA is doing.
Tool brands’ financial performance – their sales, revenue, and profit/loss figures – can give us clues as to their product development activities, promotions, risk, and pricing strategies.
Makita USA had company-wide layoffs in mid 2023, following several price increases over the span of two years.
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The company tried new things for the 2023 holiday shopping season, such as introducing mail-in rebates. They also recently made a big announcement about their return as a Snocross team sponsor.
There were noticeably fewer Makita cordless power tool promotions over the 2023 holiday shopping season, compared to what we’ve seen in the USA in previous years.
Makita USA also seems to have made far fewer product announcements over the past few months than we’ve been accustomed to expect. They seem to have abandoned press releases entirely, choosing instead to simply announce to social media audiences about “more coming.”
Here are the latest numbers, for the 9-month period ending 12/31/23:
Makita North America
- Total Revenue: 75.165 billion Yen | $513 million USD*
- Operating Loss: 3.404 billion Yen | $23.2 million USD*
Makita Overall
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- Total Revenue: 550.614 billion Yen | $3.75 billion USD*
- Operating Profit: 48.049 billion Yen | $328 million USD*
*Converted using 1/31/24 exchange rate of 146.64 Yen to $1 USD.
Makita said this about their performance in North America:
Sales, mainly at home improvement stores, were down 20.8% year on year
Makita reported an overall profit for the 12 months ending on 3/31/23 (FY 2023), but loss for their North America segment. It’s looking like they are on track for an overall profit in FY 2024 as well (ending 3/31/24), and an overall loss in North America unless they turn things around in a big way.
When we last reported about Makita’s 6-month performance ending 9/30/23 – Makita USA Faces Hard Times – their financials were in similar state.
Makita’s revenue overall and in North America increased for the period of October thru December 2023. Comparing the 9-month period ending 12/31/23 to the 6-month period ending 9/30/23, Makita’s North America segment profit changed from a 3.474 million JPY loss to a 3.404 million JPY loss.
By extrapolation, this suggests that for the period of October thru December 2023, Makita North America earned a profit of 70 million Yen, or ~$477 thousand.
Makita is reporting for their North America segment a $23 million* LOSS for the 9-month period ending 12/31/23, but at least they seem to have done a little better than breaking even for the October thru December 2023 holiday shopping season.
Objectively, an approximately $478 thousand profit on $164 million in added revenue for Makita’s North America segment, reflecting the currency-converted difference between 9-month (78.18 billion JPY) and 6-month figures (54.19 billion JPY), isn’t very good.
But, I would argue that a 0.3% profit for the holiday shopping season is definitely better than increased losses.
For the 9-month period ending 12/31/23, Makita’s North America segment contributed approximately 13.7% of the company’s total revenue. In this period, Makita reported an overall profit of ~$328 million, and loss for the North America segment of ~$23.2 million, with both figures converted from JPY.
For the 9 months ending 12/31/23, Makita’s North America segment is the only one still in the red, with all of the other segments – Japan, Europe, Asia, and other – reporting operating profits.
Will this affect the tools Makita launches (or doesn’t) in the USA in 2024? Will Makita North America’s continued overall losses lead to more price increases? What other changes might we see?
It’s too soon to know if they’re an upwards track, and we also don’t know what changes have been brought about by the new President and CEO (Makita USA Announces a Major Change in Leadership).
Makita USA already had company-wide layoffs and several rounds of price increases. What else can they do to improve profits or further reduce annual losses?
Steve L
Makita will not abandon the North American market. With $328 million overall operating profit Makita will be in business for the foreseeable future.
Techtronic (Milwaukee owner) reported $1.2 billion EBIT for 2022 and made a big point of talking about Milwaukee’s innovation and profitability.
Stanley Black & Decker (Dewalt owner) reported $1.2 billion segment profit for Tools & Outdoor.
Makita cannot outspend Red or Yellow on new product R&D. And to me it seems Makita management has made some blunders.
It is very difficult to maintain yourself as a high quality brand when you don’t have the R&D budget. Maybe in markets with more emphasis on safety (compare sawdust from a Makita mitre saw to one from Dewalt) Makita can carve out a defensible position. In North America it will tough and my guess Makita will continue to shrink in importance.
Stuart
What’s more important to the corporate office and their investors? Higher revenue or higher overall profit?
There’s also the question of what Makita USA’s retail customers – such as Home Depot – want.
What will all this mean for end users? How might continued losses shape Makita USA’s path and product offerings over the next 5 years?
Steve L
We don’t know where Makita places R&D and Admin costs.
Operating profit is typically after deducting corporate R&D and Admin costs. If Makita does this then Makita North America might be cash flow positive before paying its share of corporate R&D and Admin. We just don’t know. We do know closing North America means those costs will need to be 100% paid by the remaining regions.
if Makita loses its primary retail outlets (Home Depot + ?) the outlook in North America is not good.
Niche brands can have very loyal customers. There have been many comments on ToolGuyd by Makita users who want to stay with Makita.
Badger12345
Steve L’s comment expresses a critical point. It is unclear how much overhead is burdened on the NA market. There large international companies (including Apple for example) that allocate overheads and recognize profits in mysterious ways to sometimes maximize tax write-offs and minimize income taxes.
Stuart
How Makita spreads their capital expenditures around to different segments is opaque.
However, keep in mind the several rounds of price hikes and recent Makita USA company-wide layoffs due to their “financial condition”.
https://14cyiuhvcgv.com/makita-usa-layoffs-2023/%3C/a%3E%3C/p%3E
These suggest that the company’s North America segment losses are not tied to creative accounting to “allocate overheads and recognize profits in mysterious ways.”
Lance
Feb 2, 2024
Makita needs to streamline their USA product line with their global lineup (model numbers) and eliminate a myriad of tool/kit configurations that are redundant and unnecessary.
Makita USA lists the LXT system (18/36v) as 325 tools!!! This is ridiculous. There’s no need for them to offer 14 unique drills an 9 unique impact drivers (I checked). It would seem to me they could cut somewhere between 10-30% of their models and no one would notice.
Combine that with adoption of global part numbers and their USA overhead could immediately look much better. That’s step 1.
Step 2 is to commit to the LXT platform by introducing 21700 or pouch style batteries, as well as the 18×2 tools that need them.
Step 3 is eliminating the pathetic BL1815 1.5Ah batteries. They’re a cheap, low capacity reminder of how far things have progressed in 15 years, and they don’t have a battery gauge. The logistics savings alone would likely cover the cost jump to the BL1820B replacing it. Just because Ryobi has 1.5Ah batteries with no gauge in their entry level kits is no excuse… you’re better than them! Prove it!
Loyal Makita user here. Absolutely love their tools and want them to thrive, not just survive. I think XGT was a huge investment for Makita that’s not paying off. That R&D put into the LXT lineup would have kept them in the running for top spot.
Hon Cho
Sure, North America is a big market but Makita is more prominent and profitable in their other markets. They probably won’t abandon the N. American market but retrenchment and focus on profitability here may find them becoming more niche compared to their N. American competitors.
Stuart
I don’t think Makita abandoning North America is anywhere close to being considered or even possible.
But is there risk of Home dropping Makita in favor of another brand, such as Bosch?
Luke
Why would it not be considered? I thought profits drove decisions. Wouldn’t they have profited an extra 23 million if they weren’t operating in the US last year? How many millions are they willing to burn just to keep their products in the US?
Jim
I don’t think we have enough info to say one way or the other. A business unit losing money on paper may still contribute to the overarching organization in ways that offset a short term loss.
If the stated profit / loss by N.A. include prorated cost paid by N.A. division back to corporate for things like R&D, overhead, legacy costs, etc come close to or exceed the stated loss then N.A. division would be, in a way, profitable.
It’s a shell game, to be sure, and conjecture on my part. But I don’t feel like it’s implausible either.
Matt Ross
Home depot carries the lower end of makita products. They have the smallest displays and few specials. I would prefer to see makita focus on other smaller retailers and online orders. Let milwaukee have hone depot. Focus on higher quality and higher end, like a different festool
S
I think the big question stands as to how the brand can potentially ‘retrench and become more niche.’
It’s easy to point out Fein as a professional wood working tool lineup. But other brands like Ryobi, Ridgid, Milwaukee, or DeWalt, I don’t really feel any of them have a specific niche that they perform better in than any other brand.
But part of a narrowed focus and excelling at a niche requires specialized tools for the purpose. New development is costly, so a good first basis is 2 distinct categories.
1.Assuming all of makita’s international products are included in the discussion, is there anything they already make that does the job more specifically or better than any other brand?
2. Are there any power tool use categories that other brands aren’t adequately serving options for?
I can’t think of any tools they make that are differently-better, or serve a purpose that no other tool brand offers the same solution for. I mean, they are the only company with a cordless microwave, and cordless coffee maker…
Which brings us to a 3rd category. Who’s gonna sell it? If home depot is out, and DeWalt and Milwaukee have the lead in trade-specific stores as well, where can they partner with/sell at that garners just as many eyes on the product?
I don’t have an answer for any of this.
Right now, it’s easy to say that Milwaukee is one of the top power tool brands. Their stuff is everywhere. Most trades use them, from carpentry, to plumbing, electrical, and HVAC, even mechanics tend to gravitate towards the brand. In some ways, it seems to be a nearly unstoppable force.
But in the same token, 20-30 years ago, one would be hard-pressed for many of those same trades to not have a few craftsman or sears branded tools performing the same tasks…
Stefanooch
>I can’t think of any tools they make that are differently-better, or serve a purpose that no other tool brand offers the same solution for.
Makita does have some niche things like a rebar tie gun and concrete scanner that don’t exist on most other platforms, but I wouldn’t consider those best in class.
Where I truly think they excel is user safety. The AWS system, 80v vac with flow alarm and knocking filter, new XGT cutoff saw has dust collection shroud; they continue to take safety seriously and their tools are some of the best, if not the best, in a lot of cases at dust capture. I mean, have you seen how great the XGT mitre saw with matching AWS vac is at capturing dust compared to the DeWalt? After a day of use my mind was made up.
In that same vein is vibration reduction, balance, and ergonomics. Many Makita tools seem to be designed with that in mind yet I see other brands ignoring those completely or impossible to find specs on vibration.
The problem is, influencers often test speed/power above everything. Some test weight, noise, balance, durability as best they can, which I do appreciate…
With new regulations coming every year, especially in Europe/Oceania, if they can continue with that as a differentiator, I think they could move into a good place.
MFC
If they continue to withdraw from the North American market and focus on their stronger markets, it could help relieve pressure and allow them to focus on more innovation and tools that they are currently missing. Now, could they move back into the North American market after they regroup or is it a big deal to basically leave a territory and try to make it back again? Obviously this is oversimplifying it 1000x, but I can see a strategy that incorporates this.
Steve L
IMO, withdrawing from North America is a one-way street. The other brands (ranging from Milwaukee to Festool) will take your retail space, your online stores, and your customers. Especially your customers who you left high and dry.
Rog
There’s no way they’d leave and come back, that’s just not logistically or financially feasible
ITCD
They already are at least in Home Depot, who from my obviously extremely limited observations seems to be dedicating more and more and more space to Milwaukee, and that was before the Makita price hikes and changes. My local took out most of their display of benchtop and stationary tools to fill it all up with M12. And now Milwaukee has encroached on the space long reserved for Klein.
Now this isn’t to say that they’re in mega deep on TTI necessarily because my store is big but it’s definitely not among their larger locations, and I’m only seeing the view of one store here. But they do seem to love them some Team Red. Meanwhile TSC last I looked has kept their Makita section much the same, they even ignored the price hikes for what stock they already had in before they came about lol so you could still get their XWT08 for under $300 when it blew up to like $349 everywhere else.
I’m surprised their overall sales didn’t go down since the hikes were stupidly steep. You can get the latest and greatest from DeWalt and Milwaukee for 1/2″ impact for like $300 or you can get Makitas big mama for another $50 that isn’t a chart topper and is starting to show its age. $189 ratchet that can’t compete with lower priced options from Milwaukee aside from the interchangeable anvil. The router is up to $199 (allegedly $20 off MSRP), I want to say I paid $159 for mine just before the price hikes started.
The hikes were crazy, 25% or more, now they’re no longer cheaper than Milwaukee it feels like and yet are lacking in things people are begging for like bigger 18V batteries.
Perry
At my closest Home Depot stores makita is the front endcap at their tool corrals, it’s the first brand you see when walking up. There’s definitely not as broad a range as Ryobi, DeWalt or Milwaukee but they are front and center in both the power tool section and the OPE
ITCD
Oh yeah mine has that too for like their starter driver/drill kits. On the backside of it is a massive wall of M12.
JR Ramos
Your conversion figures are correct but you’ve listed JPY as billions rather than millions. 🙂
I think if Makita wants to stay focused/most profitable in the DIY and carpentry markets they’ll need to try much harder with both warranty and service/jobsite reps to emulate what Milwaukee has done (and they have actually surpassed DeWalt there over the last decade, which is saying something).
Home Depot and joe homeowner will eat your lunch, as I think they are seeing now with their own missteps but also with the general demise of industry and manufacturing where Makita was always stronger. I think Hilti also may have taken a sizeable chunk out of Makita’s market in concrete where they did well for a long time…Hilti seems to have grown a lot and shown a lot of energy. As it is, it sure seems that DIY is their unfortunate strong suit in the US and big red made tremendous inroads to the service trades and even aircraft maintenance (the latter being another area that Makita did well in). If they can get back into the more professional/industrial markets *and* support those users with a better warranty and maybe bolstering their somewhat weak service network then maybe they can regain some pie. Tough row to hoe.
I can’t see HD picking up Bosch…too many product line conflicts and some of those lines are poorly represented in stores anyway. Even if Lowe’s would “submit” to sharing Bosch – and I’m sure Bosch would be happy to spread their love – I can’t see HD being any better for Bosch so the relationship might not be stellar anyway. Makita and Bosch do so well across the rest of the globe where they are top dogs along with Metabo…North America can’t be ignored but none of them seem to want to put the efforts into getting more sales and adoption here in the face of such strong red and yellow (and green and orange) competitors I guess.
JR Ramos
…wait, ignore my Yen statement. Sorry…math fog error. 🙂
Stuart
Sorry; I tend to swap commas for decimal points, or move them around when convenient.
I find it easier to treat numbers as billions rather than thousands of millions or millions of thousands.
Badger12345
In the commercial office building where I work there is some major demo and renovation going on with three 60 year-old restrooms. The plumbers and sparkies are all using Milwaukee with the exception of the masons who are using a SDS hammer which looks like Hilti under all the dirt. That is just one anecdote, but that tells me where the pros lean at least around here.
Eliot Truelove
That doesn’t surprise me, Milwaukee has always had the plumber and sparky presence.
Makita has historically been framing, finish carpentry, and general contracting with a large share behind the scenes in the manufacturing and industrial market.
Ryan
I started out with Makita in the 80’s with stick/rc style batteries. I still have them and batteries still charged a couple years ago. Good quality at the time but I quickly upgraded with more powerful dewalt. I haven’t thought about buying again.
In the 2000’s I used some Makita at a race team that was sponsored by them. The quality feeling was gone, felt flimsy and cheap.
In the last 40 years, Makita has had nothing to compel me to buy again. I
Just looked at what is on HD, nothing unique for my use and anything I would use seems higher priced than competitors. Is the price justified by being better, better service or made on Japan. I doubt I am the only one who feels that way.
Milwaukee(a company I dislike and hate owning) has made it practically impossible for someone not to buy into their m12 line. I can’t see very many people starting out choosing Makita over more complete and better priced competitors. Maybe Makita should focus very hard to dominate specific trades where they can offer a complete lineup.
Derek
“Comparing the 9-month period ending 12/31/23 to the 6-month period ending 9/30/23, Makita’s North America segment profit changed from a 3.474 million JPY loss to a 3.404 million JPY loss.”
The conversion rate between USD and JPY seems to have changed fairly significantly, and multiple times, over the last few months and years. That very well could be changing the numbers and whether they made a profit or a loss from the US.
Jim Felt
Oddly Makita like some other revered (or at least well liked) Japanese brands like Nikon have simply atrophied. No idea why but no one stays on top of their game indefinitely.
I certainly remember many many Nokia, Motorola and even up until the first iPhone Sony-Erickson being truly state of that art phones in my use.
But now?
lk
huh, nokia is finnish. motorola was american
Eliot Truelove
I truly think think they immediately invested the record profits from 2020/2021 and took a long-term view, so they’ve spread out that payback of the various new facilities they’ve built (and the upgrading of the existing facilities) over the course of the next few years, as well as taking on the burden of much of the operating costs of the world.
The US makes a lot of the Makita products at their Buford Georgia plant, even table saws for the international market, and they have massive warehouses of stock in La Mirada California. Once shipped internationally, those markets have to just sell the items, which means almost pure profit for them.
While this doesn’t look good on paper for America, I’d bet the situation isn’t as dire as we may think. There may even be tax breaks offered in America for operating at a loss.
I have noticed a positive shift in the updating of the US website and the specs and accessory compatibility as well as the social media presence in the past few months since the new president came in, and while it’s too little too late for some people, us diehards are appreciative.
I also think an explanation for the dipped profits could be that many of the people who have been Makita users for a long time still have the tools they’ve bought 10-15 years ago, when that literally can’t be said of many other brands. Thus they don’t have many repeat customers in the sense of buying the same products over and over again once they’ve broken out of warranty, because the tools don’t break that much, and when they do it’s often an easy fix like a trigger issue, stuck chuck, or brushes needing replaced.
Overall, I won’t count Makita out yet. They debuted some impressive prototypes at World of Concrete which I think was a smart move, and it’s generated alot of social media buzz. We’ll see if that buzz makes some new bee-lievers. (whomp whomp).
Stuart
I know you want a lot of those things to be true.
My worry is that they’re no longer a top-tier company, and they have no viable plan to get back.
Saulac
As it will be difficult for Makita to increase their present in big box store, they must simplify their product selections in order to increase online sale. Too many similar options confuse online shoppers and hurt sales. A while a go I was looking for a circular saw. Makita had more circular saw than any other brand. But that made it actually very hard to pick one.
Bremon
I bought into XGT over the holidays. There was a week long sale at a supply house I like that was too good to pass up. It’s unfortunate to see Makita struggling in North America. They make some top tier gear. 80% of my stuff is Dewalt, but Makita is just as good, if not better, depending on the tool. Sold all my M18 stuff years ago after I started having intermittent battery connection and trigger issues. Disposable in a lot of ways from a repair perspective. I still have a few M12 tools but I’m dismayed to see Milwaukee dominate so hard. Better for consumers when there’s more of a horse race imo. I wouldn’t want to see Makita become Bosch, which is largely a joke in North America as far as I’m concerned.
Shawn Yuan
There is a belief (anecdotally true) that Made in Japan Makitas are better in every way compared to their US offerings. People even show off their Amazon.co.jp Makita imports. Some guy on reddit even bought their entire color range of impact drivers.
I’m sure the percentage of import buyers is but a rounding error in the grand scheme but it does tell us two things. Word is around that domestically available Makitas are inferior to a very similar product not available here. Also, there exists Makita owners in NA w a fanaticism I’ve only seen amongst Festool guys… but only for their Made in Japan stuff.