TOKYO -- Shares in Japanese robotics manufacturer Yaskawa Electric hit a record high of 5,560 yen apiece on Friday during midday in Tokyo, marking over a threefold gain at the close of Friday trading at 5,540 yen from the end of 2016. The stock's stellar rise reflects investor enthusiasm for the company's future, especially as it expands its operations to Europe.
The company started up its first European plant in September in Slovenia to manufacture robots for industrial use. Yaskawa has an eye on capturing market share from German competitors that dominate the region, marking its diversification from China. In Japan's stock markets, Yaskawa had traditionally been thought of as a China play, but that may soon change if its foray into Europe is successful.
"We will break the stronghold of our competitors," said a Yaskawa executive at a Tokyo press meeting late December. In particular, Yaskawa is hoping to grab market share from Germany's Kuka.
Like ABB of Switzerland, Kuka enjoys a large share of the European market for industrial-use robots. In the summer of 2016, it accepted a takeover bid by major Chinese electronic appliance maker Midea Group. While Midea promised to maintain Kuka's European operations and workforce, Kuka is clearly shifting toward customers in China, where the robotics market is growing rapidly.
Against that backdrop, Yaskawa sees a chance to wedge itself into the European market. Yaskawa's Slovenia plant will be its third production center after Japan and China. "We'll raise our profile as a European manufacturer by producing robots there," said Yaskawa President Hiroshi Ogasawara. The company is banking that local production and development will enhance its European credentials and attract more clients.
In the past, Yaskawa had trailed Kuka in the European market in large part because requests from the sales force were not easily reaching developers. The company is addressing this issue by giving the Slovenian plant development purview and the capability to fulfill custom orders and meet client requests such as changes in order sizes.
So far, analysts are liking Yaskawa's European strategy. "It has a large chance of winning," said analyst Shinji Kuroda at Credit Suisse Securities (Japan).
Europe currently accounts for a little over 10% of consolidated Yaskawa sales, at 27.9 billion yen ($250 million), for April-September 2017. Japan is still its biggest market, followed by China, the Americas and then Europe. But the market is growing in Europe where the International Federation of Robotics reported that 430,000 robots were operating in the region in 2015, or about one-third of the global total.
Investors are taking note. At the end of November, Yaskawa shares made up 4% of Nikko Asset Management's Global Robotics Equity Fund which oversees 900 billion yen. That made Yaskawa the fourth largest stock in the portfolio, after Nikko increased holdings by 1 percentage point in the two months prior.