Dec. 18, 2009
Sumitomo to embark on Equipment Rental Business in the United States
Sumitomo Corporation (President and CEO: Susumu Kato; Head office: Chuo-ku, Tokyo; hereinafter, "Sumitomo"), through its 100 percent subsidiary, SMS International Corporation, has invested 50 million US dollars in Convertible Preferred Interests of Sunstate Equipment Co., LLC (Chairman Michael Watts, Head office: Phoenix, Arizona; hereinafter, "Sunstate"). Sunstate is one of the major equipment rental companies in the United States, with branch locations in eight states in the southwestern US.
Within the construction equipment industry, there has been a secular trend amongst end-users to rent, rather than to own, equipment, and this trend has been more pronounced in developed countries. To capitalize on this trend, Sumitomo has identified equipment rental as a strategic business area on which to focus going forward.
Sumitomo has been actively searching for an investment opportunity in the US in particular--with the world's largest market of more than 30 billion US dollars and rental penetration rates that have continued to increase year after year (from 25percent to 40percent over the past decade), the US is the most attractive equipment rental market. Although the US construction equipment rental industry has been experiencing a severe downturn since the financial crisis, given the long-term growth prospects of this market, Sumitomo believes that it is an excellent opportunity to enter the industry by making this full scale investment.
Sumitomo is the first Japanese company to make a full scale investment in the US equipment rental industry.
Sumitomo currently operates construction equipment dealerships in North America with annual turnover of approximately JPY 150 billion. Sumitomo also has an existing equipment rental business in Canada with 15 branch locations operating under the name "SMS Rents". Together with this new investment in Sunstate, Sumitomo is determined to expand its equipment rental business portfolio and become a leading company in the North American equipment rental market.
＜Overview of Sunstate＞
Name: Sunstate Equipment Co., LLC
Address: Headquartered in Phoenix, Arizona (operates 52 branches in total)
Representative: Michael Watts (Chairman of the Board)
Total Revenue: 227million US dollars (as of Dec 2008)
Business: Rental of aerial and construction equipment
Corporate Communications Department,