Jul. 22, 2014
Sumitomo Corporation acquires share in construction equipment sales/service company in the Kingdom of Saudi Arabia
Becomes first Japanese corporation to invest in a construction equipment retail business in Arabic countries
Sumitomo Corporation (head office: Chuo-ku, Tokyo; President & CEO: Kuniharu Nakamura) has completed an investment of approximately 1.5 billion yen, acquiring 50% share in Abdul Latif Jameel Summit Company Limited (“ALJ Summit”), a sales/service company for Komatsu construction equipment and a subsidiary of the Abdul Latif Jameel Group (“ALJ Group”; head office: Jeddah, Saudi Arabia; president: Mohammed Jameel), a major Saudi Arabian conglomerate.
Sumitomo Corporation started out in Saudi Arabia by establishing a sales/service company for Komatsu construction equipment there in 2012, and it selected the ALJ Group as a partner. It then founded ALJ Summit as an affiliate of that Group, began offering preliminary sales and after-sales services for Komatsu construction equipment and, after completing the necessary procedures, in July of this year made ALJ Summit a consortium with Sumitomo Corporation and the ALJ Group each holding a 50% share. ALJ Summit will construct a network of business locations throughout Saudi Arabia, steadily expanding to a total of eight locations in Jeddah, Riyadh, Dammam and other cities, and pursuing downstream business in Saudi Arabia’s construction equipment sector.
Saudi Arabia is an energy power boasting the world’s highest oil production and most extensive oil reserves, but in recent years it has also endeavored to develop non-oil sectors as well as undertake reforms by developing its human resources, privatizing state-run enterprises, introducing foreign capital, and opening its markets. A sharp rise in population has given urgency to the construction of housing and medical/educational facilities and the improvement of transportation and infrastructure, and investment in construction is likely to remain strong. Saudi Arabia’s market for construction equipment has seen significant annual growth on the order of 20–40% over the past ten years, with the exception of 2009 due to the adverse impact of the Lehman Shock, and the market scale should reach about 6,000 units in 2014. With the market expected to stay strong, ALJ Summit’s sales should soon reach 50 billion yen.
The ALJ Group is a global company with a long history of dealing in Toyota automobiles and a deep understanding of Japan that also widely engages in business outside the Middle East. The Group has worked hard not only to build its sales and service business but also to play a role in community service and social action by offering schooling to train automobile technicians and setting up scholarship funds in the hope of bringing about a more prosperous society. The partnership between Sumitomo Corporation and the ALJ Group reflects the resonance between their corporate philosophies and global growth strategies.
Sumitomo Corporation started its overseas construction equipment business in Europe and the US, going on to set up distributors in China, Russia and other areas to undertake downstream business. By gaining the ALJ Group as a powerful and trustworthy partner in Saudi Arabia, a key player in the Islamic world, Sumitomo Corporation will be able to make use of the know-how it has cultivated in that country to provide Komatsu construction equipment and high-level after-sales services to a remarkably growing Saudi Arabia. Sumitomo Corporation will also contribute to that country’s development by creating jobs locally and training technicians.
|[Profile of ALJ Summit]|
|Official name||:||Abdul Latif Jameel Summit Company Limited|
|Location||:||Jeddah, Saudi Arabia|
|Capital||:||112.5 million Saudi riyal (approx. US$30 million)|
|Investment ratios||:||Sumitomo Corporation:50%; Abdul Latif Jameel Group: 50%|
|Employees||:||127 (as of July 2014)|
Temporary company premises at present (Jeddah)
Rendering of new company premises (Jeddah, Riyadh)
Corporate Communications Department,