Tokyo: Japan’s Suzuki Motor Corp posted an 80% drop in quarterly operating profit hit by a stronger yen and declining sales, and it kept its annual forecasts amid an uncertain outlook for global vehicle demand.
Suzuki, Japan’s fourth-biggest automaker and known for its penny-pinching expertise, made an operating profit of ¥6.86 billion ($72.4 million) in the April-June quarter, down from a profit of ¥33.8 billion a year earlier.
The result was better than a consensus estimate for a ¥2.9 billion profit in a survey of six analysts by Thomson Reuters, as cost cuts added ¥52.3 billion to profit, equivalent to three-quarters of its annual goal for cost-saving contribution.
Suzuki earned a net ¥2.14 billion in the first quarter, down 92% from ¥26 billion a year earlier. Revenue fell 37% to ¥577.1 billion as car sales declined 12.4% to 541,000 vehicles.
“(The first-quarter result was) better than anticipated,” a Suzuki spokesman said.
But he added: “There are many uncertainties facing the industry. The sales environment is tough in Europe and the United States, and our sales recovery is lagging in Japan. We need to wait and see before we revise any projections.”
For the financial year to the end of next March, the maker of compact cars left its operating profit forecast at ¥10 billion and its net forecast at ¥5 billion . The projections were based on a cautious assumption for the dollar to average ¥90 and the euro to average ¥115 during the year.
Consensus forecasts from 17 analysts call for a much higher operating profit of 41.3 billion yen.
Support From India
Bigger Japanese rivals Honda Motor Co and Nissan Motor Co surprised markets last week with unexpected first-quarter profits, which they attributed largely to deeper cost cuts rather than anticipation of a recovery in demand.
Suzuki has been able to offset some of the sales plunge in developed markets with big growth in India, where it is the top-selling brand through unit Maruti Suzuki India Ltd.
Suzuki’s global car sales fell 12% to 541,000 units in the first quarter, but sales in India grew about 10% to 197,000 units.
That helped it outsell France’s Renault SA in the first half of 2009 to rank No.9 in global auto sales.
Last month, Maruti Suzuki, in which Suzuki owns 54.2%, unexpectedly reported a rise in April-June net profit driven by brisk export demand for the new A-Star hatchback, higher selling prices and lower raw materials costs.
Earlier, rival compact-car maker Daihatsu Motor Co reported a 73% drop in April-June operating profit to ¥4.99 billion and tripled its first-half profit forecast to ¥6 billion citing slightly better-than-expected revenue and deeper cost cuts.
It kept its full-year forecasts intact.
Shares in Suzuki have risen 95% in the year to date, outperforming Tokyo’s transport subindex, which is up 53%. Daihatsu, a unit of Toyota Motor Corp, has gained 36%.
Before the results were announced, Suzuki shares ended up 1.3% at ¥2,420 , while the transport sector gained 2.4%. Daihatsu ended down 0.5% at ¥1,060 after its results.