Suzuki sees profits tad up, India bottleneck eases

Suzuki sees profits tad up, India bottleneck eases

Tokyo: Suzuki Motor Corp forecast on Monday a tiny rise in annual operating profit as a supply bottleneck in India eases despite stiffer competition and higher input costs in its single-biggest market.

The maker of the Swift, Alto and other tiny hatchbacks has outperformed the industry in the past few years thanks to consumers’ shift to smaller, more fuel-efficient cars around the world.

Analysts said Suzuki would also benefit from recently expanded capacity in India — at 1 million units a year as of March — before it adds another 250,000 units from April 2012 to cement its dominance in the fast-growing Indian market.

For the year to 31 March 2011, Suzuki, Japan’s fourth-biggest automaker, forecast an operating profit of ¥80 billion ($874 million), 0.8% up from the ¥79.36 billion it made last year. It expects net profit to grow 3.8% to ¥30 billion.

A survey of 18 brokerages by Thomson Reuters I/B/E/S showed that on average they expect operating profit of ¥88 billion for 2010-11.

Operating profit in the final, January-March quarter was ¥29.5 billion, compared with a profit of ¥10.45 billion a year earlier. The result was better than the ¥19.2 billion average estimate in the poll of brokerages.

Fourth-quarter net profit came to ¥13.4 billion versus a profit of ¥5.8 billion a year ago.

Last month, Indian unit Maruti Suzuki India Ltd missed forecasts for fourth-quarter net profit and warned of margin pressure and slower sales growth as global automakers pile into the competitive compact car market.

Suzuki must also repair its ailing motorcycle business, which unlike Honda Motor Co’s successful operations, has yet to recover from a sales slump as consumers stay away from leisure products.

Further out, analysts are looking for Suzuki to realise synergies from its tie-up with Volkswagen AG, which now owns 19.9% of Suzuki.

Suzuki’s shares have fallen 18% in the year to date, underperforming a 6% rise in Tokyo’s transport equipment subindex.

Before the announcement, Suzuki’s shares closed up 1.5% at ¥1,858.