NEW DELHI :
Suzuki Motor Corp.’s net profit plunged 42% year-on-year (y-o-y) in the fiscal first half, hammered by lower vehicle sales in key markets of Japan and India and sharp fluctuations of the Japanese yen against major currencies.
The parent of Maruti Suzuki India Ltd posted a net profit of 79.3 billion yen in the six months ended 30 September.
During the period, Japan’s fourth-largest automaker posted a 17% y-o-y drop in volumes to about 1.4 million vehicles. This was mainly because of 4.6% and 26.5% decline in sales in Japan and India, respectively. Sales in other core markets such as Indonesia, Thailand and Pakistan also declined in double digits.
During the fiscal first half, Suzuki’s net sales fell 9% y-o-y to 1,755.4 billion yen. Operating income—a measure of a company’s operational profitability—declined 40% to 118.6 billion yen.
Suzuki did not disclose financial results for the July to September quarter in its earnings presentation uploaded on the company’s website on Tuesday.
In Japan, the company has started recalling almost 2 million vehicles after its final inspection infrastructure was found inadequate and had to be restructured, which led to loss of production.
Meanwhile, a year-long slowdown in the Indian market has led to a substantial reduction in contribution from Maruti Suzuki, which controls about half of the Indian market and contributes more than half of Suzuki’s profit and revenue. The Hamamatsu, Japan-based manufacturer in October already guided for a significant decline in revenue, operating profit and net profit in the current fiscal due to expected loss of production in both Japan and India.
The company, led by Osamu Suzuki, cut net sales forecast by 10.3% to 3,500 billion yen.
Operating income has been lowered by 39.4% to 200 billion yen. Suzuki also revised downwards its net profit guidance by 30% to 140 billion yen.
“The company hereby revises the consolidated business forecast due to decrease in Japan production in the course of restructuring final inspection scheme, slowdown in Indian automobile market, and exchange rate fluctuations," Suzuki informed the Tokyo Stock Exchange on 10 October.
In its results presentation on Tuesday, Suzuki said “The Group will work as one to reform in every field and pursue the business activity to accomplish more than the below forecasts for the consolidated operating results."
Maruti Suzuki—Suzuki’s most valuable unit—posted a 39% y-o-y drop in net profit to ₹1,359 crore in the September quarter, the lowest profit in 15 quarters, due to lower volumes. Revenue declined by 25% y-o-y to ₹16,120.4 crore.
At the recent motor show in Tokyo, Suzuki’s president Toshihiro Suzuki said the company will find it extremely challenging to hold on to its 50% market share in India.
“It’s a challenge. Globally, one firm has never been able to get 50% share in one country. The Indian market is very special to us and we will try to keep the a 50% share but there are varied challenges. General Motors in the US has around 16% market share and same is the case with Volkswagen in Europe. But I will try to keep the 50% market share (in India)," Suzuki said.