Japan’s Suzuki Motor Corp issued its first-ever profit warning on Friday, predicting a 33% drop in operating profit this business year as the worst financial crisis in 80 years pulls down even the healthiest automakers.
Suzuki, a maker of compact cars with about half of India’s market, now expects to make an operating profit of ¥100 billion ($1.02 billion) instead of ¥140 billion, and net profit of ¥60 billion instead of ¥80 billion for the year to March 31. It was the first profit warning since it began reporting consolidated numbers a decade ago.
A poll of 11 brokerages had put its operating profit at ¥124 billion, although the business environment has become increasingly unpredictable in the past few weeks due to volatile exchange rates and uncertainty over when economies will rebound.
While Suzuki has little exposure to the United States, it is feeling the pain of slowing European and Asian sales, including of motorcycles, as well as the yen’s surge against the euro and a basket of Asian currencies. The acute economic crises in Pakistan and Hungary, where Suzuki recently ramped up production capacity, have also added to worries about its outlook. For the April-September first half, operating profit fell 23% to ¥60.7 billion, while net profit plunged 26% to ¥34.2 billion. Revenues declined 0.5% to ¥1.72 trillion.
Shares of Suzuki have lost about 55% in the year to date, sharply underperforming the Tokyo’s transport sub-index, which has fallen 30%. Before the results, Suzuki shares ended down 6.4% at ¥1,404, while the sector lost 6.2%. (Reuters)