Suzuki Motor Corp., Japan's top minivehicle maker, posted a 14 percent jump in quarterly operating profit on Thursday as demand for small cars boomed in Asia, and it stuck to its forecast for another year of record earnings.
Operating profit at Suzuki, owned one-fifth by General Motors Corp. and Japan's fourth-biggest auto maker by stock value, was 26.71 billion yen ($251.7 million) for July-September, shaking off losses from a weaker dollar.
But net profit fell 2.6 percent to 12.12 billion yen, even as sales expanded by 12.6 percent to 575.41 billion yen. Sales were driven by stellar demand for its compact cars in Europe and minicars in Japan, where the 660cc vehicles get preferential tax treatment and make up a third of the car market.
Last week, rival Daihatsu Motor Co. <7262.T> also revealed rosy results thanks to brisk sales of minivehicles and one-litre-engine compact cars at home.
While Daihatsu, part of the Toyota Motor Corp. <7203.T> group, relies heavily on the domestic market, Suzuki's strength lies in its strategy of seeking growth outside Japan, whose car market has stagnated for the past decade.
After a double-digit jump in profits last year, Suzuki, known for its cost-cutting savvy, is expecting another record-breaking year fuelled by steady gains in the thriving Asian market, which accounts for about a fifth of its revenues.
It maintained its forecasts for 100 billion yen operating profit and 60 billion yen net profit -- projections that most analysts say are conservative. In 2003/04, its operating profit was 95.14 billion yen and net profit was 43.84 billion yen.
A major driver of growth for Suzuki is the fast-growing Indian market, where its Maruti 800, Alto hatchback and other models make up nearly half of the country's cars through majority-owned Maruti Udyog Ltd. .
Through Maruti, India's biggest auto maker, Suzuki also plans to boost its share of the burgeoning compact segment by launching a 1.3-litre premium hatchback next year to compete with Hyundai Motor Co.'s <005380.KS> Getz and the Fiat Palio models.
The model, which went on sale in Japan as the "Swift" on Monday, will be built in Japan, India, China and Hungary as a strategic model to help Suzuki grab a bigger piece of the compact car segment in those regions.
Driven by a 25 percent jump in sales, Maruti Udyog last week posted a 48 percent rise in net profit during the latest quarter.
For the April-September half-year, Suzuki's operating profit grew 13 percent to 54.22 billion yen as cost cuts and sales growth erased the effect of increased fixed costs and losses exceeding 10 billion yen from currency swings.
First-half net profit jumped 14.5 percent to 28.68 billion yen on a 7.1 percent rise in sales to 1.163 trillion yen.
Strong automobile sales made up for a fall in profits from its motorcycle business, while North America returned to profit and profit improved in Japan and Asia.
Shares in Suzuki lost 6.2 percent during the three months to Sept. 30, underperforming a 2.5 percent fall in Tokyo's transport index <.ITEQP.T>.
They ended up 0.74 percent at 1,897 yen on Thursday after the results were announced, coming down from an intraday high of 1,920 yen. Most other auto stocks also closed higher, in line with the broader index. ($1=106.09 Yen)
Source: Reuters
04.11.2004