Suzuki Motor Corp, Japan’s top minivehicle maker, has reported a double-digit jump in annual profit and forecast another record-breaking year boosted by steady gains in the thriving Asian market.
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According to Reuters, Suzuki, known for its cost-cutting skills, has taken a firm lead in India, China and other Asian markets with its small, competitively priced cars, making up for a lacklustre performance in North America.
The news agency noted that, last month, Suzuki rival Daihatsu Motor, the minivehicle unit of Toyota Motor, also reported rosy results with a 37% jump in operating profit thanks to brisk domestic demand for the 660cc vehicles last year.
Analysts reportedly said strong momentum in India, where Suzuki dominates the market through a majority stake in top local car maker Maruti Udyog, would help offset any damage from a weaker dollar.
“As a whole, the announcement was a positive surprise,” UBS Securities analyst Takaki Nakanishi told the news agency, noting the company’s net profit projection for this year was higher than expected.
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By GlobalData“Suzuki’s forecasts are usually conservative – they’re calling for flat sales this year, which is very unlikely since Asian sales are growing quite strongly,” he reportedly added.
Reuters said that, for the current business year to March 2005, Suzuki, which is 20% owned by General Motors, projected operating profit growth of 5.1% to 100 billion yen ($US886 million).
The company, Japan’s fourth-largest car maker by stock value, reportedly forecast a net profit of 60 billion yen, up 37% and better than a consensus estimate of around 53 billion yen, which the company attributed to the early write-down of losses from fixed-asset valuation during the just-ended term.
Operating profit for the year that ended in March surged 28% to a record 95.14 billion yen ($US842.7 million), better than a median forecast of 92.55 billion yen in a survey of 12 brokerages by Reuters Research.
The news agency’s report said net profit grew 41% to 43.84 billion yen thanks to aggressive cost reductions totalling 56 billion yen as sales rose 9.1% to 2.199 trillion yen.
While Suzuki agreed that profits would rise in Asia, which accounts for about a fifth of its total operating profit, it reportedly said the outlook was uncertain due to rising material and oil prices as well as Japan’s fragile economic recovery.
“It’s very difficult to predict what will happen, especially because we’re much more exposed to developing markets than other car makers,” chairman and CEO Osamu Suzuki told Reuters.
But he reportedly added that Suzuki would continue to invest heavily in its businesses in India, China, Thailand, Pakistan and Hungary, while maintaining the number-one spot in the domestic minivehicle market despite facing fierce competition against Daihatsu.
According to Reuters, Suzuki, also the world’s third-largest motorcycle maker, said it would target parent-only global car production of 1.942 million units this business year, up 0.8% from last year.
While the auto maker does not provide a regional breakdown of profit forecasts, Suzuki reportedly said he was targeting a surge in North American earnings through an expanded line-up that would include Suzuki-badged cars developed with partner GM-Daewoo Auto and Technology (GMDAT).
“I want to bring North American operating profit to two to three billion yen this year,” he told Reuters which noted that, last year, it made a profit of 800 million yen.
