Japan's Suzuki Motor Corp and Subaru-maker Fuji Heavy Industries Ltd reported improved quarterly earnings on Monday as expanded vehicle sales and a weaker yen offset higher commodities costs, and they kept their forecasts for the full year unchanged.
Suzuki, Japan's top maker of minivehicles and the world's third-biggest motorcycle manufacturer, has been a major beneficiary of the global shift in demand to smaller, fuel-efficient cars as gasoline prices hover near record highs.
The popularity of 660cc minivehicles in Japan and heady growth in India, which accounts for a quarter of its global sales, has helped Suzuki weather a sharp contraction in the Indonesian car market and increased spending to add more output capacity around the world.
In contrast, high pump prices have hit Fuji Heavy, which sells bigger, all-wheel-drive cars such as the Legacy and B9 Tribeca models that are especially popular in the US snowbelt regions and among car enthusiasts.
"There's a shift in the (North American) market towards smaller cars right now, so with our product line-up the situation is pretty tough," a Fuji Heavy spokesman told reporters. Fuji Heavy's operating profit for the first quarter ended June 30 was 10.77 billion yen ($94 million), up from 1.15 billion yen in the year-earlier period. Net profit came to 4.6 billion yen, compared with a loss of 1.18 billion yen.
Revenue rose 9.9 percent to 329.53 billion yen as a sharp rise in sales of the Impreza and Forester models in Europe, as well as stronger shipments to other overseas markets, offset a decline in domestic sales. Global vehicle sales grew 3.2 percent to 124,000 units.
The spokesman added that persistently high fuel prices meant more spending on incentives to move the metal in the United States. Subaru expects to spend an average $1,800 per vehicle this calendar year, up $300 from 2005, assuming it can substantially pull back outlays in the third and fourth quarters.
It kept its full-year operating profit forecast at 50 billion yen and net profit at 30 billion yen, but stressed that competition was set to grow tougher at home and in North America.
Suzuki, meanwhile, is scrambling to add capacity at its Hungarian and Indian factories as it races to catch up with runaway demand for its SX4 crossover and Swift hatchback global models.
Its operating profit for the first quarter jumped 18 percent to 33.95 billion yen ($296.5 million), roughly in line with a median forecast of 33 billion yen in a survey of five brokerages by Reuters Estimates.
Rival minivehicle maker Daihatsu Motor Co last week also posted a healthy 8.3 percent rise in operating profit citing expanded vehicle sales at home and to parent Toyota Motor Corp.
Suzuki's net profit and sales both rose 20 percent, to 20.26 billion yen and 763.84 billion yen, also benefiting from steady sales of large motorcycles in the United States and Europe. Its global car sales expanded 8.4 percent to 533,000 units.
Driven by the popularity of the Swift, as well as the Zen and Alto cars, Indian unit Maruti Udyog Ltd, in which Suzuki holds a 54.2 percent stake, last week booked a consensus-beating 66 percent jump in quarterly net profit. For the year to March 2007, Suzuki maintained its cautious forecasts for operating profit of 115 billion yen and net profit of 66 billion yen.
Shares in Suzuki fell 8.5 percent to 2,475 yen during the three months to June 30, mirroring an 8.0 percent drop in Tokyo's transport sector subindex. Fuji Heavy outperformed with a 3.3 percent fall.
Before the announcement, Suzuki shares ended up 1.08 percent at 2,805 yen while Fuji Heavy gained 1.59 percent, both outpacing the transport sector's 0.22 percent rise.
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