Japan's Suzuki Motor Corp beat market expectations with its highest quarterly profits in two years as sales zoomed in Asia, but stuck to its cautious guidance citing a softer euro and stiffer competition in India.Suzuki, in which Volkswagen took a 19.9 percent stake this year, weathered the financial crisis better than most thanks to a product line-up heavy on cheaper, small cars such as the Swift hatchback, and to its dominance in the fast-growing Indian market.Suzuki's local unit, Maruti Suzuki India , sells about half of India's new cars, but will face more competition over the next year from Nissan Motor, Toyota Motor and other major brands aiming for a bigger piece of the market with low-cost cars tailored to local tastes."We're facing a tougher race in India, and that situation is going to continue," Senior Managing Officer Toshihiro Suzuki, son of Chairman Osamu Suzuki, told a news conference.He said the company would continue to pour investments into improving its sales and distribution network in India to stay ahead.Analysts will also be looking at how well car sales in India hold up in the near term. In a move that could dent demand, the central bank last week raised interest rates more forcefully than expected, to fight double-digit inflation. Economists expect a more aggressive tightening for the rest of the fiscal year, according to a Reuters poll.Suzuki reported an operating profit of 31.95 billion yen ($369 million) for the April-June quarter, up from 6.86 billion yen a year earlier and beating the average 24.5 billion yen estimated by five analysts surveyed by Reuters.First-quarter net profit was 15.16 billion yen, surging from 2.14 billion yen a year earlier and above Suzuki's forecast for the six months to Sept. 30."The market got some jitters after Maruti's (profit decline), so I think these results will calm some of those fears," said CLSA Asia-Pacific Markets analyst Christopher Richter."All companies are sounding a cautious note because they don't want to be caught out. But you do wonder whether the caution is a bit excessive," he said, adding that Suzuki would likely lift its annual guidance at the end of the first half.For the year to March 2011, Suzuki, also the world's third-biggest motorcycle maker, kept its operating profit forecast at 80 billion yen, roughly flat from last year. A survey of 19 analysts by Thomson Reuters I/B/E/S forecasts profit of 96 billion yen.Suzuki sees this year's net profit at 30 billion yen.Suzuki is better shielded against a stronger yen than its domestic rivals, having set a conservative assumption for the euro to average 115 yen. With few cars sold in the United States, the company has little exposure to the dollar.Prior to the announcement, Suzuki shares closed up 2.3 percent at 1,868 yen. The stock is down 18 percent in the year to date, faring worse than Tokyo's transport sector subindex, which lost 13 percent in the same period.(Editing by Chris Gallagher)(For more business news on Reuters India click http://in.reuters.com)News posted by www.newsinfoline.com
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