Suzuki Motor Corp, Japan's No.4 automaker, forecast flat operating profits this year, below market expectations, as a firmer yen and turmoil in Europe counter the impact of a sales increase led by India.The cautious outlook from Suzuki, 20 percent owned by Germany's Volkswagen, followed similarly conservative guidance from larger rival Honda Motor Co and raised concerns ahead of earnings from heavyweight Toyota Motor Co on Tuesday."I hope Suzuki's pessimistic view toward the euro and the European economy is very conservative," said Kazutaka Oshima, President of Rakuten Investment Management."I am now concerned about Toyota's earnings tomorrow. I am now worried how the crisis in Greece would have an impact on Japanese car makers."Suzuki has outperformed the industry in the past few years as consumers around the world shift to smaller, more fuel-efficient cars such as its Swift and Alto hatchbacks.Analysts said Suzuki would also benefit from recently expanded capacity in its biggest market India -- at 1 million units a year as of March -- before it adds another 250,000 units from April 2012 to cement its dominance in the fast-growing Indian market.But a weaker euro originating from Greece's debt woes may erode its profit."I am afraid the crisis may hit not only the euro, but also the economy in entire Europe and other currencies," chairman Osamu Suzuki told a news conference."It may sound I am praying to God for help, but I wish the negative impact on the economy would be limited."For the year to March 31, 2011, Suzuki forecast an operating profit of 80 billion yen ($874 million), 0.8 percent up from the 79.36 billion yen it made last year. It expects net profit to grow 3.8 percent to 30 billion yen.A survey of 18 brokerages by Thomson Reuters I/B/E/S showed that on average they expect operating profit of 88 billion yen for 2010/11.Led by the Indian market, Suzuki expects to boost its global vehicle sales by 5.7 percent to 2.482 million units this financial year.But the firm forecast a stronger yen would have a negative impact of 24 billion yen in its operating profit. Suzuki assumes the yen to average 90 to the dollar and 115 to the euro, compared with current levels around 93 and 121.INDIA MARGINS PRESSUREDOperating profit in the final, January-March quarter was 29.5 billion yen, compared with a profit of 10.45 billion yen a year earlier. The result was better than the 19.2 billion yen average estimate in the poll of brokerages.Fourth-quarter net profit came to 13.4 billion yen versus a profit of 5.8 billion yen a year ago.Last month, Indian unit Maruti Suzuki India Ltd missed forecasts for fourth-quarter net profit and warned of margin pressure and slower sales growth as global automakers pile into the competitive compact car market.Suzuki must also repair its ailing motorcycle business, which unlike Honda successful operations, has yet to recover from a sales slump as consumers stay away from leisure products.Further out, analysts are looking for Suzuki to realise synergies from its tie-up with Volkswagen."When we announced the tie-up, I assumed it would take a year to discuss between the two companies what we would do. We are in talks, but nothing has been decided," said the chairman.Suzuki's shares have fallen more than 20 percent since it agreed its deal with Volkswagen last December, underperforming a 1 percent rise in Tokyo's transport equipment subindex over the same period.Before the announcement, Suzuki's shares closed up 1.5 percent at 1,858 yen, matching the market's rise.($1=91.56 Yen)(Reporting by Chang-Ran Kim and Nobuhiro Kubo; Editing by Lincoln Feast)(For more business news on Reuters Money visit http://www.reutersmoney.in)News posted by www.newsinfoline.com
Click here to read more news from www.newsinfoline.com
Please follow our blogs
newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1
photogallery1
No comments:
Post a Comment