The Wall Street Journal (Tokyo) - Suzuki Motor Corp. on Tuesday posted a 56% surge in net profit for the past fiscal year, but the car maker warned of tough conditions this year because of the impact of the disaster that hit Japan in March and potential power shortages during the summer.
The uncertainties in Suzuki's home market are a major setback for the company's earnings recovery after the global financial crisis. The profit rebound had been helped by vehicle demand in India, where the auto maker holds a share of about 50% of the emerging market.
Suzuki, which formed an alliance with Volkswagen AG of Germany in 2009, said its net profit rose to ¥45.17 billion ($563.2 million) in the fiscal year ended in March from ¥28.91 billion in the previous year, as it increased sales in India and other fast-growing Asian markets. Sales rose 5.6% to ¥2.608 trillion from ¥2.469 trillion.
However, the maker of small vehicles didn't give an earnings forecast for this fiscal year, joining Honda Motor Co., Mazda Motor Corp. and Mitsubishi Motors Corp. in omitting projections, as it was unable to immediately gauge the impact of the March 11 earthquake and tsunami in Japan that disrupted the auto-parts supply chain.
The company also is likely to be affected by Chubu Electric Power Co.'s decision Monday to temporarily shut down reactors at the Hamaoka plant in Shizuoka over earthquake safety concerns, as requested by the government. The plant supplies power in the central Japan region where Suzuki is based and its six domestic factories are located.
"We'll probably be under severe circumstances, given the outlook for our production [in Japan] after June is still unclear," Osamu Suzuki, chief executive and chairman of Suzuki, said at a news conference.
The car maker's domestic production in April and May was and will be about 70% of the volume in the same months last year because of the scarcity of parts from suppliers after the disaster, he said.
"We are concerned about power supplies as the [peak] summer season approaches," Mr. Suzuki said.
Japan's economy minister, Kaoru Yosano, said earlier Tuesday that the decision by Chubu Electric to suspend the Hamaoka plant could cause electricity-supply problems this summer.
To deal with the possible power-supply issue, the auto maker can only work harder than before to reduce power consumption, the CEO said, though he declined to elaborate.
In the past fiscal year, Suzuki increased global vehicle sales 12% to 2.6 million vehicles. Sales in Asia rose 28%, offsetting sales declines in Japan, Europe and North America.
Meanwhile, Fuji Heavy Industries Ltd. on Tuesday reported a record net profit for the fiscal year ended in March.
The maker of Subaru-brand vehicles posted a net profit of ¥50.33 billion for the fiscal year ended March 31, reversing a net loss of ¥16.45 billion the previous year. Sales rose 11% to ¥1.581 trillion from ¥1.429 trillion, driven by solid sales in North America, Europe and China.
Still, the car maker didn't provide any earnings projections for this fiscal year through March, as parts shortages will keep the company's domestic production low at least until November, Fuji Heavy President Ikuo Mori said at a news conference.
"We understand the first and second quarter will be a harsh first six months," Mitsuru Takahashi, Fuji Heavy chief financial officer, said at a separate news conference. "A key will be how far we can make up for [the reduced first-half production] in the second half."
Suzuki and Fuji Heavy report earnings based on Japanese accounting standards.
