Mazda, Fuji Heavy seen taking a hit from stiffer yen

Mazda, Fuji Heavy seen taking a hit from stiffer yen

TOKYO -- Mazda Motor and Fuji Heavy Industries will likely undershoot their profit targets this fiscal year as solid global sales fail to offset the impact of a strong yen.

Mazda's operating profit is expected to drop 34% on the year to about 150 billion yen ($1.43 billion) in the year ending March 2017. Fuji Heavy's is seen shrinking 35% to around 370 billion yen. Mazda had projected a 25% slide to 170 billion yen and the Subaru maker a 29% decline to 400 billion yen.

The robust yen has eaten into the profitability of exports. Mazda will update its assumed yen-dollar rate from 110 to around 102, with the stronger Japanese currency shaving around 50 billion yen off operating profit.

Fuji Heavy will revise its assumed rate for October and beyond from 105 to 100 or so. The company faces higher costs for incentives in the U.S. Recalling its mainstay Legacy passenger car will also deal a blow.

The two rivals are enjoying healthy sales globally. Mazda is seen maintaining its projection of 1% growth to 1.55 million units. Sales in Japan are seen falling short of the target by about 20,000 units as the boost from new rollouts fades. But the Chinese market, lifted by a tax break, is seen offsetting this.

Fuji Heavy is doing well in the U.S. and is seen sticking with its global sales forecast of 1.05 million units, up 10%.

The automakers will announce April-September results Nov. 2. Mazda will likely report declines in sales and operating profit for the first half, while Fuji Heavy is expected to roughly meet its expectations. They will step up sales of high-margin sport utility vehicles and cut costs.