Denso Corp. posted a 75-percent surge in net income in the quarter ended June 30, 2013, to JPY86.04 billion ($872.7 million). The Japanese supplier also posted a 13-percent rise in revenues in the quarter to $10.12 billion.
Denso logged a 31-percent in quarterly operating profit $1.04 billion. Kenichiro Ito, an executive director at Denso, remarked that despite a decline in vehicle production in Japan, the supplier’s sales and operating income surged thanks to steady vehicle production in North America and the emerging markets.
One of the biggest boosters of the supplier’s profit hike in the quarter is the continuing weakness of the Japanese yen against other currencies, accounting for $340 million of the operating profit. Denso logged a 30-percent surge in sales in North America to $2.1 billion and a 20-percent jump in operating income to $63.4 million. The Japanese supplier also logged a sales increase in Europe at 26 percent to $1.2 billion.
Higher labor cost and other expenses, however, dragged the company’s operating income in the quarter ended June 30, 2013 down by 5 percent to $17.5 million. Thanks to its strong performance in the quarter, Denso updated its earnings forecast to reflect an increase in expected net income of $2.47 billion on expected net sales of $39.46 billion in the fiscal year ending March 31, 2014.
The previous forecast made in late April had expected a net income of $1.97 billion on sales of $38.54 billion. Although Toyota Motor Corp. owns a 23-percent stake at Denso, the Japanese supplier has been aiming to cut its dependence on the carmaker and its affiliates as customers. In fact, the Toyota Group accounted for 49 percent of Denso’s sales in the quarter ended June 30, 2013, compared to 52 percent in the same period in 2012.
In May, two Denso executives agreed to plead guilty to conspiring to fix prices of electronic auto components sold to Toyota. Japanese nationals Yuji Suzuki and Hiroshi Watanabe have also agreed to cooperate with an ongoing criminal probe. The Denso executives were to serve time in US prison and pay a criminal fine, according to the US Justice Department. As part of the bargain agreement, Suzuki and Watanabe have to be imprisoned for 16 and 15 months, respectively.
Suzuki and Watanabe agreed to plead guilty to conspiring to fix the prices of heater control panels that regulate vehicle temperature. These components were sold to Toyota Motor Corp. and a US unit. In addition, Suzuki agreed to plead guilty to conspiring to fix the prices of electronic control units that regulate power windows, power locks and other electrical systems.