Suzuki’s operating profit dropped by 2.8% in the third quarter

Article by Christian A., on February 7, 2012

Suzuki Motor Corp.’s operating profit for the last quarter dropped by 2.8% as it was affected by the slowdown in Indian sales. It chose to keep its forecast for its annual profit even with the impact from the stronger yen and the flooding in Thailand. Five analysts polled by Thomson Reuters had estimated an average profit of 23.8 billion yen, which is comparable to its operating profit for the third quarter (October-December) of 23.0 billion yen ($300 million). Its net profit decreased by 29% to 8.61 billion yen, according to calculations based on its nine-month results.

Suzuki lowered its revenue forecast by 110 billion yen to 2.50 trillion yen for the year to March 31, due to the yen's strength and the disruption from the Thai floods last quarter. In a news conference, executive vice president Toshihiro Suzuki said that the floods had made production in Indonesia decrease by around 37,000 motorcycles. Sales in Hungary also fell by about 13,000 cars.

Suzuki retained its profit guidance due to cost-cutting efforts, projecting operating profit of 110 billion yen, a 2.9% increase from 2010/11. This figure is at 119 billion yen, according to the estimate of 21 analysts.

Last January, subsidiary Maruti Suzuki India Ltd. posted a quarterly profit decline that was worse than anticipated, reflecting sluggish sales and weaker rupee.

However, it gave assurances that the worst is over, increasing Maruti's stock price by over 6% on the day. Analysts say that Suzuki will benefit from a shift towards monetary easing in India (its biggest market) wherein car sales dropped due to increasing interest rates.

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