JAPAN: North America, currency, hit Denso results
Denso Corporation on Wednesday reported its first fall in net sales and operating income since quarterly reporting began in fiscal 2003 due to falling production in North America and exchange rate losses.
Consolidated net sales for the first quarter ended 30 June 30 totaled JPY983.9bn (US$9.2bn), a slight decrease from the previous year. Consolidated operating income fell 20.6% to JPY74.2bn ($696.8m) and consolidated net income fell 23.3% to JPY51.7bn ($485.4m).
"Sales decreased mainly due to the decrease in car production in North America and substantial currency exchange loss, despite increases in the export of vehicles to emerging countries and car production for Japanese auto manufacturers in ASEAN countries and China," said managing officer Sadahiro Usui. "A decrease in sales and substantial currency exchange loss led to a decrease in operating income."
Japan sales rose 5% to JPY650.7bn ($6.1bn), a 0.5% increase from the previous year. Despite a sales increase led by the growing export of vehicles and cost reduction efforts, substantial currency exchange loss and rising raw materials costs led to operating income falling 40.6% to JPY31.4bn ($295.0m).
In North, Central and South America, a decrease in sales mainly to the three major American automakers, resulting from the slowdown in car production in North America, led to a 15.2% decrease in sales to JPY190.9bn ($1.8bn). Operating income fell 23.7% to JPY10.8bn ($101.6m) due to the decline in production volume and currency exchange loss.
But Europe sales rose 4.4% to JPY163.9bn ($1.5bn) and operating income rose 7.3% to JPY7.0bn ($65.6m). Sales of more air conditioners to Fiat and other automakers contributed to the increases, Denso said.
Asia and Oceania sales rose 3.3% to JPY152.2bn ($1.4bn) due to continued growth in car production volume for Japanese auto manufacturers in ASEAN countries and China. Operating income was up 24.5% to JPY23.1bn ($217.3m). In addition to an increase in production volume of air conditioning systems to Toyota, and diesel common rail systems to Isuzu and Mitsubishi in Thailand, the stable expansion of China operations resulted in an increase in operating income.
"Considering the severe business environment, including the trend of decreases in car production in North America and rising raw materials costs in the second quarter, we have revised the half-year forecast for the fiscal year ending 31 March," said Usui. "We have also reflected the changes in the half-year forecasts to our full-year forecasts."