Denso Corporation has announced a sharp improvement in financial results for the first half of its fiscal year to the end of September on the back of increased car production, especially in Japan.

The company said that consolidated net sales totalled 1,589.6 billion yen (USD19.0bn), a 22.1% increase from the previous year. Consolidated operating income totalled 124.3 billion yen (USD1.5bn), a 1,173.4% increase from the previous year while consolidated net income reached 93.7 billion yen (USD1.1bn), a 1,753.9% increase from the previous year.

"The worldwide recovery in car production, especially in Japan, has led to the increase in sales and income, despite the substantial currency exchange losses," said Nobuaki Katoh, president and CEO of Denso Corporation.

In Japan, an increase in domestic car production, supported by the government's vehicle incentive programme and product exports mainly to North America, Asia and Oceania, led to an increase in sales totalling 1,080.7 billion yen (USD12.9bn), a 21.1% increase from the previous year. The increase in production volumes led to an operating income of 57.8 billion yen (USD689.8m), an increase of 78.1 billion yen (USD931.3m) from the previous year's operating loss.

In North America, an increase in sales mainly due to General Motors, Chrysler, Toyota and Honda led to an increase in sales to 274.4 billion yen (USD3.3bn), a 32.7% increase from last year. As a result of the increase in production volume, the operating income totalled 14.1bn yen (USD168.4m), an increase of 16.8 billion yen (USD200.1m) from the previous year's operating loss.

However, exchange rate losses hampered performance in Europe. Denso said that despite an increase in sales mainly due to BMW, Ford and Land Rover, currency exchange losses led to a decrease in sales to 193.7 billion yen (USD2.3 billion), a 0.2% decrease from last year. Due to an increase in production volume, operating income totalled 5.4 billion yen (USD64.2m), a 115.4% increase from the previous year.

In Asia and Oceania, an increase in car production volume for Japanese car manufacturers, General Motors and Hyundai Kia Automotive Group in ASEAN countries led to an increase in sales to 320.9 billion yen (USD3.8bn), a 44.1% increase from the previous year. The increase in production volumes led to an operating income of 44.6 billion yen (USD532.2m), a 61.1% gain on the same period of last year.

Denso was cautious on the outlook for the second half of the fiscal year.

"For the second half of the year, due to substantial currency exchange losses and an increase of materials cost, we forecast a decrease of operating income from the previous year, but with the steady results of the first half financial results, we have made an upward revision to our full year forecasts for the fiscal year ending March 31, 2011," said Katoh.

"In continuing efforts to realise future growth, we will focus on vehicle electrification, improved fuel consumption and CO2 emissions reduction, as well as developing products for emerging markets such as China and India," Katoh added.

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