Suzuki Motor has posted a flat operating profit in the fourth quarter and forecast a sharp drop this year as it increases spending on investment to expand output capacity worldwide, according to Reuters.
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For the final January-March quarter, Suzuki’s operating profit inched up 0.2% to 25.84 billion yen, falling short of market estimates of 28.79 billion yen in a survey of 13 analysts by Reuters Estimates, while net profit more than quadrupled to 15.67 billion yen from 3.36 billion yen in the year-earlier period, when Suzuki booked big special losses to meet tighter accounting rules on fixed assets – revenues grew 7% to 626.59 billion yen.
Suzuki reportedly said it expected bigger revenues in the year to March 2006 as it rolls out the new Swift in more countries, but projected a 16% drop in operating profit to 90 billion yen ($US853.2 million) citing a 70 percent jump in capital spending, an assumed 7 yen weakening in the dollar and higher materials costs – that would be the first profit fall in six business years.
Reuters said Suzuki expects 2005/06 net profit to sink 21% to 48 billion yen, even as sales rise 5.7% to 2.5 trillion yen but noted that most analysts are optimistic about its longer-term prospects as the compact car maker also expands rapidly in the emerging Eastern European market, where it launched the locally built Swift model in Hungary this year.
Reuters said that, under a new five-year business plan, Suzuki Motor is aiming to boost recurring profit to over 150 billion yen and consolidated revenues to at least 3 trillion yen by the year ending in March 2010 and is budgeting capital outlays of 1 trillion yen over the next five years to beef up production capacity and develop new cars.
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By GlobalDataStarting with the new Swift compact, the compact car specialist is aiming to build key models locally at its global production centres in Hungary, India, China and Indonesia, relying less on exports from Japan, and, during the 12 months to March 2005, sold 2.924 million motorcycles worldwide, up 28% from the previous year, and 1.89 million cars, up 9%, Reuters added.
