Suzuki Motor has reported its first ever profits warning after delivering a first half performance that has seen falling sales and income.
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The automaker said in a statement today that it was cutting its forecast for full year net income which will now fall 25% to JPY60bn (US$612m). The company previously forecast profit of JPY80billion.
Suzuki also cut its full year sales forecast JPY300bn yen against original estimates. Sales are now predicted to fall 8.6% to JPY3.2 trillion, it said. Global vehicle sales are expected to fall 0.9% to 2.39m units, led by a drop in overseas sales.
“The US and European economies as well as the world economy as a whole have further decelerated, affected by the financial market confusions started by the US subprime loan issue, with the unpredictable future outlook continued,” the company said in a statement.
“In Japan, while the corporate profits have been declining as a result of the soaring crude oil and raw material prices, the facility investment has also been sluggish, and the economic deceleration seems to have intensified with the export reduction brought by the slowdown of the growth of the world economy.”
Under these circumstances, Suzuki said that its first half consolidated sales were JPY1,719.854bn, slightly below the same period last year, because a substantial sales decline in North America had not been offset by sales in other regions.
Operating income fell 20% to JPY68.821bn and net profits tumbled 26% to JPY34.232bn.
The company said reduced costs, reduced depreciation/amortisation and operating expenses had not been great enough to cover increased raw material costs, exchange influences and increased research and development expenses.
