Thought it posted unit sales growth and cost reduction progress, operating income at Subaru Corporation fell 27.4% year on year to JPY410.8bn due to increases in SG&A and R&D expenses as well as foreign exchange losses during the financial year to 31 March, 2017.
The automaker said the rise in SG&A expenses was due to increased quality related costs associated with airbag inflators as well as increased sales expenses due to higher interest rates in the US.
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Ordinary income decreased 31.7% to JPY394.3bn and net income fell 35.3% to 282.4bn.
Sales increased 2.9% to JPY3,326bn as unit sales growth offset foreign exchange losses and other factors.
Global sales of Subaru vehicles rose 11.1% to 1,065,000 units, passing the 1m mark for the first time. Unit sales in Japan increased 9.4% to 159,000 units, as a decline in mini vehicle sales was offset by growth in passenger car sales led by the new Impreza, which was launched in October 2016.
Overseas unit sales grew 11.4% to 906,000 units, driven by continued strong sales of the Legacy and Outback in North America.
Unit sales in North America set a record for the eighth consecutive year.
Outlook
Subaru said, in prospect of further growth in North America and other regions, consolidated global unit sales are projected to increase 3.8% to 1,106,000 units. It forecast net sales of JPY3,420bn (up 2.8%), operating income of JPY410bn (down 0.2%), ordinary income of JPY410bn (up 4.0%) and net income of JPY285bn yen, factoring in the positive impact of unit sales growth and a weaker yen as well as the negative impact of increases in SG&A and R&D expenses and higher raw material costs.
Net sales, global unit sales, overseas unit sales, and North American unit sales are projected to post new records.
