Suzuki Motor Corp., Japan's second-largest minicar maker, cut its full-year profit forecast Friday due to slowing sales in India, a strong yen and higher materials costs.
Net income will fall 25 percent to ¥60 billion in the year ending in March from ¥80.3 billion a year earlier, the Hamamatsu, Shizuoka Prefecture-based company said in a statement Friday. The company previously forecast profit of ¥80 billion.
Suzuki cut its forecast in anticipation of slowing sales in Europe and India, its biggest market, and as a stronger yen against the Indian rupee erodes repatriated profits from sales in the country.
India's car sales in the six months to September grew at half the pace of last year, the Society of Indian Automobile Manufacturers said Oct. 13.
"If the European and Indian economies slow further, not only may we see lower auto volumes, but also weaker currencies leading to a double hit for Suzuki," said Andrew Phillips, a Tokyo-based analyst at KBC Securities Japan.
The company also cut its operating profit forecast this business year by 29 percent to ¥100 billion and cut its sales forecast 8.6 percent to ¥3.2 trillion, it said. Its global vehicle sales will fall 0.9 percent to 2.39 million.
Higher prices for steel, rubber and other materials are also eroding earnings at Suzuki. The carmaker's first-half net income fell 26 percent to ¥34.2 billion from ¥46.1 billion a year earlier. Operating profit slumped 23 percent to ¥60.7 billion and sales fell 0.5 percent to ¥1.72 trillion.
Maruti Suzuki India Ltd., the maker of half the cars sold in the country, reported on Oct. 24 its smallest quarterly profit in three years after costlier auto loans and higher inflation hurt vehicle sales.
Maruti's sales of WagonR and Swift hatchbacks, Alto minicars and Omni vans dropped to 189,451 from 191,325 between July and September.