Suzuki and Mazda lift forecasts on sales, cost cuts

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Suzuki and Mazda lift forecasts on sales, cost cuts
February 5, 2010 - 3:46 am ET


TOKYO (Reuters) -- Suzuki Motor Corp. and Mazda Motor Corp., Japan's fourth- and fifth-biggest car makers, hiked their annual profit forecasts today as they enjoyed higher demand in some markets and cut costs.

Suzuki and Mazda, like other automakers globally, have been slashing fixed costs and boosting production efficiencies to cope with the global economic slowdown, while getting a boost from government incentives on purchases of fuel-efficient cars.

Suzuki, owned 19.9 percent by Germany's Volkswagen AG following a deal struck in December, has profited from strong sales in India's fast-growing market, where it is the top player through subsidiary Maruti Suzuki.

Suzuki raised its operating profit outlook for the full year to March to 50 billion yen ($558.2 million) from 40 billion yen, though that falls short of the consensus of 66 billion yen from 14 analysts surveyed by Thomson Reuters I/B/E/S/.

"We have a very cautious outlook for the January-March quarter because of concerns on the yen rate and an unclear economic outlook," a Suzuki spokesman said. "The heavy reliance on India's car market is a risk."

Suzuki, known for its Swift and Alto hatchback cars, reported a 17.99 billion yen ($201 million) operating profit for October-December, compared with a 5.78 billion yen profit a year earlier and roughly in line with market expectations.

Maruti Suzuki said last month that its third-quarter net profit had more than tripled on improved sales. Suzuki holds 54.2 percent in Maruti and counts India as its single biggest market.

Mazda slashes costs

Mazda reported an operating profit of 11.1 billion yen for the October-December quarter, a large swing from its 24.2 billion yen loss a year earlier. Sales surged nearly 9 percent to 557.5 billion yen.

The maker of the Mazda3 compact car lifted its full-year operating forecast to a profit of 5 billion yen from a loss of 12 billion yen, against the consensus from 11 analysts for a profit of 1 billion yen.

Mazda said sales were strong in markets such as China, Australia and Israel, and that it got a boost from a softer-than-expected yen against the British pound and Australian dollar.

Mazda also has been cutting costs by becoming more efficient at procuring raw materials, and slashing bonuses and labor costs by holding down overtime hours, a spokesman said.

Source: Auto News