August 2, 2018 / 7:00 AM / 2 months ago

Suzuki posts record profit on strong global auto sales

TOKYO (Reuters) - Suzuki Motor Corp on Thursday posted a record-high operating profit in the first quarter, outpacing expectations on the back of a strong rise in global automobile sales, particularly in its biggest market India.

The logo of Suzuki Motor Corp. is pictured at the 45th Tokyo Motor Show in Tokyo, Japan October 25, 2017. REUTERS/Toru Hanai/Files

Operating profit at Japan’s fourth-largest automaker jumped 37 percent to 116.5 billion yen ($1 billion) for April-June, versus 85.1 billion yen a year earlier. The result was stronger than an average of 97.3 billion yen based on seven analyst estimates compiled by Thomson Reuters I/B/E/S.

Vehicle sales jumped 26 percent to 464,000 units in India, where the Swift subcompact, Baleno compact hatchback and Vitara Brezza compact sport utility vehicle are among the best-selling cars.

Suzuki accounts for roughly half the passenger vehicles sold in India through a majority stake in the country’s largest automaker, Maruti Suzuki India Ltd.

Overall sales in Asia, which comprise roughly 65 percent of global vehicles sales, rose 21 percent to 570,000 units. At home, they rose 8.5 percent to 173,000 units.

In the first quarter, higher steel prices increased the automaker’s raw materials costs, shaving 2.3 billion yen off operating profit.

Suzuki is on track to post record global vehicle sales of 3.3 million units for the year to March, but it is also anticipating a 9.1 percent slide in global operating profit, as it ramps up R&D spending to develop new technologies such as electric vehicles to defend its dominance in India.

As rival Japanese automakers brace for the possibility of U.S. auto tariffs, Suzuki is shielded from such restrictions as it does not market cars in the United States. However, the automaker said that it would be vigilant for any trickle-down impact such restrictions could have on other markets.

To protect its market share amid the rise of electric cars, Suzuki is partnering with Toyota Motor Corp to leverage Toyota’s firepower to help it develop and market EVs in India.

The two automakers have also agreed to produce cars for each other in India as Toyota aims to increase its market share in the country.

($1 = 111.5600 yen)

Reporting by Naomi Tajitsu; Editing by Stephen Coates

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