Isuzu Motors Posts 44 Percent Rise in Half-Year Profit; Says Japanese Cos. Invest in Truckmaker

TOKYO November 18,2004; The AP reported that truckmaker Isuzu Motors Ltd. reported its profit for the first fiscal half year rose 44 percent, and said Thursday that two major Japanese trading companies are making investments in the company which is allied with General Motors Corp. of the United States.

Isuzu president Yoshinori Ida said Thursday that GM, the world's biggest automaker, has also been asked to invest more in the company, but did not give details. GM owns 10 percent of Isuzu.

The two trading companies who have made investments were identified as Mitsubishi Corp. and Itochu Corp.

In the earnings report, Isuzu said cost cuts and brisk sales in Asia have helped boost its profit for the first fiscal half ended Sept. 30 to 35.8 billion yen ($344 million) from 24.9 billion yen the same period a year ago.

Sales for the period edged up 1.7 percent to 735 billion yen ($7 billion) from 723 billion yen.

It raised its forecast for the full year through March 2005 to a profit of 56 billion yen ($539 million) from an earlier forecast of 50 billion yen ($481 million).

The Mitsubishi trading company is buying 11.75 million Isuzu preferred shares, but said it was undecided about whether or when they will be changed into ordinary shares. The Tokyo-based company refused to say how much it was paying for the shares which are valued at about 9.4 billion yen ($90 million). Mitsubishi now owns 0.3 percent of Isuzu.

Mitsubishi Corp. is also an investor with other Mitsubishi group companies, which include a major bank and machinery maker, in Mitsubishi Motors Corp., a Tokyo-based automaker, as well as in Mitsubishi Fuso Truck and Bus Corp., a truckmaker that was spun off from Mitsubishi Motors. Mitsubishi Fuso has an alliance with DaimlerChrysler AG of Germany.

The deal with Isuzu will allow Mitsubishi to expand its auto business, especially in Asia.

Mitsubishi said it was approached by Isuzu and agreed to the deal because it wanted to help stabilize the company, which after years of deep losses, has been struggling to make a turnaround by reducing jobs and cutting back on projects.

The Nihon Keizai Shimbun reported Thursday that Mitsubishi plans to convert some of the preferred shares, leaving the U.S. automaker as top shareholder. But Mitsubishi denied the report as speculative.

The Japanese trading house Itochu was also buying preferred shares in Isuzu, worth about 7 billion yen ($67 million), Isuzu said.