Suzuki Motor Corp Reports Q1 2005 Results

TOKYO, Aug 2, 2005; Reuters reported that Japan's Suzuki Motor Corp. reported a stronger-than-expected 4.6 percent rise in quarterly operating profit despite bigger investment spending on capacity expansion, but kept its conservative forecasts for the full year.

After five straight years of profit growth, Japan's top minivehicle maker, held one-fifth by General Motors Corp., has forecast a steep earnings slide this year as it boosts output capacity worldwide to meet burgeoning demand.

Analysts say Suzuki's fundamentals are strong thanks to its firm dominance in Japan's minivehicle market and growing presence in emerging markets such as Eastern Europe, and expect the company to far outpace its typically cautious projections.

Suzuki, also the world's third-biggest motorcycle maker, made an operating profit of 28.78 billion yen ($256.4 million) in the first quarter ended June 30, compared with 27.51 billion yen a year before and the 27.85 billion yen average of two brokerages' projections according to Reuters Estimates.

Net profit was up 1.7 percent at 16.83 billion yen, a little above the brokerages' estimate of 16 billion yen. Sales grew 8.6 percent to 637.85 billion yen.

The maker of the Swift and other compact cars stuck to its forecasts for the year to March 2006, which put operating profit at 90 billion yen and net profit at 48 billion yen.

Last week, rival compact car maker Daihatsu Motor Co. reported robust first-quarter earnings, with operating profit surging 20 percent to 10.10 billion yen on strong sales, including those to supply parent Toyota Motor Corp.

Suzuki is aggressively expanding overseas production capacity like Japan's top auto makers, notably in Indonesia and Hungary, where it said June production volumes hit record highs.

With its strategic Swift model hitting more showrooms globally, Suzuki expects its global car sales to jump 16 percent to 2.189 million units this business year.

Despite ending the quarter with a weaker-than-expected yen at 108 to the dollar and 138 to the euro, Suzuki kept its assumed exchange rates at 100 yen and 134 yen respectively for the year to March 2006.