Isuzu Posts Profit But Collapse is Seen Ahead...

by : Andrew Christian

Isuzu Motors Ltd. posted record profits in outgoing President Yoshinori Ida's last year. But incoming President Susumu Hosoi warns that a slowdown in the domestic Japanese truck market will cut profits this fiscal year.

In the fiscal year that ended March 31, operating profits rose 18.0 percent to a record 106.98 billion yen, or $906.2 million at current exchange rates. Net income surged 56.7 percent to a record $782.7 million.

Revenues rose 5.1 percent to $14.09 billion. Truck sales grew 4.5 percent to 646,824.

Profits rose mostly on cost-cutting. In addition, currency gains covered the cost of several product launches. Higher, more profitable sales offset higher raw-material prices.

The largest sales gains came in the Middle East, Africa and South America.

For the current fiscal year that began April 1, Isuzu predicts its revenues will decline 1.8 percent. Operating profits will tumble 23.6 percent. Net profits will slide 36.8 percent, the company says. Global truck sales will rise 1.4 percent to 656,000. China, Latin America and Europe will show the strongest gains. Sales in Japan will fall a steep 24.0 percent.

"We don't see domestic demand rising," Hosoi says. Japanese truck sales have risen for several years, as fleets ordered new models to meet tightened truck-emissions regulations. But those sales began tapering in the second half of the last fiscal year.

Sales of Isuzu's commercial vehicles in North America will soften slightly, to 32,000 from 33,000 in the year that just ended. That will be roughly half the sales volume expected in Latin America.[Source ]