Suzuki and Mazda lift forecasts on sales, cost cuts

Suzuki Motor Corp and Mazda Motor Corp, Japan's fourth- and fifth-biggest car makers, hiked their annual profit forecasts on Friday as they enjoyed higher demand in India and China 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 IBES.                                          

"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, aided by stronger-than-expected sales in China, against the consensus from 11 analysts for a profit of 1 billion yen.

China has emerged as its single-biggest market since November, with its sales in the country rising nearly 70 percent from a year earlier to 57,000 units in October-December, buoyed by the introduction of the Mazda CX-7 and a new model of the Mazda6.

The company aims to sell 220,000 cars in China in THE 2010 calendar year, 13 percent more than its sales target for the year to March 31 of 194,000 units.                                           

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

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

President Takashi Yamanouchi said he expects the global market environment to remain severe in the next financial year. "We'll further improve our cost structure as we don't expect a large increase in unit-sales," he told a news conference. 

Prior to the results, Suzuki's shares closed down 2.1 percent at 2,031 yen and Mazda fell 4.9 percent to 233 yen, both underperforming a 1.3 percent drop in Tokyo's transport equipment subindex.

In the past 3 months Suzuki's shares have fallen 5 percent, Mazda is up 10 percent and the sector index has been virtually flat.