Toyota Group suppliers grapple with yen’s impact on profits

Toyota Group suppliers posted mixed financial results for the April-June quarter, reflecting varying levels of success in coping with adverse exchange rates in the wake of the yen’s sharp rise following the U.K.’s Brexit vote.

Toyota Group suppliers Friday released mixed results for the April-June quarter, reflecting varying levels of success in coping with adverse exchange rates in the wake of the yen’s sharp rise following the U.K.’s Brexit vote.

Here are results for select companies during Japan’s fiscal first quarter.

Denso

Denso Corp.’s net profit fell 38 percent from the year-earlier quarter to 46.11 billion yen ($449.5 million), as revenue eased 1.2 percent to $10.65 billion. Operating profit dropped 22 percent to $655.1 million.

“Despite the production volume increase and the growth in sales, Denso’s revenue and operating profit decreased due to the appreciation of the yen,” said Yasushi Matsui, Denso executive director, in a statement.

Exchange-rate losses subtracted $273 million from operating profit, the company said. Along with several other companies, Denso cited the yen’s swing in cutting the full fiscal-year earnings forecast that had been issued just three months earlier.

Denso’s Japan operations were battered by a softer domestic vehicle market and the currency hit. Operating profit in Japan tumbled 67 percent to $138.4 million, for an operating-profit margin of just 2.3 percent. Japan operations thus trailed both European and North American operations in both absolute operating profits and operating margins in the quarter.

Aisin Seiki

Aisin Seiki Co.’s net income surged 93 percent to $407.3 million, as revenue rose 8.8 percent to $8.18 billion. Operating profit jumped 78 percent to $575.4 million, the company’s earnings statement showed.

Two factors drove the profit surge: the sales increase and Aisin Seiki’s acquisition, as of April 1, of parts maker Shiroki Corp. Those changes more than offset losses on currency and from recent Japanese earthquakes, as well as higher r&d costs.

Aisin Seiki previously owned about 13 percent of Shiroki.

Toyota Boshoku

Toyota Boshoku Corp.’s net fell 6.7 percent to $82.1 million on a 2.7 percent drop in revenue, to $3.17 billion. Operating profit rose 28 percent to $155.9 million.

Boshoku offset the negative impact of currencies with higher volumes and cost cuts.

In the latest quarter, Boshoku’s Asia and Oceania region, which includes China, dramatically strengthened its lead of the company’s home Japan market in terms of absolute operating profit and operating profit margin. In the April-June 2015 quarter, the two regions had been roughly equal in profits, though Asia and Oceania’s profit margin, at 7.6 percent, was more than double Japan’s 3.3 percent. But in this fiscal year’s first quarter, Asia and Oceania’s operating profit surged 43 percent to $84.8 million, representing an 11 percent margin. In contrast, Japan’s operating profit slid 27 percent to $40 million, for a 2.5 percent margin.

JTEKT

JTEKT Corp.’s net income fell 24 percent to $121.9 million, while operating income dropped 6.8 percent to $181.5 million. Revenue declined 7.3 percent to $3.13 billion.

Foreign-exchange rates swung to a negative impact for the company of $22.2 million in the latest quarter from a positive impact of $11.8 million a year earlier.

Rankings

Denso Corp. ranks No. 2 on Automotive News’ list of the top 100 global OEM parts suppliers, with parts sales to automakers of an estimated $36.03 billion in the fiscal year that ended March 31, 2016.

Aisin Seiki Co. ranks No. 7 on that list, with parts sales to automakers of $25.9 billion in the fiscal year that ended March 31, 2016.

Toyota Boshoku Corp. ranks No. 21 on that list, with parts sales to automakers of an estimated $10.08 billion in the fiscal year that ended March 31, 2016.

JTEKT Corp. ranks No. 15 on that list, with parts sales to automakers of $11.67 billion in the fiscal year that ended March 31, 2016.

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