Subaru parent says quarterly net income surges to $776 million

Fuji gained $497 million from one-time asset sale

TOKYO -- The maker of Subaru vehicles reported a sixfold increase in net income for the October-December quarter, with results bolstered by booming vehicle sales in North America, a weaker yen and a one-time gain from the sale of a stake in a snowmobile maker.

Net income at Fuji Heavy Industries Ltd. climbed to 81.7 billion yen ($776.5 million) in the company’s fiscal third quarter ended Dec. 31, compared with 12.7 billion yen ($120.7 million) a year earlier, the company said today while announcing financial results.

Net income was pumped up by Fuji Heavy’s sale of its stake in the American snowmobile maker Polaris Industries Inc., which generated a one-off gain of $497 million.

Global revenue advanced 23 percent to 582.9 billion yen ($5.54 billion) in the three months, while worldwide vehicles sales increased 11 percent to 200,800 units.

Earnings also got a big boost from the yen’s tumbling value against foreign currencies, especially the U.S. dollar. A weaker yen increases the yen value of overseas earnings when repatriated to Japan and makes Japanese exports more competitive internationally.

Fuji Heavy, the all-wheel drive specialist that makes the Forester crossover, Legacy sedan and Outback wagon, did not detail third-quarter foreign exchange gains.

But for the first nine months of the year, it booked a foreign exchange gain of 142.8 billion yen ($1.36 billion), with the yen’s drop against the dollar accounting for 89 percent of the windfall. The yen has lost about 25 percent of its value against dollar over the past year.

Soaring sales in the United States, Subaru’s biggest market, also fueled profits. U.S. sales climbed 24 percent to 117,500 vehicles in the October-December period, Fuji Heavy said

Subaru has been one of the fastest growing brands in the United States during the past five years. Sales last year jumped 26 percent to 424,683 vehicles in 2013, marking the sixth-straight year of rising sales and the fifth year of record results. Subaru of America President Tom Doll said last month that U.S. sales should hit 500,000 by 2016.

On Monday, Subaru reported its January U.S. sales rose by 19 percent from the same month last year to 33,000 vehicles.

Buoyed by the brisk demand in the United States and by the beneficial exchange rates, Fuji Heavy raised its earnings outlook for the third time this year.

It now sees net income surging 85 percent to 221.0 billion yen ($2.1 billion) in the current fiscal year ending March 31, 2014, from 119.6 billion yen ($1.17 billion) the year before.

That represents a marked uptick from the outlook of 207.0 billion yen ($1.97 billion) given in November and an initial forecast of 121.0 billion yen ($1.15 billion) given in July.

The company also raised its revenue outlook, for a second time.

Revenue is now expected to climb 24 percent to 2.38 trillion yen ($22.62 billion) in the fiscal full-year, from 1.913 trillion yen ($18.18 billion) the year before.

That is up from a forecast of 2.3 trillion yen ($21.86 billion) given in October and an initial outlook of 2.08 trillion yen ($19.77 billion) from last summer.

Fuji Heavy also lifted its full-year unit sales forecast, fueled partly by surging U.S. demand for Subaru cars. It now expects to sell 829,000 vehicles in the fiscal year to March 31, compared with an earlier outlook for sales of 807,000 units. The new target marks a 15 percent increase over the 724,000 units Subaru sold worldwide in the previous fiscal year.

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