TOKYO - After a banner performance in the just-ended fiscal year, Japan's carmakers forecast that profit gains will downshift this year.
No. 1 Toyota Motor Corp., for example, predicts that the net income of the parent company, excluding results of subsidiaries, will rise 19 percent this year, to about $2.9 billion at current exchange rates, after a 66 percent surge last year.
Exports, it said, will rise only 7 percent after a 12 percent rise last year.
The reasons for sharp earnings growth last year - a weak yen, vigorous cost cutting and higher sales - likely won't be repeated this year, Toyota and the other automakers say in their annual profit forecasts.
All Japanese companies benefited from the yen rate and cost-cutting last year. Sales largely determined the difference among corporate results.
Nissan Motor Co., which reported its financial results last week, posted its first consolidated profit in five years with the help of a 1.5 percent jump in worldwide unit sales. (See earnings table, left.)
Similarly, Honda Motor Co., which reported results the previous week, posted record profits on record sales.
But sales fell at Mazda Motor Corp., Mitsubishi Motors Corp. and Isuzu Motors Ltd.
Mazda managed to post a net profit by selling securities, but remained in the red on an operating basis.
Profits tumbled at Isuzu, which was hurt by softness in Japan's commercial truck market.
At Mitsubishi, an aging lineup of light trucks in the Japanese market and the need to cover losses at its U.S. subsidiaries pulled profits down. Its pretax profit on worldwide operations fell 42 percent on a 4 percent decline in unit sales.
EASY CUTS ARE OVER
Sales, and especially exports, may prove even more important this fiscal year as the swing factor in earnings, analysts said. The reasoning is simple: The other two profit-builders are losing their punch.
With the dollar trading at around 115 yen, down from 127 yen in April, carmakers are predicting much lower currency gains this year.
Savings from cost cutting also are declining, as companies find the easy cuts have been made. (See table, Page 40.)
Cutting costs was easy in the early 1990s, when Japanese carmakers began taking out the fat they had built into their models in the 1980s. Nissan, for instance, found quick savings when it scrapped all but five of the 18 steering wheels it once offered on most models.
But for the most part, those easy savings have been achieved.
'We couldn't possibly have kept up the pace of cost reduction,' said Gary Hexter, Mazda senior managing director.
Almost every Japanese carmaker predicts higher home-market sales this year, even though the industrywide forecast is for sales to be flat at about 7 million.
That apparent inconsistency does not bother analysts, who say that better-than-predicted exports could more than make up for shortfalls in Japan-market sales.
'With the yen at this level, the Japanese can produce cars in Japan more cheaply than anyone else anywhere in the world,' said Saul Rubin, Tokyo-based analyst for SBC Warburg Japan Ltd. 'So the real profit generator will be on the export side.'