TOKYO - Isuzu Motors Ltd. posted a worse-than-expected loss for the first half of the fiscal year, battered by fierce competition in the truck market and the strengthening of the yen against foreign currencies.
To get back on the right track, Isuzu announced several planned restructuring steps, including an 8 percent cut in purchasing costs over the next year and a reduction of its domestic affiliates by half, to 50.
For the six months through Sept. 30, Isuzu's consolidated net loss was 22.1 billion, or $206.8 million at current exchange rates, widening from the $177.6 million that the truckmaker had forecast in May. Sales of $6.77 billion also failed to match the forecast of $7.0 billion.
The company also reported an operating loss of $215.2 million, almost double its forecast. Comparisons with year-earlier results were not available because Isuzu previously had not reported consolidated, or group, results for the fiscal first half.
Assaulted by its rivals in the Japanese truck market and in the U.S. sport-utility business, Isuzu cut prices, slashing its margins. The stronger yen also helped to undermine the performance of the company, which derived more than 60 percent of its sales from overseas. A higher yen hurts because the company books fewer yen for every dollar or euro it earns on sales overseas.
'I'm very worried (about our business) as we remained in the red,' said Takeshi Inoo, Isuzu's president.
Startup costs at its joint venture, DMAX Ltd., a Moraine, Ohio, diesel engine maker co-owned with General Motors, led Isuzu's operating losses to widen to $43.6 million in North America. Isuzu expects DMAX, which began operating in July, to show a turnaround in the fiscal year starting in April by cutting purchasing costs with the help of GM.