TOKYO -- Japan's Fuji Heavy Industries Ltd., maker of Subaru cars, barely managed to turn in a profit in the first quarter due mainly to costs associated with the U.S. launch of a new version of its flagship Legacy model.
Operating profit was a mere 12 million yen ($107,300) for the April-June term, down from 9.23 billion a year earlier, even though revenue rose 8.5 percent to 307.5 billion yen.
Net profit, which fell 90 percent to 619 million yen, was also hurt by a 12-yen fall in the value of the dollar to an average 107 yen in the quarter.
The niche maker of off-road vehicles, however, stuck to its forecast made in May for an operating profit of 45 billion yen in the year to next March, down 10.6 percent from last year.
"Sales in Japan should pick up in the July-September quarter, so we're not too worried about (overall profits in) the second half," Executive Vice President Shunsuke Takagi told reporters.
Fuji Heavy, best known for its symmetrical all-wheel-drive technology, expects damage from a weaker dollar to push net profit down 17 percent to 32 billion yen for the year, while sales are forecast to rise 2.1 percent to 1.47 trillion yen.
Under a five-year business plan, the auto maker, owned one-fifth by General Motors, has been trying to jump-start its core car-making business by crafting a premium brand image like BMW and Sweden's Volvo AB.
Domestic sales grew 10.3 percent to 54,000 vehicles during the quarter, helped by an increase in demand for cheaper 660cc minicars. North American sales rose 22 percent to 44,000 units.
Subaru is counting on sales in the United States to improve with the launch of the revamped flagship Legacy model in June.
Sales of the Legacy, which beat Honda Motor Co.'s Odyssey minivan and Toyota Motor Corp.'s Prius hybrid sedan to take "Car of the Year" in Japan last year, exceeded 10,348 units by end-July, in line with targets.
Subaru also wants to improve profit margins with a high-end crossover vehicle, dubbed "XUV", which is due to hit showrooms in the middle of next year.