DETROIT -- The head of Denso International America Inc. said a weaker yen and shrinking U.S. vehicle production are making it tough to forecast a profit for the fiscal year that ends March 31.
We continue to make our best efforts, CEO Haruya Maruyama told Automotive News today on the sidelines of the auto show here. But every month the car production volume is changing.
Automakers are cutting production drastically in the face of collapsing sales.
Toyota Motor Corp., which owns 22.9 percent of Denso, is the suppliers largest customer in North America. Toyota will slash its North American first-quarter output 28 percent, predicts the consulting firm CSM Worldwide.
And thats the good news. Other customers will cut more.
For example, General Motors says it will reduce first-quarter output 52 percent. Ford Motor Co. is planning a 38 percent cut.
Last month, parent company Denso Corp. slashed its forecast for net profit in the fiscal year that ends March 31 by 90.1 percent -- to ¥10.0 billion or $112.2 million at current exchange rates, from an earlier forecast of $1.13 billion. The new outlook represents a 95.9 percent collapse from a year-earlier net profit of $2.74 billion.
Revenues at the worlds second-largest supplier are forecast to be $37 billion, down 9.6 percent from an earlier forecast of $40.93 billion and off 18 percent from year-earlier actual revenues of $45.13 billion.
Besides lower production volumes, Denso has been hit hard by a less favorable exchange rate. The Japanese company now expects to book an average of ¥93 for every dollar received in sales during the fiscal second half, from October 2008 through March. In the year-earlier period, it booked ¥109 for every dollar.
The yen has had a big impact, Maruyama said. To cope, Denso International America has begun importing smaller components from production locations in lower-cost regions, such as Southeast Asia, rather than from Japan.
Maruyama, 54, took over as CEO of Denso International America on April 1, 2008. He joined Denso in 1978. Before taking his current post, he oversaw Denso's European sales.
Denso Corp. ranks No. 2 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers estimated at $35.70 billion in fiscal 2007.