Denso Corp., mirroring the red ink flowing throughout the global auto supply chain, swung to a loss in the quarter ended June 30 as sales tumbled in the wake of vehicle-production cuts in its major markets.
But the worlds second-largest auto-parts maker also predicted its loss in the six months to Sept. 30 wont be as steep as it had previously forecast.
The sales decrease and operating loss were due to the sharp decline in worldwide car production from the second half of last fiscal year, and currency exchange losses, said Sadahiro Usui, a Denso managing officer.
Many of the world's auto suppliers are suffering losses as automakers cut production in major markets such as Europe and North America. In the U.S., at least 16 major suppliers have filed for Chapter 11 bankruptcy so far this year.
Denso remains in far better condition than many U.S. suppliers and Usui cited our progress in cost reduction, along with the recovering trend of production for auto manufacturers, for the upward revision in the forecast for the fiscal first half.
In the three months to June 30, Denso swung to an operating loss of 15.2 billion yen ($158.3 million) from an operating profit of $772.4 million a year earlier. The company also swung to a net loss of $27.9 million from a net profit of $538.1 million a year earlier.
Global sales dropped 40.6 percent to $6.1 billion.
In Japan, Densos largest market, sales fell 39.1 percent to $4.1 billion.
In North, South and Central America, Densos sales fell 43.9 percent to $1.1 billion. Denso said the drop came on lower production at Toyota Motor Corp., General Motors, Chrysler and other Japanese automakers.
Toyota owns 22.9 percent of Denso.
For the six months to Sept. 30, Denso now forecasts an operating loss of $416.6 million, against an earlier forecast loss of $781.2 million. It also forecasts sales of $13.1 billion, up from an earlier forecast of $12.8 billion.
Denso ranks No. 2 on the Automotive News list of the top 100 global suppliers with estimated worldwide sales to automakers of $27.76 billion in 2008.