Denso Corp., Toyota Motor Corp.’s top supplier, says production at the automaker should recover swiftly, leaving Denso on track to beat its own profit forecast for the current fiscal year.
Denso will likely take a profit hit of about 20 billion yen ($182 million) to 30 billion yen in September due to Toyota’s production cuts, CFO Yasushi Matsui said. But that loss is more than covered by the 75 billion yen in potential losses Denso had earlier worked into forecasts for the fiscal year ending March, he said.
“There are automakers that can’t up their production after stumbling, but if Toyota says it will recover, it really will,” Matsui said in an interview at the company’s headquarters south of Tokyo on Friday.
For Denso, which issued a relatively conservative profit outlook for the current fiscal year of 440 billion yen last month, “it’s likely we’ll exceed this,” Matsui said.
Toyota on Thursday said supply-chain snarls caused by COVID-related disruptions in Southeast Asia, particularly Vietnam and Malaysia, as well as the ongoing chips shortage would cut output by around 40 percent next month, a reduction of about 360,000 cars. Some 27 lines in all of its 14 plants in Japan will be impacted, affecting production of models from the RAV4 to Corolla, Prius, Camry and Lexus RX.
“Especially in Southeast Asia, the spread of COVID and lockdowns are impacting our local suppliers,” Toyota’s Purchasing Group Chief Officer Kazunari Kumakura said.
The Japanese automaker also has a large production base in Thailand, where COVID cases have just blown past 1 million. Thailand this week launched a pilot program to test, vaccinate and isolate factory workers to limit COVID-related disruptions to its export-driven manufacturing industry.