Suzuki and Mazda Raise Fourth Quarter Profit Estimates on Increased Sales and Improved Efficiency

Japan’s fourth- and fifth-largest automakers, Suzuki Motor Corporation and Mazda Motor Corporation have raised their yearly profit forecasts as the result of aggressive cost cutting efforts and increased demand.

Despite the global economic downturn, both companies have benefitted from government incentive programs and ongoing efforts to boost production efficiencies and reduce fixed operating costs.

Last December, Suzuki shored up its financial footing by entering into a partnership with Volkswagen AG which gave the German automaker a 19.9% ownership in the company. Suzuki has also enjoyed strong sales in India through its subsidiary, Maruti Suzuki.

Suzuki projects an operating profit of 50 billion yen ($558.2 million) through the end of its fiscal year in March. That’s up from the company’s previous 40 billion yen projection but well short of the 66 billion yen predicted by a Thomas Reuters survey of 14 industry analysts.

A Suzuki spokesman explained the discrepancy saying, “We have a very cautious outlook for the January-March quarter because of concerns on the yen rate and an unclear economic outlook.” He went on to say, “The heavy reliance on India’s car market is a risk.”

Last quarter, Suzuki reported an operating profit of 17.99 billion yen ($201 million) which was up from 5.78 billion yen during the same period in 2008.

Last month, Suzuki’s Maruti Suzuki division reported that net profits during the third-quarter had tripled on improved sales. Suzuki has a 54.2% ownership stake in Maruti and counts India as its largest single market.

Japan’s fifth-largest automaker, Mazda, has reported third-quarter operating profits of 11.1 billion yen. That compares to a 24.2 billion yen loss during the same period in 2008 and is due in large part to improved sales which grew by 9% to 557.5 billion yen.

Mazda raised its full-year operating profit forecast to 5 billion yen from its previous prediction of a 12 billion yen loss. That outpaces an 11-analyst consensus of 1 billion yen in profits.

Mazda reported strong sales in China, Israel and Australia where the automaker said that it received a boost from weaker-than-projected exchange rates between the yen and the British pound and Australian dollar.

Like Suzuki, Mazda has made significant reductions in its operating costs including slashing labor costs and bonuses. A spokesman for the company said it has also become more efficient in its procurement of raw materials and reduced overtime hours for its production workers.

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