Toyota supplier Denso cuts profit forecast on car production risks

TOKYO: Japan's Denso Corp, a leading supplier to Toyota Motor Corp, on Friday slashed its annual operating profit forecast by 12.5%, missing analysts' estimates, as it warned a chip shortage could cause auto production cuts. The company, a major manufacturer of automotive parts and chips, lowered its full-year operating profit forecast to 420 billion yen ($3.26 billion) for the year to end-March, from 480 billion yen expected previously. Denso said the new forecast took into account the pandemic's impact in China and the risk of vehicle production cuts due to the ongoing global semiconductor shortage, despite efforts being taken to reduce costs. The downward revision comes after the world's top-selling auto maker Toyota in November lowered its vehicle production forecast for the current financial year through March to 9.2 million vehicles from 9.7 million amid the chip shortage. Denso, which specialises in systems for running gasoline engines and driving hybrid and battery electric vehicles, gets about half of its revenue from the Toyota group, which also includes Toyota truck unit Hino Motors and small-car maker Daihatsu. Denso's revised profit forecast reflected slowing sales in China and Japan, which are relatively profitable markets for the company, executive Yasushi Matsui told reporters during an earnings briefing. In China, Denso has also faced production difficulties because of the rapid spread of COVID-19 as well as supply chain issues that are also affecting auto makers, Matsui said. The company's production in China is only at 40% of original projections and it not expected to make a full recovery any time soon, he added. Denso's new forecast would still mark a record operating profit, Matsui said, but it was lower than a 474.21 billion yen average forecast by 20 analysts, according to Refinitiv data. The company's shares rose 1.5% to 7,084 yen in afternoon trade, recovering after an initial sell-off following the earnings release and outperforming the Nikkei index, which was little changed. Denso, which counts outgoing Toyota President Akio Toyoda as a board member, posted an operating profit of 112.5 billion yen for the three months to Dec. 31, versus an average 125.71 billion yen profit estimated by 10 analysts. A year earlier, it earned 96.9 billion yen in the third quarter. ($1 = 128.6600 yen) (Reporting by Daniel Leussink; Editing by Muralikumar Anantharaman and Jamie Freed)

Toyota supplier Denso cuts profit forecast on car production risks

DISCOVER MORE

DFM introduces 'Omnibus Accounts' to enhance market access

Mideast Stocks: Gulf stocks end mixed as investors remain cautious

Shares gain as bank support emboldens investors

Egypt: Edita to distribute $12.9mln cash dividends for 2022

UAE: Al Ramz’s shareholders nod to $9mln dividends for 2022

Stocks decline on window dressing: Philippines

Hong Kong leads Asian markets higher on Alibaba boost

Mideast Stocks: Gulf markets extend gains on rising oil prices

Five African cities hold more than 50% of continent's private wealth

AI may affect 300mln full-time jobs: Goldman Sachs

UAE approves 24 national initiatives to double re-export industry

BP and UAE's ADNOC bid for stake in NewMed Energy

UAE banking sector to remain stable in 2023 – KPMG

Nissan considering second battery source in U.S., Gupta says

Toyota to accept full union demand for wage hike - sources

Nissan, Renault to invest $600mln to make new models in India

Honda reports 22% rise in Q3 operating profit, beating estimates

Toyota to launch two luxury vehicles in Japan - Nikkei

LATEST VIDEO

VIDEO: Why is China's Belt and Road Initiative facing setbacks?

ZAWYA COVERAGE

UAE President appoints Abu Dhabi Crown Prince, deputy rulers

Middle East, Asia-Pacific airfares surge 53%, pose threat to recovery of aviation sector - ACI

DP World develops edible oil terminal at Port of Berbera

Maldives airport temporarily shut down after Flydubai aircraft suffers tire burst on landing

DFM introduces 'Omnibus Accounts' to enhance market access

Portugal's rents hit record high amid cost of living crisis

Egypt to raise allocation for food subsidies by 20% in FY 2023/24 draft budget

IMF and Seychelles reach over $100mln staff-level agreement

Nuclear row looms over EU renewable energy talks

THE BRI REPORT

China is reshaping the Belt and Road Initiative ahead of a post-pandemic era

DISCOVER MORE

LATEST VIDEO

ZAWYA NEWSLETTERS

ZAWYA COVERAGE