TOKYO – Japanese automotive suppliers, buoyed by a 13-year low in the yen’s rate against the dollar in fiscal 2015, are forecasting lower earnings and sales in the current year due in part to a stronger yen.
Since January, the Japanese currency rose nearly 20% against the U.S. dollar, cutting into profit margins on exports to North America, still one of the largest markets for cars built in Japan.
A review of Japan’s 15 most profitable suppliers, of which 10 reported record earnings in fiscal 2015 ending March 31, shows earnings are forecast to fall an average 12% in fiscal 2016.
Bridgestone, Japan’s No.1 tire maker, revealed in August that profit from its tire operations would tumble 13% in fiscal 2016 to ¥410. billion ($4 billion) on a 13% decline in revenue of ¥3.1 trillion ($31.2 billion). Bridgestone’s earnings peaked in fiscal 2015.
Bridgestone, as well as competitors Sumitomo Rubber Industries and Toyo Tire & Rubber, operates on a January-December fiscal year. Other suppliers in the survey calculate their business results in the April-March financial year.
Denso, Toyota’s No.1 parts supplier, projects earnings of ¥282 billion ($2.8 billion) on sales of ¥2.8 trillion ($27 billion), down 11% and 3%, respectively. Its earnings peaked in fiscal 2013.
Aisin Seiki, the second-leading supplier in the Toyota group, forecasts a profit of ¥175 billion ($1.7 billion), down 1% from a fiscal-2015 high, on a 5% sales increase of ¥3.4 trillion ($33 billion).
Aisin Seiki’s largest group company, automatic transmission maker Aisin AW, predicts earnings of ¥103 billion ($1 billion), nearly 60% of its parent’s total, on sales of ¥1.3 trillion ($13 billion). Sales based on first-quarter results are likely to fall short of the target and below last year’s peak, the supplier says.
Sumitomo Electric, Japan’s No.2 supplier of wiring harnesses, expects earnings of ¥89 billion ($874 million), down less than 1% on a 4% decrease in sales of ¥1.5 trillion ($9.8 billion). Main group companies are Sumitomo Wiring, accounting for 72% of revenue, and Sumitomo Riko (formerly Tokai Rubber), claiming most of the rest. Sumitomo Electric peaked in fiscal 2014.
Yazaki, Japan’s leading wiring harness supplier, is privately held and does not disclose earnings or sales forecasts.
Koito Manufacturing, Japan’s top lighting provider and a Toyota Group member, anticipates earnings and sales of ¥78 billion ($766 million) and ¥813.4 billion ($8 billion), down 5% and 4%, respectively. Its earnings peaked in fiscal 2015.
Sumitomo Rubber, which makes Dunlop tires, forecasts earnings from its tire operations of ¥64 billion ($629 million) on sales of ¥695.0 billion ($6.8 billion), down 12% and 5%, respectively. Sumitomo Rubber earnings peaked in fiscal 2014.
Hitachi Automotive, a subsidiary of electronics giant Hitachi Ltd., projects earnings of ¥60 billion ($589 million), down 3% from a fiscal 2015 high, on unchanged sales of ¥1 trillion ($9.8 billion).
Toyota Boshoku, Toyota’s main seating and interiors supplier, targets earnings and sales of ¥52.5 billion ($516 billion) and ¥1.3 trillion ($13 billion), down 12% and 6%, respectively. Its earnings peaked in fiscal 2015. The supplier expects to produce 7.1 million seat sets, unchanged from the previous reporting period.
Toyo Tire & Rubber, Japan's fourth-largest tire maker, expects earnings and revenue from its core tire business of ¥49.9 billion ($490 million) and ¥317.7 billion ($3.1 billion), down 14% and 2%, respectively. Its earnings peaked in fiscal 2015.
NSK, a leading steering and hub manufacturer, predicts automotive earnings and sales of ¥49 billion ($481 million) and ¥656 billion ($6.4 billion), down 28% and 5%, respectively. NSK earnings peaked in fiscal 2015.
NGK, which produces both spark plugs and sensors, expects automotive earnings and sales of ¥48 billion ($471 million) and ¥308.9 billion ($30.3 billion), down 33% and 4%, respectively. Its profit peaked in fiscal 2015.
Calsonic-Kansei, a leading Nissan Group supplier, anticipates earnings of ¥39.9 billion ($39 million), up 4%, on sales of ¥1 trillion ($9.8 billion), down 5%. Its profit peaked in fiscal 2015.
TS Tech, Honda’s main seating and interiors supplier, forecasts earnings and sales of ¥36.5 billion ($358 million) and ¥430 billion ($4.2 billion), down 7% and 6%, respectively. It earnings peaked in fiscal 2015.
JTEKT, the leading steering and drivetrain supplier to Toyota, forecasts earnings and sales of ¥60 billion ($589 million) and ¥1.3 trillion ($12.8 billion). Its steering and drivetrain divisions will account for estimated ¥36.1 billion ($354 million) and ¥869.7 billion ($8.5 billion) of the total, a decline of 27% and 7%, respectively. Automotive earnings are believed to have peaked in fiscal 2015.
Toyoda Gosei, a Toyota Group supplier of synthetic rubber and plastic components including weather stripping and trim, predicts earnings sales of ¥36 billion ($354 million) and ¥710 billion ($7 billion), down 16% and 9%, respectively. Its earnings peaked in fiscal 2013.
JATCO, Nissan’s primary transmission supplier, does not publish a forecast but in fiscal 2015 it reported record earnings and sales of ¥58.3 billion ($573 million) and ¥752.1 billion ($7.4 billion). Based on estimates from Nissan’s fiscal 2016 earnings and sales forecast, JATCO likely will see earnings of ¥52 billion ($510 million) on sales of ¥730 billion ($7.2 billion).
