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Suzuki Motor sees 10 percent drop in FY operating profit on R&D costs
May 12, 2017 / 9:13 AM / 6 months ago

Suzuki Motor sees 10 percent drop in FY operating profit on R&D costs

TOKYO (Reuters) - Suzuki Motor Corp (7259.T) on Friday forecast a 10 percent fall in its full-year operating profit on increased research and development costs, even as the Japanese automaker expects vehicles sales growth to continue in India and Europe.

The logo of Suzuki is seen during the 87th International Motor Show at Palexpo in Geneva, Switzerland March 8, 2017. REUTERS/Arnd Wiegmann

Japan’s fourth-largest automaker said it expected operating profit to come in at 240.0 billion yen ($2.11 billion) in the year to March 2018, short of an average estimate of 254.7 billion yen from 21 analysts polled by Thomson Reuters I/B/E/S.

Suzuki, which specializes in compact cars and dominates the Indian market through its majority stake in Maruti Suzuki India Ltd (MRTI.NS), posted a stronger-than-expected, 36.5 percent jump in operating profit to 266.7 billion yen in the year ended in March as higher sales in the South Asian country and in Europe offset negative currency impact.

Suzuki said it would pay a full-year dividend of 44 yen per share for the year ended March, up from 32 yen per share a year earlier, and forecast a dividend of 44 yen this year.

The company took an accounting impairment loss of 39.9 billion yen in the year ended March, including an extraordinary loss on its Thailand operations.

Suzuki's latest forecasts are based on an assumption for the yen to average around 110 yen to the U.S. dollar, stronger than its trading rate around 114 yen JPY= on Friday, and 1.65 yen to the Indian Rupee.

It expects global consolidated vehicle sales to increase 5.2 percent in the year to March to 3.07 million vehicles. In India, where it sells one in every two cars, it expect vehicles sales to rise 8 percent from a year earlier.

Suzuki owns 56.2 percent of Maruti, and gets the bulk of its revenues from the Indian partnership, which has a market value of around $30 billion, higher than Suzuki’s market capitalization of about $20.5 billion.

Reporting by Naomi Tajitsu and Maki Shiraki; Editing by Amrutha Gayathri

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