Isuzu forecasts 5% profit growth keyed by North America
Automaker sees opportunities to reintroduce midsize trucks in market
TOKYO -- Isuzu Motors projects a 5% increase in net profit for the current year ending in March 2018, supported by its revived U.S. midsize truck operations.
The Japanese automaker announced the forecast Friday along with its fiscal 2016 results. Isuzu projects net profit of 99 billion yen ($872 million) on sales of 1.99 trillion yen, up 2%. Operating profit is expected to climb 4% to 152 billion yen.
Isuzu's fiscal 2016 sales rose 1% to 1.95 trillion yen while net profit shrank 18% to 93.8 billion yen.
Earnings for the current year should benefit from a sales recovery in Thailand, a key market for Isuzu. Sales have rebounded lately after being slowed for several years by political instability and tax changes.
Isuzu also predicts help from a softer yen, as the automaker expects the home currency to weaken this fiscal year against not just the dollar but also emerging-economy currencies.
Another boost is expected from Isuzu's re-entry to the midsize-truck segment in North America, after the company retreated from the market following the 2008 financial crisis.
"E-commerce growth creates strong demand for small and midsize trucks to go through narrow roads in city centers," said Seiji Sugiura of Tokai Tokyo Research Center.
Isuzu's cab-over midsize trucks -- which place the driver's seat over the engine -- are suitable for inner cities because they are more compact than the conventional trucks that are the mainstay in the U.S. Isuzu enjoys a nearly 20% share in the U.S. market for small trucks, trailing just Ford Motor, and the Japanese automaker hopes to strengthen its presence further by returning to the midsize segment.
Isuzu also aims to boost high-margin, after-purchase services such as repair and maintenance. While secondhand parts are common in emerging markets, parts from original equipment manufacturers are frequently used in North America.
President Masanori Katayama expressed hope for achieving growth in the "very stable" North American market.