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Japan-Update

Isuzu profit seen climbing 11% for April-December

Brisk Thai pickup truck sales helped counter slumps in Japan, Middle East

Isuzu's pickup trucks sold well in Thailand and Australia during the nine months through December.

TOKYO -- Isuzu Motors likely lifted group operating profit 11% on the year to roughly 122 billion yen ($1.12 billion) for the nine months ended in December, thanks to strong demand for pickup trucks and industrial engines.

The profit figure would top market predictions by around 4 billion yen. Sales for the Japanese automaker apparently climbed 11% to about 1.54 trillion yen.

Asian operations, led by Thailand, produce around 40% of total operating profit. Strong sales of pickups and light commercial vehicles were supported by drivers looking to replace their automobiles, five years after the previous Thai government instituted popular measures promoting auto sales.

Isuzu makes pickup trucks in Thailand for sale in that country and others such as Australia, where demand also was brisk in the April-December period. The strong U.S. economy drove sales of medium- and heavy-duty trucks there as well.

These sales helped counter a slump in the Middle East and Africa, traditional Isuzu strongholds. Demand in Saudi Arabia remains depressed as austerity measures hinder public works investment. African sales have yet to fully recover from an economic downturn sparked by a slide in resource prices and currency depreciation.

In the domestic market, Isuzu sold 6% fewer trucks and buses on the year, the Japan Automobile Dealers Association said. Though higher shipping demand propelled truck sales overall, new offerings from rival automakers made for fierce competition in 2017. Isuzu failed to keep up, and its share of the Japanese truck market fell.

But a stronger maintenance business kept profits robust despite the lower truck sales. Isuzu also renovated Japanese factories to increase efficiency and revamped its distribution structure, lowering costs.

In addition, makers of construction machinery in Japan and China have shown heavy interest in Isuzu's industrial engines. Sales of those parts are seen climbing at least 30% for the year ending in March. Plants in Japan are running at full capacity to keep up with demand, though additional production capacity likely will become necessary next fiscal year.

Isuzu is expected to retain full-year projections when it announces April-December earnings Feb. 7. The company forecasts 5% growth in sales to 2.06 trillion yen and a 12% rise in operating profit to 164 billion yen for fiscal 2017.

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