Truck maker Hino seen with smaller dent in profit
Rough year ended on hopeful note as Indonesian sales gained traction
TOKYO -- Japanese truck maker Hino Motors likely beat its operating profit forecast in the year ended March 31, thanks to a recovery in key foreign market Indonesia and strong sales back home.
Group operating profit is seen topping 70 billion yen ($640 million), up 1 billion yen from the projection revised in January but still down around 30% on the year as the yen's strength hurt export margins. The Toyota Motor unit's annual operating profit is dealt a blow of 700 million yen to 800 million yen for each 1 yen that the Japanese currency gains against the dollar. The yen appreciated by roughly 10 against the greenback in fiscal 2016.
Sales are seen down 5% at about 1.66 trillion yen amid weakness in markets from the Middle East to South America suffering from low commodity prices.
But Hino's fortunes started looking up as the yen softened following Donald Trump's election as U.S. president last November. And in Indonesia, which accounts for a fifth of foreign sales, more generous spending on public works lifted sales of construction trucks above projections last quarter.
Sales also remained solid on the home front. Hino's truck and bus volume improved 10% to 66,816 units in fiscal 2016, figures from the Japan Automobile Dealers Association show. Increased capital spending by the transportation sector led to higher sales of trucks for logistics, while rising domestic tourism helped move buses.
For the current year ending March 2018, Hino's operating profit is seen improving, but will likely fall short of the 85.7 billion yen consensus forecast compiled by QUICK Corp. Domestic sales are expected to remain strong, with firmness in Southeast Asian markets.
But Hino will also shoulder heavy expenses in 2017, since it will transfer its entire assembly process from Hino, outside of central Tokyo, to Kogawa, Ibaraki Prefecture. Earnings are seen getting an eventual boost from the first full model changes in 14 years in large trucks and 16 years in midsize models, but depreciation on new production equipment will depress earnings in the meantime.
Fiscal 2016 results are due out April 27.