TOKYO – Subaru swung back to profitability in the latest quarter on the back of booming sales in the recovering U.S. market, the Japanese automaker’s traditional earnings engine.
Subaru Corp. booked operating profit of 29.5 billion yen ($269.5 million) in the fiscal first quarter ended June 30, reversing an operating loss of 15.7 billion yen ($143.4 million) the previous year.
In announcing the results Tuesday, CFO Katsuyuki Mizuma said Subaru would keep its fiscal year earnings guidance unchanged, partly because of lower sales from the global microchip shortage.
Subaru now expects to sell 960,000 vehicles in the full fiscal year ending March 31, 2021.
That revised target is up from the previous year’s total of 860,200 units, but down from Subaru’s original forecast for global wholesale volume of 1.0 million vehicles.
In the April-June period, the all-wheel-drive niche player said net income returned to positive territory, notching 18.5 billion yen ($169.0 million). That erased a net loss of 7.7 billion yen ($70.3 million) in the same quarter the previous year.
Revenue jumped 39 percent to 635.2 billion yen ($5.80 billion) in the three months.
Worldwide sales, which cover wholesale volume overseas, soared 32 percent to 175,300 vehicles, while U.S. sales fell advanced 28 percent to 116,600 units in the quarter.
Sales in Europe, excluding Russia, rose by 200 units to 3,400 vehicles.
Low U.S. inventory
“In the U.S., car demand has been very strong on the back of economic recovery and our sales have been robust as well,” Mizuma said. “But with our inventory levels very low, we think we could have sold more if there had been more in our inventory.”
Subaru said it expects the semiconductor shortage to temper sales for the full fiscal year, lopping about 40,000 units off its original volume target for the full year. Still, Subaru expects the chip crunch could begin to ease in the October-March period, bolstering second-half results.
“We predict the chip shortage could reduce our annual production volume by about 40,000 units for fiscal 2021,” Mizuma said. “The situation remains still unclear and we expect this problem to continue at least in the first half of this fiscal year.”
In the previous fiscal year, Subaru lost some 61,000 units of output to the bottleneck.
Subaru kept its outlook unchanged for operating profit to nearly double to 200.0 billion yen ($1.83 billion) in the current fiscal year ending March 31, 2022. It also maintained its earlier outlook for net income to nearly double to 140.0 billion yen ($1.28 billion).
Subaru expects more stringent cost control and a more profitable sales mix, along with favorable foreign exchange rates will help offset the chip hit.
Naoto Okamura contributed to this report