Suzuki posts record earnings

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TOKYO (Reuters) - Suzuki reported a 12 percent rise in annual operating profit on Thursday thanks to booming car sales in India, but it forecast a 6.3 percent drop for this year to factor in a sharp slide in the dollar.

The Japanese maker of compact cars expects operating profit to come to 140 billion yen (680 million pounds) in the business year ending next March, when the sector faces massive currency-related losses, a spike in raw materials costs and softening demand in the West.

For the year ended March 31, Suzuki posted an operating profit of 149.41 billion yen, lagging a consensus estimate of 152.88 billion yen in a poll of 18 brokerages by Reuters Estimates.

Net profit grew 7.0 percent to 80.25 billion yen, while revenue rose 11 percent to 3.50 trillion yen.

Suzuki's limited presence in the U.S. market has shielded it from a sales downturn there, while it has enjoyed a steady earnings source in India, where it dominates the market through unit Maruti Suzuki India.

Suzuki was the first among Japan's top automakers to announce 2007/08 earnings. Honda, Mazda and Mitsubishi report on Friday.

Suzuki, typically the sector's most conservative in its projections, set its exchange rate assumptions at a surprisingly sober 102 yen to the dollar and 155 yen to the euro. Last year, the dollar and euro averaged 114 yen and 160 yen, respectively, it said.

Consensus forecasts have Suzuki's operating profit falling to 145.38 billion yen this year, though many analysts expect a comeback the following year as more production capacity comes online and the negative currency impact disappears.

Having achieved a revenue goal of 3.5 trillion yen two years ahead of schedule with the just-ended term, Suzuki unveiled a revised business plan under which it aims to boost revenue to 4 trillion yen by the year ending March 31, 2011.

The plan also calls for recurring profit to rise 8.3 percent to 170 billion yen over the next three years, assuming an average dollar rate of 100 yen and euro of 145 yen.

Suzuki is budgeting 750 billion yen of capital expenditures during the three years, and seeks to boost global car sales by 22 percent to 2.95 million vehicles and motorcycle sales by 32 percent to 4.4 million units.

Suzuki will ramp up capacity in India, Hungary and Japan this year with all-new models such as the A-Star due for launch, helping it to continue expanding sales as consumers worldwide seek compact, fuel-efficient cars.

Maruti Suzuki's sales grew 13 percent last business year but have stalled in the last few months. Suzuki Chief Executive Osamu Suzuki has repeatedly warned of even more competition ahead with heavyweights such as Toyota and Nissan developing low-cost cars for India.

It will also face competition from Tata Motors's $2,500 (1,250 pound) Nano car due out this year.

Shares in Suzuki, whose market capitalisation of $14.3 billion makes it bigger than General Motors, have lost 16 percent so far this year, while the transport sector subindex has fallen 12 percent.

Rival Daihatsu Motor Co, Toyota's minivehicle unit, reported a 20 percent jump in 2007/08 operating profit and a 0.6 percent net profit gain to 34.94 billion yen on Thursday.

It forecast operating profit to fall 6.4 percent to 61 billion yen and net profit of 32 billion yen this year, down 8.4 percent.

Reuters