Toyota supplier Denso cuts full-year profit forecast by 21%
11:34 pm Wednesday, October 30th, 2024
TOKYO (Reuters) -Japan’s Denso, a leading supplier to Toyota, slashed its full-year operating profit forecast by 21% on Thursday, mainly due to less-favourable conditions in China and wider Asia, and said it would buy back some of its own shares.
The company cut its operating profit forecast for the financial year to March 31 to 550 billion yen ($3.58 billion) from 692 billion yen, missing the average estimate of 672.2 billion yen, according to 16 analysts surveyed by LSEG.
Denso said it plans to buy back up to nearly 10% of its shares, worth up to 450 billion yen, through October next year after some financial institutions had indicated an intention to sell the company’s shares.
Denso’s quarterly operating profit also missed analysts’ expectations, but still rose due to foreign exchange gains and cost-control measures even as it faced pressure from lower vehicle production and sales volumes in Asia.
Operating profit for July-September rose 11% to 130.7 yen, versus 136.5 billion yen estimated on average by seven analysts. A year earlier, the company earned 117.4 billion yen in profit.
The world’s second-biggest maker of automotive components gets more than half its revenue from the Toyota group, including truck unit Hino Motors and small-car maker Daihatsu.
In a separate announcement, Toyota Industries said its board of directors had agreed for the company to sell its entire stake in Denso between December and March 2027.
Shares of Denso surged more than 5% after the company posted its financial disclosures, before paring early gains to end the morning session 2.8% higher.
($1 = 153.5000 yen)
(Reporting by Daniel Leussink; Editing by David Dolan, Shri Navaratnam and Sherry Jacob-Phillips)
