Japan Car Firms Profits Up On Weak Yen

The companies said they expected the upward drive in profits to continue through the full business year, which ends next March 31.

Toyota, Japans biggest car maker and the worlds number two auto company, said its parent current profits for the six months to the end of September totalled Y258.50 billion ($2.30 billion), nearly four times as much as it made in the comparable period last year.

The reason for the rise in the half-year profit is the yens fall, Toyota vice-chairman Iwao Isomura told reporters.

Exports were robust, but domestic sales were sluggish, another Toyota official said.

Current profit is pre-tax and includes losses or gains on non-operating activities such as investments in stocks.

Toyota said it expects a full-year parent current profit of Y550 billion yen ($4.91 billion) in the 1996-97 business year, against its actual parent current profit of Y340.73 billion ($3.04 billion) in 1995-96.

Nissan, Japans second largest car maker, announced it powered out of the red to post a healthy six-month profit. Its parent current profits were Y30.91 billion ($275 million), against a parent current loss of Y8.8 billion ($78.5 million) in the year-earlier period.

It said its operating profit was nearly 7.5 times as big as last years half-year figure.

This increase...was brought on largely by cost reduction and other extensive rationalisation efforts, and foreign exchange profits from the correction in the yens appreciation, Nissan said in a statement.

The yen stood at around 112 to the dollar on Friday, compared with about 100 a year ago.

The cheaper yen makes Japanese products more competitive in overseas markets. Also, when the Japanese currency is weak, companies converting dollar-based overseas earnings into yen get more for their money.

Toyotas Isomura warned that the company should not be too dependent on a weak yen.

He expects Toyota to post a full-year parent current profit of Y550 billion ($4.91 billion) in the 1996-97 business year, against its actual parent current profit of 340.73 billion yen ($3.04 billion) in 1995-96.

Nissan said it expects its full-year parent current profit to surge to 80 billion yen ($714 million) from a current profit of 32.43 billion yen ($289 million) in 1995/96.

Mitsubishi Motors Corp also announced its half-year business results on Friday, but unlike its bigger rivals, Mitsubishi suffered a 12.6 per cent fall in its parent current profit.

The company said, however, that the figures might have been even worse without the help of the weaker yen.

We ended with disappointing results as sales in the domestic market in the April-July period were sluggish, Mitsubishi managing director Minoru Wada said.

Despite the half-year profit fall, Mitsubishi expects to post a parent current profit of Y56 billion ($500 million) in 1996-97, which is only a shade higher than its actual parent current profit of Y55.39 billion ($494 million) a year earlier.