Toyota supplier Denso’s Q1 profit tumbles 41%, misses view
Denso Corp's robot arm "Denoute-san" plays Japanese chess, also known as Shogi, at a booth during Niconico Chokaigi 2015 in Makuhari, east of Tokyo, Japan April 26, 2015. REUTERS/Yuya Shino
TOKYO, July 29 (Reuters) – Japan's Denso Corp (6902.T), a major supplier to Toyota Motor Corp (7203.T), reported on Friday a 41% slump in first-quarter profit that missed market expectations, hurt by automakers cutting production and by high commodities and logistics costs.
Denso's operating earnings of 63.6 billion yen ($473.32 million) for the three months to June 30 fell short of an average estimate of 80.8 billion yen from 10 analysts according to Refinitiv data. A year earlier, the company earned 107.2 billion yen.
The company, which specialises in vehicle air conditioning, power trains and automated driving systems, lowered its operating profit forecast to 480 billion yen from 560 billion yen for the year ending March 31.
Denso has responded to a severe chip shortage with partnership deals aimed at securing access to key components.
The two-year long crunch and supply disruptions caused by China's COVID-19 curbs have forced car makers including Toyota to repeatedly cut production, and on Thursday the Japanese automaker said production for the April-June quarter fell some 10% short of its initial plan.
But a recent glut in chip supplies due to a pullback in demand in other markets like consumer electronics may finally start to ease things for car makers. Toyota struck a more optimistic note for its business from August.
Denso expected demand for auto chips to be about a third higher by 2025 than it was in 2020, as the key component was increasingly used in fossil-fuel cars, electric vehicles and autonomous driving technology, its Chief Technology Officer Yoshifumi Kato said last month.
Denso shares ended Friday morning's trading down 2.78%, compared with a 0.46% gain for Japan's benchmark Nikkei share average (.N225).
($1 = 134.3700 yen)
Reporting by Satoshi Sugiyama; Editing by Shri Navaratnam and Muralikumar Anantharaman
Our Standards: The Thomson Reuters Trust Principles.
Source:www.reuters.com
