Thursday, November 6, 2008

Isuzu Slumps After Cutting Forecast on Overseas Sales

By Makiko Kitamura

Nov. 6 (Bloomberg) -- Isuzu Motors Ltd., Japan's largest maker of light-duty trucks, plummeted after the company cut its full-year profit forecast as overseas sales slow and a stronger yen reduces the value of repatriated earnings.

Isuzu dropped 42 yen, or 21 percent, to close at 161 yen on the Tokyo Stock Exchange.

The company's truck sales in Thailand, its biggest overseas market, have dropped for four straight months through September. Overseas sales may decline 10 percent in the full year to 391,000 units, Isuzu said in a statement yesterday.

``Overseas truck sales are slowing and therefore, like the carmakers, the company's earnings are deteriorating,'' said Shinya Naruse, a Tokyo-based analyst at Nomura Securities Co. wrote in a report dated today. Isuzu ``will likely be forced to cut production.'' Naruse downgraded Isuzu to ``neutral'' from ``buy'' today.

Mitsubishi UFJ Securities Co. analyst Shotaro Noguchi also cut Isuzu to ``outperform'' from ``strong outperform'' today.

Net income may fall 47 percent to 40 billion yen ($408 million) in the year ending March, from 76 billion yen a year earlier, the Tokyo-based company said yesterday. The company previously forecast profit of 85 billion yen.

The Thai economy may expand less than 4 percent next year, the slowest pace in four years, as the global economic slowdown cools demand for exports, Thai Finance Minister Suchart Thadathamrongvej said last month.

Isuzu is basing its full-year forecast on an exchange rate of 102 yen to the dollar, compared with an average 115 yen last fiscal year. The stronger yen will cut operating profit by 12 billion yen in the period, the company said.

To contact the reporter on this story: Makiko Kitamura in Tokyo atmkitamura1@bloomberg.net.

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