Toyota supplier Denso cuts forecast after third-quarter profits were hit by additional costs

Japan’s Denso, a leading supplier to Toyota, cut its annual profit forecast on Friday after third-quarter profit was hit by additional quality-related cost reserves, missing analysts’ estimates.

Denso cut its operating profit forecast for the fiscal year to March 31 by 21% to 495 billion yen ($3.38 billion), missing the average estimate of 623.2 billion yen, according to 17 analysts surveyed by LSEG.

The world’s second-largest auto parts maker said operating profit fell to 26.8 billion yen in the three months ended December 31, from 112.5 billion yen a year earlier, and well below market estimates of 177, 1 billion yen from a poll of eight analysts remained. by LSEG.

Denso gets about half of its sales from the Toyota group, which also includes Toyota truck unit Hino Motors and small carmaker Daihatsu.

The company recorded 151.8 billion yen in quality-related costs last quarter as it faces the fallout from the recall of defective fuel pumps.

The revenue impact of Daihatsu’s emissions is expected to be about 17 billion yen in the fourth quarter, Denso CFO Yasushi Matsui told reporters.

Shares were volatile, selling off more than 2% before recovering to end the morning session 4.4% higher.

First print: February 2, 2024 | 11:20 PM IST