DENSO expects full year profit to increase in spite of slowing Asian economies

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DENSO, attractive investment destination


On October 31, DENSO, one of the leading auto parts manufacturing companies in Japan, announced the consolidated financial results for the April-September period of 2019.


 DENSO has kept incredible performance in this decade with its high profitability and a stable financial base as the charts bellow show. 

Sales have grown steadily over the last decade.
                                      
The company also has maintained high profitability.
                           
However recent business conditions seem to change a bit. Operating income of this period decreased 12.0% to 134.0 billion yen, a decrease for the second consecutive period due to the appreciation of the yen and weak economies in Asian countries.

Although sales volume increased in Japan and North America, revenues decreased 0.2% from last year to 2,618.4 billion yen because of stagnating economies in Asian countries such as China and effects of exchange rates.

Net profit of this period also decreased 11.2% to 151.2 billion yen. The company revised down full-year consolidated earnings forecast in light of the downturn in the automobile market and the impact of foreign exchange rates.

Sales are expected to be 5,260 billion yen, down 240 billion yen from the previous forecast.
Profit is expected to be 257.0 billion yen, also decrease by 48.0 billion yen from previous forecast.

In terms of business results by country and region, sales and profits at Japan increased due to strong demand from Toyota Motor Corporation. In North America and Asia excluding Japan, sales and profits decreased caused by slowing market and effect of foreign exchange rate. 

Other companies in the Toyota Group also announced declines in sales and profits at the interim financial results in September 2019. Slowdown of the Chinese economy initiated by trade friction between the US and China has affected profits of each company.

On the other hand, DENSO expects full year profits to increase compared to last year although the company revised down its forecast from the previous. It may be a proof that DENSO can continue to be an attractive investment destination in the face of harsh circumstances with high profitability and a stable financial base.

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