* Subaru maker Fuji Heavy raises full-year profit forecast
* Subaru output capacity topped up for sixth time in barely
* Mazda also raises profit outlook to triple prior year's
* Weak yen, popular models boost Japan's second tier
By Yoko Kubota
TOKYO, Oct 31 Fuji Heavy Industries
bumped up its forecast for record profits this year by another
40 percent on Thursday and announced its sixth increase in
production capacity in barely a year as it struggles to meet
demand for its Subaru cars.
Fuji Heavy, along with fellow second-tier Japanese automaker
Mazda Motor Corp, is enjoying a rebound in the market
but bumping up against capacity constraints that limit their
ability to take full advantage.
"We boosted capacity to match what we expected to sell, but
it's surpassed even that, faster than we'd ever imagined," Fuji
Heavy's chief executive Yasuyuki Yoshinaga said in a results
Earlier the company announced that it expects to make an
operating profit of 278 billion yen ($2.83 billion) in the
current year ending next March, more than double last year's
result and up from its previous forecast of 198 billion yen.
It also raised its global sales forecast for Subaru cars,
about half of which are sold in the United States, by more than
10 percent to 807,300 vehicles, and said it would boost output
at its main plant in Japan by another 20,000 vehicles a year -
more than 10 percent - by next summer to meet demand.
Meanwhile Mazda raised its full-year operating profit
forecast by a third, to 160 billion yen, triple the year-ago
result but still shy of a record, as it benefits from new
versions of its key models, including the Mazda 3 and Mazda 6,
which feature its latest fuel-efficient engine technology.
Shares in both Fuji Heavy and Mazda are up by around 150
percent so far this year, outperforming those of the three
biggest Japanese automakers - Toyota Motor Corp, Nissan
Motor Co and Honda Motor Co which are
variously up by between 20 and 60 percent.
BURSTING AT THE SEAMS
Profits at Fuji Heavy and Subaru have also been boosted by a
weaker yen over the past year sparked by the reflationary
policies of Prime Minister Shinzo Abe.
While the big Japanese automakers have moved most of their
production for foreign markets overseas, spurred at first by
trade frictions in the 1980s and more recently by the strong
yen, their smaller rivals, each accounting for barely 1 percent
of the global car industry's total output, have continued to
produce mostly in Japan and export to foreign markets.
This battered their bottom line when the yen was strong but
delivered a windfall with the recent weakness, generating more
yen from currencies earned overseas.
Mazda, which relies heavily on exports to Europe and other
foreign markets, racked up $2.5 billion in combined net losses
in the four consecutive financial years to March 2012, when the
yen was strong.
Subaru, which relies on the U.S. market for about half its
sales, has fared better with a devoted following for its
four-wheel-drive, boxer-engined vehicles and a marketing
strategy focused on its biggest market.
But the company is finding it increasingly difficult to keep
pace with growing demand. Its volumes are still too low to
justify a new plant, while its existing facilities are bursting
at the seams.
At its U.S. plant in Indiana, it makes 170,000 Subaru
vehicles a year along with 100,000 Camry mid-sized cars for its
biggest shareholder Toyota, the world's largest automaker with
forecast production this year of more than 9 million cars.
Fuji Heavy plans to spend $400 million to boost capacity at
the plant by another 130,000 vehicles, but that won't be ready
until the end of 2016.
The Nikkei business paper said last week that Fuji Heavy
would more than double its U.S. output by 2016, partly by
discontinuing the Toyota Camry production, but Yoshinaga on
Thursday said any such move would be up to Toyota.
"Regarding Camry production, there have been some news
reports but we ourselves have absolutely no desire to halt
that," Yoshinaga said, while stressing the importance of the
Toyota alliance for a small automaker like Fuji Heavy. "We get
first-hand exposure to Toyota's production methods, which is a
good learning experience for us."