* Sees op profit of Y110 bln vs consensus Y90.4 bln
* Sees Japan production climbing in August vs year-ago
* Need to spread out Japan facilities to avert risk-CEO
* Shares jump 4.1 pct, outperforming market fall
By Chang-Ran Kim, Asia autos correspondent
TOKYO, June 23 Suzuki Motor Corp
forecast a better-than-expected 2.9 percent rise in annual
operating profit on Thursday powered by a sales surge in Asia
and a swift resolution to post-quake disruption to vehicle
Suzuki said domestic factories were gradually returning to
conditions before the March 11 earthquake, allowing it to bring
back overtime from July and increase output in August compared
with a year earlier for the first time since the quake.
By ramping up production, Suzuki aims to boost global car
sales by 6.7 percent to 2.82 million vehicles this business
year, with growth expected in India, China and Indonesia.
The news sent Suzuki's shares up 4.1 percent to 1,773 yen in
morning trade, while the benchmark Nikkei average lost
Japan's fourth-largest automaker projected an operating
profit of 110 billion yen ($1.4 billion) for the business year
ending in March 2012, easily beating the average forecast of
90.4 billion yen in a Thomson Reuters I/B/E/S poll of 20
The maker of the Swift and other compact cars sees net
profit of 50 billion yen, up 10.7 percent from 2010/11.
Slower growth in India, however, has been seen as a risk for
Suzuki and its majority-held subsidiary Maruti Suzuki India Ltd
, which accounts for about half of the market.
Suzuki Chief Executive Osamu Suzuki acknowledged the risk
that inflationary pressures may dampen Indian consumer spending,
saying he was projecting slightly weaker sales this year than
Maruti's official forecasts.
"With inflation and other issues, a decision was made (at
Maruti) to lower the sales growth forecast for this financial
year from the initial 13 percent to 8 percent," Suzuki told a
news conference. "But I personally think a 5 percent rise would
be about right."
That would bring Maruti's sales this year to 1.18 million
vehicles, up from 1.13 million, he said.
Maruti was also hit by a two-week strike this month by
employees demanding recognition of a new union specific to the
But Suzuki said the strike had lasted just six working days,
causing what he called a negligible output loss of 16,000
"In a market where we sell 1.2 million vehicles a year,
16,000 vehicles was a matter of inventory adjustment," Suzuki
He added that he was not surprised at the short-lived labour
strife, repeating Maruti's stance that it would not recognise
the separate union. Maruti, held 54.2 percent by Suzuki, has one
workers' union recognised by management.
SPREADING OUT RISK
Suzuki's guidance assumes a dollar rate of 80 yen, a euro
rate of 110 yen and a 60 percent jump in capital expenditure
this year as it invests in more output capacity in India,
Thailand and Indonesia. In Indonesia, Suzuki said it would build
a 100,000-units-a-year engine factory for 30 billion yen to
raise the ratio of local content and lower costs.
Further out, CEO Suzuki said the Hamamatsu-based automaker
would need to spend to spread out its domestic facilities, all
concentrated in the central Tokai region of Japan long seen at
high risk of being hit by a massive earthquake.
"Our facilities are all at risk, either of an earthquake,
tsunami or (disruption at) a nuclear power plant," Suzuki said,
noting that it had a motorcycle test centre just a few hundred
meters from the shoreline.
"If we don't spread out our factories after all that's
happened, I would be called a fool as a chief executive," he
said. He did not give a timeline or specifics on how Suzuki
would diversify its facilities.
Last month, the government forced Chubu Electric Power
to close its sole nuclear power plant, which provides
power to all four of Suzuki's domestic car and motorcycle plants
to avert a tsunami-induced meltdown that crippled a major power
plant of Tokyo Electric Power Co . Chubu Electric has
said it would make up for the loss by boosting thermal energy
and securing electricity from another utility in western
Suzuki, which had delayed its forecast announcement due to
uncertainty over when the supply chain would recover, posted a
51 percent drop in fourth-quarter operating profit to 14.48
billion yen ($180 million) last month.
($1 = 80.315 Japanese Yen)
(Editing by Edwina Gibbs)