July 6, 2011 / 3:32 AM / 7 years ago

UPDATE 1-Fuji Heavy aims to boost global sales 40 pct in 5 years

* Targets 900,000 global sales in 2015/16

* North America, China account for bulk of growth

* Targets 2015/16 op margin of 6 pct, profit of 120 bln yen

* New 5-year plan excludes awaited details on China joint venture

* 2011/12 op profit forecast 30 bln yen vs consensus 48.2 bln yen (Adds 2011/12 forecasts, details)

By Chang-Ran Kim, Asia autos correspondent

TOKYO, July 6 (Reuters) - Fuji Heavy Industries Ltd , the maker of Subaru cars, said on Wednesday it aims to boost global sales by 40 percent to 900,000 vehicles in the next five years, fuelled by four new models including its first hybrid car.

Announcing a new five-year business plan, Fuji Heavy also said it would target an operating profit of 120 billion yen ($1.5 billion) and a profit margin of 6 percent in the year ending in March 2016, based on an average dollar rate of 90 yen and euro of 120 yen. Last business year, its operating profit was 84.14 billion yen.

For the current business year to March 2012, the smallest of Japan’s eight car makers forecast a 64 percent fall in operating profit to 30 billion yen, far short of an average forecast of 48.2 billion yen in a survey of 18 analysts by Thomson Reuters I/B/E/S.

It expects 2011/12 net profit of 35 billion yen, down 30 percent, on revenue of 1.48 trillion yen.

Fuji Heavy had been in the fast lane until the earthquake and tsunami on March 11 interrupted the growth spurt. Last year, the company reported its highest operating profit in nine years and its best net earnings ever.

President Yasuyuki Yoshinaga, appointed to his post two weeks ago, said the bulk of the sales expansion would be in China and North America, which would account for a combined increase of 190,000 vehicles by 2015/16.

The plan, however, fell short of identifying a local Chinese partner with which to build vehicles in the world’s biggest car market. Fuji Heavy executives had said they hoped to finalise those plans along with the unveiling of the midterm plan.

“We are very eager to announce our plans for China soon, since that is the key to easing the capacity restraint that we face now,” Yoshinaga told a news conference.

“But we are still in the process of finalising the negotiations, and hope to be able to give you the details soon,” he said.

Sources with knowledge of the deal told Reuters in May that Fuji Heavy had agreed in principle to make Subaru cars in northeast China with Chery Automobile, the country’s largest independent automaker.

Foreign automakers are required to form joint ventures with a Chinese company to build cars for the local market, with ownership limited to 50 percent.


By the final year of the five-year plan, Fuji Heavy expects its sales in North America to grow by 70,000 vehicles to 380,000, and in China to triple to 180,000 vehicles, making it its second-biggest market ahead of Japan.

Elsewhere, the maker of Legacy and other all-wheel-drive cars said it would aim to expand in the booming Southeast Asian region, announcing a deal to consign production in Malaysia to the Tan Chong Group . Production will begin in October 2012 at an existing factory of Tan Chong Motor, with capacity of 5,000 vehicles a year.

Further out, Fuji Heavy said it aimed to sell 1 million vehicles a year globally within the next decade.

Shares of Fuji Heavy ended morning trade up 1.1 percent at 633 yen before the announcement, which came during the midday break. ($1 = 81.080 Japanese Yen) (Editing by Chris Gallagher)

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