Stronger yen and dearer steel cutting heavily into Isuzu’s profit

TOKYO - Isuzu Motors, Japan's biggest maker of trucks and commercial vehicles, says profit will fall 17 per cent this financial year as a stronger yen erodes the value of exports and it pays more for steel.

Net income may decline to 50 billion ($652 million) after a record profit of 60 billion in the year ended March 31, the Tokyo-based company, 8.3 per cent owned by General Motors, said yesterday.

The price of steel used in cars and trucks surged 43 per cent in Japan last year, adding to costs for Isuzu and rival Nissan Diesel just as they increase investment in new trucks to meet tougher domestic emissions standards. Isuzu, which sells 77 per cent of its vehicles overseas, expects the yen to be 6.5 per cent stronger against the US dollar this fiscal year.

"The outlook is grim this year," said Koji Endo, an autos and truck analyst at Credit Suisse First Boston. "They are facing many risks like higher steel costs and a stronger yen."

Isuzu shares were unchanged at 254.

- BLOOMBERG