Isuzu Motors Ltd
TSE:7202
Isuzu Motors Ltd
Isuzu Motors Ltd., a stalwart in the global automotive industry, traces its origins back to the early 20th century in Japan. Known for its pioneering spirit, the company initially ventured into the manufacturing of commercial vehicles and diesel engines. Its first truck was produced in 1918, marking the dawn of a relentless pursuit of engineering excellence and innovation. Over the decades, Isuzu entrenched itself as a leader in the commercial vehicle space, particularly in trucks and buses, by focusing on producing durable and efficient vehicles. This focus led to the development of robust diesel engines, which became a hallmark of the brand, sought after for their reliability and fuel efficiency. The company built a reputation based on quality and engineering acumen, catering to both commercial needs and the broader consumer market.
Today, Isuzu Motors thrives by leveraging its core competencies in durable vehicle manufacturing and engine technology. It operates within a network of global partnerships and subsidiaries that enable it to meet diverse automotive and industrial demands across different regions. Revenue is generated primarily through the sale of commercial vehicles and engines, positioning itself strongly in local and international markets. Isuzu's business strategy heavily weighs on the deployment of cutting-edge diesel technology, broadening its product offerings to include pickup trucks, light trucks, commercial buses, and industrial engines. This diversified product portfolio not only caters to a widening customer base but leverages economies of scale, reducing costs while optimizing margins. Isuzu's success is underpinned by its continuous investment in research and development, ensuring it remains at the forefront of innovation, reliability, and efficiency in the automotive sector.
Earnings Calls
Isuzu Motors reported a profit increase for Q3 FY2024, hitting all-time highs in net sales and profit levels for the nine-month period despite challenges in emerging markets and material price fluctuations. CV and LCV unit sales have declined, especially in emerging economies, but improvements in component shortages buoyed advanced economies. The full-year operating income forecast remains at JPY 280 billion due to expected gains from price realizations, cost reductions, and a weaker yen. The full-year net sales forecast is revised down due to production delays and shifts. Despite global CV unit sales decreases, market share improved in Japan. After sales and industrial engine segments face mixed results, with the former up and the latter down. The company maintains stable financial outcomes aided by effective cost management and currency movements.
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Thank you very much for attending today's presentation of Isuzu Motor Limited's financial results for the third quarter of the fiscal year ending March 31, 2024. Allow me to introduce the Isuzu members. This is Naohiro Yamaguchi, Director of the Board and Senior Executive Officer, Group CFO, and Executive Vice President of the Corporate Strategy Division and Corporate Planning and Finance Division.
I'm Yamaguchi.
My name is Fumiya Yamakita, Vice President of the Corporate Planning and Finance Division. First, Mr. Yamaguchi will discuss the general overview of the business, while I, Yamakita, will present the financial results for the third quarter of the fiscal year ending March 31, 2024.
I am Yamaguchi. I will briefly explain the overview of our business. First are the results for the third quarter, the first 9-month performance. On the profit and loss front, profits increased year-on-year, thanks to price realization, the weaker yen, and growing after sales, despite deterioration in market conditions, especially in emerging countries and fluctuations in material prices, et cetera. As a result, net sales in all profit levels for the first 9-month period marked an all-time high.
Turning to unit sales of CVs. The sales volume to advanced economies increased due to improvements in component shortages, while those 2 emerging economies declined significantly due to deteriorating market conditions. As for LCVs, unit sales for Thailand decreased sharply due to severe market conditions, while the number of export shipments increased mainly due to delivery of backlogs.
Next is the outlook for the fiscal year ending March 31, 2024. In light of the severe market conditions for both CVs and LCVs, the sales volume forecast is adjusted downward from the forecast made in November. Due in part to a delay in the production establishment of new models, sales of some domestic CVs are pushed back to the next fiscal year. As for profit and loss, the full year forecast for operating income of JPY 280.0 billion remains the same as we expected steady progress in price realization and cost reduction activities, in addition to the weaker yen would absorb the downward revision of the sales unit projection.
Now here is the summary of the cumulative consolidated results for the 9 months of the fiscal year ending March 31, 2024. As I mentioned at the beginning, unit sales of both CVs and LCVs decreased from the same period last year. The financial results are described in the bottom table. I now turn to the full year unit sales and financial outlook for this fiscal year. The full year outlook in unit sales for CVs, for Japan and overseas markets, and LCVs for export markets have been revised downwards from the previous full year outlook.
On the other hand, as mentioned at the beginning, the financial outlook remains unchanged for sales in all profit levels. That's all from me.
Next, I, Yamakita, will explain the results for the third quarter and the full year outlook for the fiscal year ending March 31, 2024. Now I will talk about the global CV unit sales. The CV unit sales in Japan and North America increased due to improvements in part shortages, but the total global CV unit sales decreased due to the rising interest rates and inflation in regions such as Asia.
Next, I will touch on the full year outlook of the total global CV unit sales. This is a comparison between the revised full year outlook and the previous one announced in November 2023. The unit sales for the Japanese market have been revised downward because part of the unit sales projected in the previous full year outlook has been moved back to the next fiscal year caused by a delay in production establishment of new vehicle models and a prolonged lead time to sales longer than our assumptions. Also, the overseas CV unit sales have been revised downward due to severe market conditions seen in markets such as China and Asia.
Now I will explain the results of industry sales and our market share in Japan in the first 9 months of the fiscal year ending March 31, 2024. Industry sales for both the heavy and medium duty and light duty truck segments for Isuzu and our competitors recovered as the part shortage situation continue to ease. The Isuzu market share in both truck segments also increased, thanks to the east part shortages.
Next, let us now look at global LCV unit sales. The unit sales for the first 9-month period in the Thai domestic market was significantly lower than that of the same period last year due to severe market conditions, while unit sales for export markets increased, driven by execution of backlogs, which had accumulated due to part shortages in the previous fiscal year.
Now I will turn to a comparison of the full year outlook of global LCV unit sales between the previous and the latest full year outlook. Although the recent demand for the Thai domestic market is weaker than expected, the forecast for unit sales remains unchanged from the previous outlook as transition of emission regulations is scheduled in April. The unit sales for export markets have been revised downwards due to worsening market conditions in Asia and Africa and the backlog clearance in Oceania.
I will explain LCV industry sales, our market share, and production units in Thailand for the first 9-month period. Industry sales dropped significantly compared to that of the previous fiscal year due to deteriorating market conditions. However, we maintained a high market share continuing from the previous fiscal year. Although production volume increased for export markets due to the high level of backlogs, production for the time market saw a significant drop, resulting in an overall decrease from the previous fiscal year.
Now I will touch on industrial engines and after sales business. Global industrial engine shipments fell from the previous fiscal year due to market slowdowns in China. Also, we lowered our full year forecast affected by part shortages in the fourth quarter of the fiscal year ending March 31, 2024. On the other hand, revenue from the after sales business increased capturing demand mainly in Japan. We also revised our full year forecast upwards.
Next, I'll discuss the analysis of changes in operating income by comparing the variances between the first 9 months of the fiscal year ended March 31, 2023, and those of the fiscal year ending March 31, 2024. Although the unit sales decreased, the operating income increased by JPY 55.7 billion from the previous fiscal year, which is attributable to the improvement in the destination and model mix, accumulation of revenues from the after-sales business, successful price realization, and effective cost reduction activities. The exchange rates are shown in the upper right table.
I will now turn to the financial results of operating income and beyond. Ordinary income was JPY 270.2 billion. After adding and subtracting the share of profit of entities accounted for using the equity method, foreign exchange gains and others to the operating income of JPY 253.6 billion. Net income was JPY 159.4 billion after adding and subtracting items such as income taxes and profit attributed to noncontrolling interest from the ordinary income of JPY 270.2 billion. Please note that we recorded in the first quarter, JPY 2.2 billion of extraordinary loss related to the transfer of our business operations in Russia. And nothing on this matter has changed since then.
Next, I will explain the analysis of changes in our full year operating income outlook for the fiscal year ending March 31, 2024, compared with the full year result of the previous fiscal year. Our full year outlook for operating income remains unchanged from the previous forecast of JPY 280.0 billion, as we expected the negative impact from unit sales decreases will be offset by steady progress of price realization and cost reduction activities as well as the positive impact of the weaker yen.
I will now touch on the financial outlook beyond the operating income. Ordinary income is expected to be JPY 300.0 billion after adding and subtracting the share of profit of entities accounted for using the equity method, foreign exchange gains and others to the operating income of JPY 280.0 billion. Net income is expected to be JPY 165.0 billion, after adding and deducting items such as the following ones from the ordinary income of JPY 300.0 billion, income taxes, profit attributable to noncontrolling interest, loss on business restructuring of IJTT of JPY 6.0 billion, and impairment loss on production facilities of a subsidiary in China of JPY 4.0 billion.
This is the end of Isuzu Motor Limited's financial results briefing for the third quarter of the fiscal year ending March 31, 2024. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]