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Subaru cuts 04/05 forecast as product mix worsens


TOKYO, Feb 14 (Reuters) - Subaru-maker Fuji Heavy Industries Ltd. (7270.T: Quote, Profile, Research) posted a 26 percent drop in nine-month operating profit on Monday and slashed its full-year forecast citing a worsening product mix and higher marketing and other sales costs.

Subaru, held one-fifth by General Motors Corp. (GM.N: Quote, Profile, Research) , had been banking on the remodelled flagship Legacy and other new cars to improve its fortunes, but faced declining profitability as more customers opted for cheaper variations of its products.

"Sales of (high-margin) turbo engine versions of the Legacy were lower, and that hit profits," Executive Vice President Shunsuke Takagi told a news conference.

For the year to March 31, Japan's niche maker of all-wheel-drive off-road vehicles now forecasts an operating profit of 40 billion yen ($379.5 million) instead of 45 billion yen, expecting a deterioration in the model mix to shave an extra 3 billion yen.

It will also shell out 2.1 billion yen more on TV commercials and other sales-related costs than previously expected, mainly in the domestic market.

At the new forecast, Subaru's operating profit would be 20.5 percent below last year's 50.3 billion yen.

Net profit is now projected at 28 billion yen instead of 32 billion, even though its revenue forecast was untouched at 1.45 trillion yen as sales volume came roughly in line with expectations.

For the nine months to Dec. 31, operating profit was 26.5 billion yen, dented by a nine-yen fall in the dollar to 109 yen. A weaker dollar makes exports from Japan more expensive and reduces the value of dollar-based earnings when converted into yen.

Among Japanese car makers, Subaru is especially vulnerable to a weak dollar since North America accounts for over a third of its sales.

Net profit for the first three quarters fell 28 percent to 20.72 billion yen due to difficult comparisons from the year before, when the company booked a special gain on stock sales.

Revenue rose 2.1 percent to 1.05 trillion yen as volumes grew in every major region.

SALES INCENTIVES TO RISE

Subaru said, however, that sales of the Legacy had run its course in Japan, prompting it to lower its full business-year domestic sales target by 2,000 units to 263,000 vehicles.

In the United States, on the other hand, Takagi said Subaru expected to enjoy a continued rise in sales, although he warned that spending on discounts and other consumer incentives would likely rise on tough competition and higher U.S. interest rates.

Subaru's U.S. sales have risen by double digits for four of the last five months, with a slowdown last month to a seasonally adjusted 3 percent.

Takagi called January an aberration caused by the snowstorms in the U.S. Northeast, where its all-wheel-drive cars are popular, and said he expected brisk demand to resume this month.

"Sales in the first 10 days of February were up around 20 percent, and they should remain strong for a while," he said.

Subaru is also counting on the B9 Tribeca high-end crossover vehicle -- its first product in the premium segment -- to lift sales when it hits showrooms this summer in the United States.

Globally, Subaru tweaked its sales forecast up by 1,000 units to 589,000 vehicles, helped by better sales in markets outside Japan and North America.

Fuji Heavy shares sank 11.2 percent during the nine months, underperforming a 6.1 percent rise in Tokyo's transport sector subindex and a 2.5 percent fall in the broader TOPIX index.

Ahead of the results, the shares ended up 3.2 percent on the day at 516 yen against a 0.19 percent rise in the subindex. ($1=105.40 yen)

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:lol
i tried to warn them that trying to market Subaru brand as an upscal isnt going to work. haha
 

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well most ppl who bought subaru are not dat bloody rich..i am still confuse why they wanted to be in the lux market.. come on... u need another brand same like acura, lexus, infinity. they can try sell more expensive cars but will people buy it?? especially if they sell uglier model.
 

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Discussion Starter #3
dodolaje said:
well most ppl who bought subaru are not dat bloody rich..i am still confuse why they wanted to be in the lux market.. come on... u need another brand same like acura, lexus, infinity. they can try sell more expensive cars but will people buy it?? especially if they sell uglier model.
well they wanted to do something new becuase their AWD market is pretty done by everyone now. they arent the only one that sells AWD cars. so they start to panic and dont know what the hell they are doing.
 

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Their new slogan should be


SUBARU...Hey, at least we aren't losing money like Mitsubishi.




:D
 

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Subaru has never been a high volume brand. The have long had a small niche of loyal customers that like their practical AWD models. If Subaru wanted to go upscale then like dodolaje mentioned, it might have been worth it to invest in offering a seperate luxury & performance brand. Very risky but it could have been the first line of high end Japanese luxury performance vehicles with standard AWD. Subaru's small dealer network usually gets lumped in on the same car lot with other competing full line brands.

Does this mean that Lance Armstrong is going to take a pay cut?
 

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05 tC said:
Their new slogan should be


SUBARU...Hey, at least we aren't losing money like Mitsubishi.




:D
:clap hell yeah mitsubichy is out. Am sorry even with subaru having this problame . You still can not compare this 2 companies. Mitsubishy is great at one thing and that is making big screen tvs.


Btw its proven that a stock STi motor can take 526 whp. Now its only a matter of time till some one pushes this motor to its limit. I can't wait to see 600whp on a stock 2.5 Sti motor.




:ninja
 

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greddy102 said:
Btw its proven that a stock STi motor can take 526 whp. Now its only a matter of time till some one pushes this motor to its limit. I can't wait to see 600whp on a stock 2.5 Sti motor.




:ninja
correct me if im wrong but isnt the 4g63 capable of similar numbers?
 

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Sprocket Rocket said:
correct me if im wrong but isnt the 4g63 capable of similar numbers?
yes but the 2.5 subaru hasn't been out that long compared to the mitsubishy motor. As I said it will be a matter of time for the subaru motor to catch up to the mitsuibishy #. There isn't many engine turners out there doing subaru motors BUT the ones that are doing anything with the motor. Are doing a great job.
 
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