Business / Corporate

Subaru cuts fiscal 2018 earnings forecast after plant shutdown due to power-steering defect

Kyodo

Subaru Corp. said Thursday it had revised downward its full-year group earnings forecast for the current business year, which runs through March, amid declining production and sales, after it temporarily shut down a factory over a power-steering defect on certain models.

The automaker expects group net profit for the year to stand at ¥140 billion ($1.27 billion), compared with ¥167 billion from the previous projection. It expects an operating profit of ¥185 billion, down from ¥220 billion projected in November, on sales of ¥3.12 trillion, down from its earlier estimate of ¥3.21 trillion.

Subaru suspended operations at its only domestic assembly plant, in Gunma Prefecture, on Jan. 16 after finding a problem with a power-steering component — the latest quality issue to hit the automaker.

Subaru has been troubled by quality-control issues since 2017, when it admitted unauthorized staff had conducted vehicle inspections at two domestic plants for more than 30 years. That was followed by the revelation that mileage and emissions data had been systematically rigged at a plant, perhaps since as early as 2002.

For the nine months through December, Subaru’s group net profit dropped 22.7 percent to ¥118.22 billion amid spiraling costs for a series of recalls.

Its operating profit declined 49.8 percent to ¥153.67 billion, on sales of ¥2.38 trillion, down 2.5 percent from a year before.

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