Business / Corporate

Subaru reveals annual profit halved in fiscal 2018, releases earnings early by mistake

Reuters

Subaru Corp. said Friday its operating profit for the past year has halved after it suffered a string of setbacks including production delays and mounting recalls.

Japan’s seventh-biggest automaker released its results hours ahead of schedule after it inadvertently uploaded its financial results on its website earlier than planned. The company initially withdrew the material, but not before social media noticed, sending its shares down more than 2 percent after the error.

The results, officially released at 10:25 a.m. instead of the scheduled 1 p.m., showed operating profit had fallen 48.5 percent to ¥195.53 billion ($1.78 billion) in the year ended in March, in line with analysts’ estimates.

“We deeply apologize for the trouble this has caused,” the maker of Legacy sedans and Forester sport-utility vehicle crossovers wrote in an emailed statement about the early release.

For the year through March 2020 Subaru expects operating profit to jump 33 percent to ¥260 billion, under international accounting standards it is adopting from this year, as it expects vehicle sales to recover and rise 5.8 percent to 1.058 million units.

Under the previously used Japanese accounting standards, operating profit would rise 28 percent to ¥250 billion, it said.

Last year’s dismal results were weighed down by costs related to production delays, after the discovery of a defective steering component stopped output at its sole assembly plant in Japan for two weeks earlier this year.

Subaru has also been facing mounting costs related to vehicle recalls in Japan after it admitted to cheating on domestic quality inspections, while slowing sales in the United States — its biggest market — also hurt its bottom line.

The firm’s recent production- and quality-related issues are the side effects of its rapid growth following a ramp-up in output in the United States over the past few years to keep up with booming demand for its rugged-looking models.

The firm for years raked in higher sales in the United States with its popular all-wheel-drive cars but sales have plateaued in the past year, snapping a five-year winning streak.

As the smallest of Japan’s major automakers, Subaru is also struggling to invest in and develop the lower-emissions vehicles and on-demand transportation services necessary to survive ongoing technological upheaval in the global auto industry.

As a result, it has formed a partnership with Toyota Motor Corp. under which it will use vehicles technologies developed by its bigger, deeper-pocketed rival, including lower-emission plug-in hybrid systems, in Subaru vehicles.