Japan automakers slumped in early trade Thursday and weighed on the Topix benchmark following a series of downbeat earnings reports this week due to currency pressures and rising costs.
Toyota Motor was down 1.3% at 10:30am in Hong Kong to 6,001 yen after reporting its first profit drop in five years yesterday. Net income at the world’s second-largest automaker declined 20.8% for the fiscal year ended March to 1.8 trillion yen. Toyota cautioned earnings would remain under pressure and President Akio Toyoda said the company would consider making cuts where there is no sales growth. Toyota was down 11.6% so far this year as of Wednesday’s close, versus a 4.4% gain in the Topix.
Subaru was also in the red, down 1.3% to 3,930 yen in early trade and extending three straight days of declines. The Tokyo-based automaker earlier this week forecast earnings of 285 billion yen for the fiscal year ending March 2018, which is about 24% lower than analysts’ estimates, according to Bloomberg.
Meanwhile, trading in Mitsubishi Motors was mixed after the company surged 9.3% yesterday following an announcement that it expects to generate 68 billion yen in earnings in the upcoming fiscal year. Shares were down about 1% before trading 0.4% higher at 776 yen.
A recent rally in the US dollar could provide some relief to Japan’s automakers and exporters, which have been pinched as the greenback slid as much as 8% this year. A stronger dollar boosts proceeds from overseas sales when these are repatriated back to Japan. The dollar traded near an eight-week high against the yen at 114.15.
Nissan Motor is scheduled to announce its latest financial results later today. The Yokohama-based automaker reported vehicle sales in the US totaled 168,832 in March, a record high.
Transportation equipment stocks were the biggest drag among the 51 industry groups that make up the Topix, which edged 0.1% lower to 1,584.09 by 10:30am.