Subaru profit jumped 25% in the latest quarter as the automaker recovered production, ramped up sales and cashed in on favorable exchanges rates.
CFO Katsuyuki Mizuma noted that even amid recession concerns, American demand for Subarus vehicles remains robust. The company, he says, currently has 50,000 back orders to fill in the U.S. Limited production outputs stands as Subaru’s biggest obstacle.
"Our inventory continues to be at a four- to five-day supply levels at retailers in the U.S.," Mizuma said. "Despite concerns over an economic slowdown, there has been no change in sales momentum at our retailers. ... If we can produce more cars, that will lead to more sales."
Subaru Corp.'s operating profit soared to $271.3 million in the first fiscal quarter ending June 30. The Japanese automaker’s income expanded 47% to $199.5 million.
Tightened production is easing for the company as the company clears hurdles brought by the pandemic and the global semiconductor chip shortage.
Its global output increased 12% to 205,000 vehicles in the April-June period, to drive a 12% increase in worldwide sales to 196,000 vehicles.
Subaru has struggled to fill back orders for several quarters. Worldwide, the automaker sits on 100,000 back orders, Mizuma said.
"In the U.S., our retailers carefully control the number of orders they take so that they do not have to cancel any orders," Mizuma said. "That's why orders will directly lead to sales."
The biggest boost to Subaru's earnings came as the Japanese yen weakened against foreign currencies, especially the U.S. dollar.
Most of the automaker’s volume comes from the U.S. market, and when those dollar-denominated sales were repatriated to the Japanese parent company, it added around $325.6 million to the carmaker's balance sheet.
Subaru has kept its forecast unchanged for the fiscal year ending March 31, 2023. It sees global sales rebounding 28% to 940,000 vehicles by the end of the fiscal year.
The company forecasts operating income will more than double to $1.47 billion.
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