Subaru sees annual profit sinking to nine-year low as coronavirus hits car sales

Subaru Corp on Tuesday forecast its annual operating profit would drop to a nine-year low this year as it expects to take a sales hit in the United States, its largest market where the number of coronavirus infections continues to climb.

Japan's seventh-biggest automaker by sales expects annual operating profit to sink 62% to 80 billion yen ($754.3 million), its lowest since the 2011/12 financial year, and weaker than analyst estimates compiled by Refinitiv.

It posted an operating loss of 15.7 billion yen in the April-June quarter, its biggest quarterly operating loss in nearly 11 years due to a halving in global vehicle sales.

Global automakers are taking a big hit from the coronavirus outbreak, which shuttered vehicle factories earlier in the year and has kept customers out of car dealerships, leading to a drop in production and sales.

In the year to March, the maker of the Outback and Forester sport-utility vehicle crossovers expects to sell 900,000 cars, down 13% from last year and a seven-year low.

In the United States, which makes up two-thirds of global sales, it expects sell 590,000 to 600,000 vehicles, a 15% reduction on the year.

Weaker sales will hurt annual profit, but Subaru chief executive Tomomi Nakamura said the company would stay in the black as the strong credit enjoyed by the brand's high-income customer base would help the automaker avoid financing-related pressures.

"We are not anticipating another nationwide U.S. lockdown, and we see a slow but steady recovery in demand," he told a briefing, adding that he anticipated a return to profitability in the second quarter.

Even as Subaru braces for an annual profit drop, it is weathering the coronavirus outbreak better than rivals including Nissan Motor Co Ltd, Mitsubishi Motor Corp and Mazda Motor Corp, each of which last week forecast record operating losses for the year.