Exedy Expects Sales Rise to Exceed Analyst Estimates on Yen

Exedy Corp. (7278), a Toyota Motor Corp. (7203) supplier, forecast sales will expand at almost twice the pace analysts expect as it benefits from a weaker yen and orders from carmakers including Volkswagen AG. (VOW)

Revenue will rise 10 percent to about 220 billion yen ($2.4 billion) in the fiscal year started April 1, compared with the 200 billion yen projected in the year just ended, President Haruo Shimizu said in an interview. The company received an order from Volkswagen worth several billion yen last year for transmissions to be used in China, he said, without specifying details.

Exedy is also supplying non-Japanese carmakers including General Motors Co. (GM) and Volvo AB (VOLVB) as the Toyota affiliate broadens its customer base in fast-growing car markets including China, India and Mexico to make up for sluggish demand in Japan, according to Shimizu. The yen’s 16 percent decline in the past six months is helping the parts maker compete globally by boosting the value of overseas sales, he said.

“Hitting our sales target really depends on getting new customers in emerging markets,” Shimizu said March 28 in Osaka.

Exedy fell 4.6 percent to close at 1,999 yen in Tokyo, its biggest decline since Sept. 26. The benchmark Nikkei 225 Stock Average slid 1.1 percent.

Sales are expected to jump about 5 percent to 211 billion yen in the year ending March 2014, according to the average of six analysts’ estimates compiled by Bloomberg.

Acquisition Talks

“In expanding sales in overseas markets, Exedy has its brand value as the supplier to major carmakers like Toyota to its advantage,” Masahiro Akita, a Tokyo-based auto analyst at Credit Suisse AG, said by phone today. “Sales of replacement parts are more profitable than simply supplying to carmakers, and demand for that can lead to growth, too.”

The auto components maker is also in acquisition talks with several manual transmission wholesalers and retailers outside Japan to help boost sales of replacement parts, Shimizu said, without naming any targets. Manual transmissions account for about 30 percent of Exedy’s revenue, and the company expects to double sales of spare parts to 46 billion yen in five years, he said.

The companies Shimizu is considering buying are valued at “between 500 million yen and several billion yen each,” he said.

-- Editors: Aaron Clark, Subramaniam Sharma

To contact the reporters on this story: Masatsugu Horie in Osaka at mhorie3@bloomberg.net Anna Mukai in Tokyo at amukai1@bloomberg.net;

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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