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Toyota Parts Maker Predicts Sales Gain Next Year on China Demand

Toyota In China
Visitors walk past the GAC Toyota Motor Co. booth at the Wuhan Motor Show 2013 in Wuhan, China. Photographer: Tomohiro Ohsumi/Bloomberg

Exedy Corp. forecast higher revenue next fiscal year as the supplier to Toyota Motor Corp. benefits from increased demand for auto components in China.

Sales will probably climb 5 percent to 8 percent in the 12 months starting April 1, President Haruo Shimizu said in an interview at Exedy’s headquarters in Osaka, Japan. The growth estimated by analysts is at the lower end of the company’s projected range, according to data compiled by Bloomberg.

Exedy joins another Toyota supplier, Tsubakimoto Chain Co., in predicting higher sales as automakers sell more cars in the world’s biggest auto market. China, where vehicle sales touched 22 million in 2013, will account for almost one-third of global new vehicle sales in 2020, according to KPMG.

Exedy’s contracts in China with carmakers including Volkswagen AG and General Motors Co. put the company “in a good position compared with other Japanese suppliers,” Shimizu said.

Net income will probably total 12.8 billion yen and revenue 246.4 billion yen in the 12 months starting April 1, according to the average of five analyst estimates compiled by Bloomberg. That translates to growth of 5.8 percent and 5.9 percent respectively from estimates for the year-earlier period.

The maker of clutches and torque converters used in transmission systems forecast net income will rise 16 percent to 11.3 billion yen ($111 million) in the year ending March 31. Revenue may rise 14 percent to 230 billion yen, the company said Jan. 30.

Analysts predict net income of 12.1 billion yen and sales of 232.6 billion yen in the period, based on the average of five estimates.

Higher Earnings

Earnings may beat Exedy’s projections, helped by a weaker yen, Shimizu said.

Demand for Japanese goods is recovering in China after a territorial dispute over a group of islands soured relations between the two countries in 2012. While the dispute created some risks, Japanese makers can’t afford to be too conservative in the world’s largest auto market, the executive said.

“Looking at markets around the world, where else would you focus on but China?” Shimizu said. “You should be bullish about the market and not be afraid of it.”

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