April 25 2008.

Suzuki expects consolidated operating profit to fall 6% to 140 billion yen in the year ending March 31, 2009, its first decline in nine years.

The company's auto sales in India and other Asian markets continue to be brisk, but a strong yen and higher basic materials costs could slam the brakes on its growth.

"Naturally, we do not want to put out a profit decline forecast, but under current circumstances, we have no choice," Chairman Osamu Suzuki said at a press conference Thursday.

Sharp fluctuations in the currency rate are believed to be a factor behind the company's forecast. For Suzuki, which is assuming a dollar exchange rate of 102 yen, a rise in the yen beyond that would push down its operating profit by around 58 billion yen. An increase of at least 16 billion yen in costs for basic materials such as steel is also slated to place downward pressure on profit.

Suzuki plans to lower unit costs through increased production efficiency, but this alone is not likely to be enough to offset the strong yen and higher materials expenses.

Group sales are likely to decline slightly to 3.5 trillion yen. While Suzuki's auto sales are likely to show double-digit growth to at least 800,000 units, motorcycle sales in North America are expected to fall 14% to 179,000 units.

Pretax profit is likely to dip 4% to 150 billion yen, while net profit is projected to decline slightly to 80 billion yen. Suzuki plans to keep its annual dividend unchanged at 16 yen a share.

Source: Nikkei Net