Denso Lowers Profit Forecast Amid Asian Market Challenges

TOKYO (Reuters) – Japan's Denso, a major supplier to Toyota, announced a 21% reduction in its full-year operating profit forecast on Thursday. The downgrade is primarily due to unfavorable market conditions in China and broader Asia.

The revised operating profit forecast for the financial year ending March 31 is now set at 550 billion yen ($3.58 billion), down from 692 billion yen. This adjustment falls short of the average estimate of 672.2 billion yen as calculated by 16 analysts from LSEG.

Denso's quarterly operating profit also missed analysts' expectations, despite experiencing an 11% increase to 130.7 billion yen during the July-September period, compared to the average estimate of 136.5 billion yen set by seven analysts. Last year, the company recorded an operating profit of 117.4 billion yen.

As the world's second-largest automotive components manufacturer, Denso derives more than half of its revenue from Toyota and its subsidiaries, including truck unit Hino Motors and small-car manufacturer Daihatsu.

Following the announcement, Denso's shares initially surged over 5%, although they subsequently gave back some gains, closing the morning session with a 2.8% increase.

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