Isuzu shares plunge after profit forecast slashed

TOKYO - Shares of Isuzu Motors Ltd. plunged more than 20 percent Thursday after the Japanese truck maker announced a larger-than-expected cut to full-year earnings estimates.

The company more than halved its net profit forecast for the fiscal year through March to 40 billion yen ($409 million) from the 85 billion yen it projected in May. It also slashed its revenue outlook by 11 percent to 1.65 trillion yen ($16.9 billion) and now expects operating profit to fall by 43 percent to 60 billion yen ($613 million).

The Tokyo-based company blamed the earnings downgrade, announced late Wednesday after the stock market had closed, on declining demand for domestic trucks, higher prices for raw materials and an appreciating yen.

The shares closed down 20.7 percent at 161 yen on the Tokyo Stock Exchange, far worse than the benchmark Nikkei 225 stock average's 6.5 percent decline.

Credit Suisse maintained its "Outperform" rating on Isuzu but said it intends to review its forecasts and investment recommendation for the stock after meeting with the company.

"We do not see a bottom yet for domestic sales, and overseas sales have slowed significantly in a reversal of previous steady growth," said Credit Suisse analysts Chikashi Okabe and Koji Endo in a note to clients.

For the six months through September, Isuzu reported a 19 percent drop in net profit to 30.1 billion yen ($307.6 million) on sales of 859.7 billion yen ($8.8 billion).

Isuzu also said Wednesday it will reorganize its North American operations under a new holding company.

The company, known for its popular "Joe Isuzu" TV ads in the 1980s, is scheduled to pull out of the U.S. consumer auto market in January 2009. It will instead focus primarily on commercial vehicles, diesel engines and components through the new entity, Isuzu North America Corp., the company said.

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