Toyota supplier Denso cuts full-year profit forecast by 21%

TOKYO (Reuters) -Japan’s Denso, a leading supplier to Toyota (NYSE:), slashed its full-year operating profit forecast by 21% on Thursday, mainly due to less favourable conditions in China and wider Asia.

The company cut its operating profit forecast for the financial year to March 31 to 550 billion yen ($3.58 billion) from 692 billion yen, missing the average estimate of 672.2 billion yen, according to 16 analysts surveyed by LSEG.

Quarterly operating profit also missed analysts’ expectations, but still rose due to foreign exchange gains and cost control efforts even as it faced pressure from lower vehicle production and sales volumes in Asia.

Operating profit for the July-September period rose 11% to 130.7 yen, versus 136.5 billion yen estimated on average by seven analysts. A year earlier, the company earned 117.4 billion yen in profit.

The world’s second-biggest maker of automotive components gets more than half its revenue from the Toyota group, including truck unit Hino Motors and small-car maker Daihatsu.

Its shares surged more than 5% after the announcement, before partly giving back the gains and ending the morning session 2.8% higher.

($1 = 153.5000 yen)