A page with FHI's 3rd Quarter of FY2005 Consolidated Financial Results can be found at http://www.fhi.co.jp/english/news/press/2005/05_02_14e.pdf.

Here is a Bloomberg report which analyzes those results, from http://www.bloomberg.com/apps/news?pid=10000080&sid=aU2UWzyRa6vM: Fuji Heavy 3rd-Quarter Profit Rises 33% as Taxes Fall

Feb. 14 (Bloomberg) -- Fuji Heavy Industries Ltd., the maker of Subaru-brand cars, had third quarter profit rise 33 percent as the company paid less in taxes in the quarter.

Net income rose to 12.4 billion yen ($118 million) from 9.3 billion yen, a year earlier. Sales were little changed at 359 billion yen. Bloomberg News derived the figures by subtracting six-month results from nine-month figures released by the company.

Fuji Heavy, which is 20 percent owned by General Motors Corp., paid less in taxes in the third quarter, according to spokesman Shinichi Murata, without providing more details. Fuji cut its full-year profit forecast by 13 percent as the yen strengthened against the dollar, eroding the company's earnings in the U.S. and the company sold less profitable models in Japan.

"The lower forecast seems to be coming from a weaker model mix in Japan as the Legacy is getting older,'' said Yasuaki Iwamoto, an analyst at Okasan Securities Co. in Tokyo. ``If the yen remains at around 105 yen to the dollar next fiscal year, the automaker will probably be able to increase profit.''

Legacy

Fuji Heavy, which released the redesigned Legacy in May, 2003 in Japan, faces intensifying competition in its domestic market as Japan has the shortest life span for vehicles. The Tokyo-based automaker relies on three core models. The Legacy accounts for about 40 percent of Fuji Heavy's global sales.

The yen averaged 105.84 to the dollar in the three months ended Dec. 31, compared with 108.88 in the same period a year ago.

"The impact from the stronger yen and worsening model mix in Japan created severe business circumstances,'' the company said in a statement. The automaker plans to release a redesigned version of its Impreza sports sedan later in 2005.

The company lowered its full-year profit forecast 13 percent to 28 billion yen from 32 billion yen.

A stronger local currency trims the value of Fuji Heavy's dollar-denominated sales. Fuji Heavy derives about 40 percent of sales in North America and sells six models in the U.S., the world's largest auto market.

The company also said it missed its cost-cutting goals as it raised advertising spending. The company lowered costs by 700 million yen instead of the goal of 2.8 billion yen.

Fuji Heavy shares rose 3.2 percent to close at 516 yen in Tokyo. The figures were released after the equities market closed.

To contact the reporter on this story:
Naoko Fujimura in Tokyo at Or nfujimura@bloomberg.net.

To contact the editor of this story:
Eugene Tang at eugenetang@bloomberg.net.

Last Updated: February 14, 2005 03:16 EST

Here is a Bloomberg report about FHI's presentation of the results, from http://www.bloomberg.com/apps/news?pid=10000080&sid=amuNlW_kokpU&refer=asia: Fuji Heavy Cuts Profit Outlook as Profit Falls

Feb. 14 (Bloomberg) -- Fuji Heavy Industries Ltd., the maker of Subaru-brand cars, said nine-month profit fell 28 percent after the yen's gain against the dollar eroded the value of its overseas earnings and it missed cost-cutting targets. The company lowered its full-year profit forecast.

Net income fell to 20.7 billion yen ($197 million) from 28.7 billion yen, a year earlier, Fuji Heavy said in a release distributed through the Tokyo Stock Exchange. Sales rose 2.1 percent to 1.05 trillion yen from 1.03 trillion yen. The company lowered its full-year profit forecast 13 percent to 28 billion yen from 32 billion yen.

A stronger local currency trims the value of Fuji Heavy's dollar-denominated sales. Tokyo-based Fuji Heavy, which is 20 percent owned by General Motors Corp., derives about 40 percent of sales in North America and sells six models in the U.S., the world's largest auto market.

"The impact from the stronger yen and worsening model mix in Japan created severe business circumstances,'' the company said in a statement.

Fuji Heavy, which released the redesigned Legacy car in May, 2003 in Japan, faces intensifying competition in its domestic market as Japan has the shortest life span for vehicles. The Tokyo-based automaker relies on three core models. The Legacy accounts for about 40 percent of Fuji Heavy's global sales.

The company also said it missed its cost-cutting goals as it raised advertising spending. The company lowered costs by 700 million yen instead of the goal of 2.8 billion yen.

The yen averaged 108.43 to the dollar in the nine months ended Dec. 31 compared with 114.95 in the same period a year earlier.

Fuji Heavy in November said it expects net income to fall 17 percent to 32 billion yen. Sales may rise 0.7 percent to 1.45 trillion yen.

Fuji Heavy shares rose 3.2 percent to close at 516 yen in Tokyo. The figures were released after the equities market closed.

To contact the reporter on this story:
Naoko Fujimura in Tokyo at Or nfujimura@bloomberg.net.

To contact the editor of this story:
Eugene Tang at eugenetang@bloomberg.net.

Last Updated: February 14, 2005 03:49 EST

Here is the Reuters report, from http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7619868: Subaru Cuts 04/05 Forecast as Product Mix Worsens
Mon Feb 14, 2005 08:06 AM ET

By Chang-Ran Kim, Asia auto correspondent

TOKYO (Reuters) - Subaru-maker Fuji Heavy Industries Ltd. posted a 26 percent drop in nine-month operating profit on Monday and slashed its full-year forecast citing a worsening product mix and higher marketing and other sales costs.

Subaru, held one-fifth by General Motors Corp., had been banking on the remodeled flagship Legacy and other new cars to improve its fortunes, but faced declining profitability as more customers opted for cheaper variations of its products.

"Sales of (high-margin) turbo engine versions of the Legacy were lower, and that hit profits," Executive Vice President Shunsuke Takagi told a news conference.

For the year to March 31, Japan's niche maker of all-wheel-drive off-road vehicles now forecasts an operating profit of 40 billion yen ($379.5 million) instead of 45 billion yen, expecting a deterioration in the model mix to shave an extra 3 billion yen.

It will also shell out 2.1 billion yen more on TV commercials and other sales-related costs than previously expected, mainly in the domestic market.

At the new forecast, Subaru's operating profit would be 20.5 percent below last year's 50.3 billion yen.

Net profit is now projected at 28 billion yen instead of 32 billion, even though its revenue forecast was untouched at 1.45 trillion yen as sales volume came roughly in line with expectations.

For the nine months to Dec. 31, operating profit was 26.5 billion yen, dented by a nine-yen fall in the dollar to 109 yen. A weaker dollar makes exports from Japan more expensive and reduces the value of dollar-based earnings when converted into yen.

Among Japanese car makers, Subaru is especially vulnerable to a weak dollar since North America accounts for over a third of its sales.

Net profit for the first three quarters fell 28 percent to 20.72 billion yen due to difficult comparisons from the year before, when the company booked a special gain on stock sales.

Revenue rose 2.1 percent to 1.05 trillion yen as volumes grew in every major region.

Subaru said, however, that sales of the Legacy had run its course in Japan, prompting it to lower its full business-year domestic sales target by 2,000 units to 263,000 vehicles.

In the United States, on the other hand, Takagi said Subaru expected to enjoy a continued rise in sales, although he warned that spending on discounts and other consumer incentives would likely rise on tough competition and higher U.S. interest rates.

Subaru's U.S. sales have risen by double digits for four of the last five months, with a slowdown last month to a seasonally adjusted 3 percent.

Takagi called January an aberration caused by the snowstorms in the U.S. Northeast, where its all-wheel-drive cars are popular, and said he expected brisk demand to resume this month.

"Sales in the first 10 days of February were up around 20 percent, and they should remain strong for a while," he said.

Subaru is also counting on the B9 Tribeca high-end crossover vehicle -- its first product in the premium segment -- to lift sales when it hits showrooms this summer in the United States.

Globally, Subaru tweaked its sales forecast up by 1,000 units to 589,000 vehicles, helped by better sales in markets outside Japan and North America.

Fuji Heavy shares sank 11.2 percent during the nine months, underperforming a 6.1 percent rise in Tokyo's transport sector subindex and a 2.5 percent fall in the broader TOPIX index.

Ahead of the results, the shares ended up 3.2 percent on the day at 516 yen against a 0.19 percent rise in the subindex.

($1=105.40 yen)

dang.. that dollor is really falling.. it hurts alot when I buy goods from Japan now, however I wonder if Subaru is going to change anything in the AWD system as Acrua came out with their SH-AWD.

Here are some details from FHI's press conference. Note that SOA and SIA use the calendar year as their fiscal year whereas FHI's fiscal year for everything else ends on Mar 31. This makes it confusing whan FHI talks about 4th quarter expectations for SOA and SIA - are they talking about Nov-Dec last year (which are already known) or are they talking about Jan-Mar of this year? Also, what are SG&A Expenses? http://www.fhi.co.jp/fina/english/financial/3q_presen2005/img/slide06.jpg
In terms of the aggregate sales volume of passenger cars in Japan during the 9months of the fiscal year ending March 2005, Legacy sales fell by 6 thousand units from the corresponding period of FYE 2004 because of the fading impact of the new model release. This was offset by improved sales of Impreza and special spec models thanks to the impact of the WRC Japan Rally, but other models struggled, dropping by 4.2 thousand units. On the other hand, the full contribution of the R2 has pushed up the sales of minicars by 17 thousand units. So in total, we have improved by 13.1 thousand units in domestic market compared to the same period of the previous year.
In the United States, the new Legacy and Saab 9-2X made up for the weaker sales of Impreza and Forester and thereby pushed up the total sales by 6.5 thousand units. Canada crept up slightly due to new Legacy. However, the impact of the new Legacy and Justy has enabled us to increase sales in Europe by 5.5 thousand units, and The new Legacy has also pushed up sales in Australia by 3.6 thousand vehicles. In total, the sales overseas increased by 20.6 thousand units. Although Isuzu SUV decreased as SIA terminated consignment production, grand total increased sales by 27.7 units.


http://www.fhi.co.jp/fina/english/financial/3q_presen2005/img/slide11.jpg
From January to September, 2004, SOA retail sales of the new Legacy were up by 3 thousand units over the corresponding period of previous fiscal year, but existing models struggled, with a drop of 5 thousand units year over year. However, figures were improved by the introduction of the new Legacy to the product lineup. Also, SG&A expenses decreased $9 million because of decline of incentives, and operating income improved over the corresponding period of previous year by $16 million.

As for SIA, production was down by 5 thousand units compared to the same period of the previous year, but this went along with the termination of Isuzu’s consignment production. Though the net sales was increased from new Legacy, with the changeover in production, there were compensating increases in fixed cost and labor cost, but also cost reduction of materials was not much effective for the first year of new car release, bringing operating loss and the difference of negative $73 million year over year.


http://www.fhi.co.jp/fina/english/financial/3q_presen2005/img/slide15.jpg
Sales of domestic passenger cars for this fiscal year is set at 2.9 thousand units less than the previous fiscal year’s level, though increase will be expected thanks to continued favorable sales of the Impreza and the positive effect of the Forester’s big change, but the sales of the Legacy have peaked out as 1year passed since the launch of new model. The sales target for minicars was set at 20.6 thousand units more than the previous fiscal year’s level due to an expected sales increase for the R2 and the launch of the R1. We expect to see an overall increase of 17.6 thousand units in total domestic sales.
In overseas markets we expect to see a sales increase in all area. With steady sales, especially in Europe, Australia and other areas, 20.1 thousand units increase year on year in total overseas sales will be forecasted.
We project an overall increase of 25.7 thousand units compared to the previous fiscal year.


http://www.fhi.co.jp/fina/english/financial/3q_presen2005/img/slide18.jpg
In light of our current sales situation, we revise down the sales target of domestic market, mainly for the Legacy sales decline, 1.5 thousand units lower than projected at the end of first half of this fiscal year. We make some revisions in the overseas sales plan, because of existing models sold in the U.S. and Canada are not as expected. On the other hand we slightly increase the sales targets for the European, Australian and other markets. This results in an increase of 2.4 thousand units in total. We increase the total sales target by 800 units.


http://www.fhi.co.jp/fina/english/financial/3q_presen2005/img/slide21.jpg
SOA is expected see an increase in net sales both in terms of volume and revenue thanks to the positive impact of the new Legacy. However, it provides an average incentive of $1,300 per unit, which is about the same level as previous year, and plans to spend more on advertising. We do not intend to implement the plan to improve SOA financial condition in order to strengthen its operating foundation in North America as we did last fiscal year. As a result, its operating income is expected to decline by $52 million. If this factor was excluded, actual operating income would increase in comparison with the previous year.
The incentive for the second six-month period will be set at an average $1,200 per unit, which is the same level as estimated at the end of the first six-month period.

SIA will see an increase of 11 thousand units in production of the new Legacy with the exception of the decline in consignment production of Isuzu vehicle. However it expects a fall in profits due to increased fixed costs related to the launch of the new Legacy. As termination of consignment production of Isuzu vehicle, it has incurred costs related to the production facilities dedicated to Isuzu, which have been recorded as an extraordinary loss. This loss was offset by the amortization of consolidated adjustments in the consolidated P/L.

mm the new legecy didn't help out as much as I thought....

Wow lots of info here..thanks for the read.

SG&A = selling, general & administrative expenses

Wow lots of info here..thanks for the read.

SG&A = selling, general & administrative expensesThanks for the definition. BTW, you can view the complete slide show, instead of just my excerpts, at http://www.fhi.co.jp/fina/english/financial/3q_presen2005/index.html.

And, if for some reason you need higher quality images of the slides, they're available in PDF format (22 pages, 2.42 MB) at http://www.fhi.co.jp/fina/english/financial/pdf/shiryo/3q_presen2005.pdf.