Higher Investments and Nonrecurring Costs Weigh on Denso’s Profitability; Cutting FVE to JPY 5,900
Narrow-moat auto parts manufacturer Denso posted a 22% decline in operating profit for the fiscal 2019 that was worse than our expectation. Revenue was in line, up 5% from last year, but substantial investments for research and development and new production facilities coupled with additional provision and impairment costs struck the profitability significantly, with operating margin down 2 percentage points to 5.9%. Stripping out the nonrecurring items, operating profit went down by 14%, still ...Denso and its affiliates are mainly engaged in the manufacture and sale of automobile electronic, electrical parts, and other components. Co.'s principal business segments are powertrain control systems, electronic systems, thermal systems, information and safety systems, small motors, industrial systems and consumer products. Co.'s principal products include starters, alternators, engine management systems, components for gasoline, diesel and electric hybrid vehicles, engine ECUs, hybrid ICs, air conditioners, radiators, remote keyless entry controllers, car navigation systems, car-mounted ETC devices, motors, bar code handy scanners and industrial robots.
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