Most Japanese Auto Suppliers Expect Rising Profits

Twenty-seven of Japan's 34 major auto parts makers anticipate stronger earnings in the fiscal year that began on April 1 because of higher vehicle production, accord to The Nikkei.

The Toyko-based newspaper says its calculations show that combined operating income at the 34 companies will jump 27% to 946 billion yen ($12 billion). Those expecting growth cite a rebound in orders from the just-ended fiscal year, when business was slowed by natural disasters in Japan and Thailand.

Among the suppliers predicting higher profit, only half expect operating margins to surpass the 5.9% average of the year that ended in March 2011. Collectively, those companies anticipate margins of 5.7% compared with 4.9% in the past fiscal year.

Parts makers say their profit margins will be trimmed by rising labor costs in emerging markets and heavy capital investment to expand operations. The Nikkei notes that suppliers still face pressures from automakers to reduce prices.