Subaru Lowers Outlook as Sales, Earnings Drop

Subaru Inc. reports its net income in the first half of its fiscal year ended Sept. 30 fell 48% to 44.3 billion yen ($391 million).

Operating income for the period plummeted 74% to 55 billion yen ($485 million). Most of the decline is due to recalls of 530,000 cars in Japan that were improperly tested and 410,000 vehicles worldwide with engine valve springs that could break and cause the engine to stall.

Subaru reports its net sales revenue in April-September shrank 8% to 14.8 trillion yen ($131 billion), as worldwide unit sales fell 9% to 482,100 units.

Subaru lowered its full-fiscal-year outlook from its previous forecast in August. Recalls and costlier sales incentives are now expected to slash operating profit by 42% to 220 billion yen ($1.9 billion) and cut net income 24% to 167 billion yen ($1.5 billion).

The company anticipates that its unit sales for the fiscal year will slip 2% to 1.04 million vehicles. Net revenue is likely to dip 1% to 3.2 trillion yen ($28 billion).