Subaru’s Net Income Drops 35%

Subaru Corp.’s net income fell 35% to 282 billion yen ($2.5 billion) in the 12-month period ended March 31.

Revenue rose 3% to 3 trillion yen ($29.2 billion), and unit sales grew 11% to 1.1 million vehicles. It was the fifth consecutive year of record highs for both measures. Deliveries surged 14% to 721,000 units in North America but declined in China, Europe and Japan.

Operating profit for the fiscal year slumped 27% to 411 billion yen ($3.6 billion). Subaru, which changed its name in April from Fuji Heavy Industries, says unfavorable exchange rates trimmed profits by 144 billion yen ($1.3 billion).

The cost of recalling explosion-prone Takata Corp. airbags, coupled with heavier spending on technology and capital investment, reduced operating results for the year by another 169 billion yen ($1.5 billion). Subaru notes that a 60% jump in its spending on retail sales incentives in the U.S. cut operating profit in North America 8%.

Subaru predicts its operating income for the current fiscal year ending next March 31 will remain unchanged at 410 billion yen ($3.7 billion). The company expects revenue will rise 3% to 3.4 trillion yen ($30 billion), and net income will advance 1% to 285 billion yen ($2.5 billion).